Banco Santander, S.A.
Auditor’s report, Annual accounts and directors’ report for the year
ended 31 December 2021
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial
reporting framework applicable to Banco Santander in Spain (see notes 1 and 49). In the event of a discrepancy, the
Spanish-language version prevails.
Banco Santander, S.A.
Financial statements for the year ended 31 December 2021
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial
reporting framework applicable to Banco Santander in Spain (see notes 1 and 49). In the event of a discrepancy, the
Spanish-language version prevails.
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain
(see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
Banco Santander, S.A.
BALANCE SHEETS AS OF 31 DECEMBER 2021 AND 2020
EUR Million
CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEPOSITS ON
DEMAND
6
91,736
67,561
FINANCIAL ASSETS HELD FOR TRADING
86,085
81,437
Derivatives
9 & 11
42,023
53,362
Equity instruments
8
14,619
9,758
Debt instruments
7
14,320
18,243
Loans and advances
15,123
74
  Central banks
6
1,118
  Credit institutions
6
6,980
3
  Customers
10
7,025
71
Memorandum items: lent or delivered as guarantees with disposal or pledge
rights
31
22,440
8,540
NON-TRADING FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH
PROFIT OR LOSS
2,355
2,225
Equity instruments
8
908
305
Debt instruments
7
734
671
Loans and advances
713
1,249
  Central banks
6
  Credit institutions
6
  Customers
10
713
1,249
Memorandum items: lent or delivered as guarantees with disposal or pledge
rights
31
154
329
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
13,403
33,899
Debt instruments
7
Loans and advances
13,403
33,899
  Central banks
6
482
  Credit institutions
6
3,445
9,888
  Customers
10
9,958
23,529
Memorandum items: lent or delivered as guarantees with disposal or pledge
rights
31
3,642
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
INCOME
15,035
22,623
Equity instruments
8 & 25
1,705
1,942
Debt instruments
7 & 25
9,394
15,146
Loans and advances
3,936
5,535
  Central banks
6
  Credit institutions
6
  Customers
10
3,936
5,535
Memorandum items: lent or delivered as guarantees with disposal or pledge
rights
31
2,348
2,293
ASSETS
Note
2021
2020*
2
FINANCIAL ASSETS AT AMORTIZED COST
339,053
311,020
Debt instruments
7
17,208
11,413
Loans and advances
321,845
299,607
  Central banks
6
26
21
  Credit institutions
6
35,084
34,159
  Customers
10
286,735
265,427
Memorandum items: lent or delivered as guarantees with disposal or pledge
rights
31
1,513
2,607
HEDGING DERIVATIVES
32
1,648
3,137
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF
INTEREST RATE RISK
32
120
206
INVESTMENTS
88,549
84,890
Group entities
13
85,272
81,560
Joint venture entities
257
248
Associated entities
13
3,020
3,082
TANGIBLE ASSETS
15
6,515
6,680
Property, plant and equipment
6,244
6,462
For own-use
5,392
5,715
Leased out under an operating lease
852
747
Investment property
271
218
Of which, Leased out under an operating lease
271
218
Memorandum items: acquired in financial leasing
2,695
2,879
INTANGIBLE ASSETS
16
896
948
Goodwill
396
458
Other intangible assets
500
490
TAX ASSETS
24
9,622
9,282
Current tax assets
1,003
721
Deferred tax assets
8,619
8,561
OTHER ASSETS
1,940
4,174
Insurance contracts linked to pensions
14, 17 & 23
381
423
Inventories
17
Other
17
1,559
3,751
NON-CURRENT ASSETS HELD FOR SALE
12
993
1,287
TOTAL ASSETS
657,950
629,369
ASSETS
Note
2021
2020*
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49  and Appendices are an integral part of the balance sheet as of 31 December 2021.
3
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain
(see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
BALANCE SHEETS AS OF 31 DECEMBER 2021 AND 2020
EUR Million
LIABILITIES
Note
2021
2020*
FINANCIAL LIABILITIES HELD FOR TRADING
56,969
61,014
Derivatives
9 & 11
40,672
50,676
Short positions
9
9,244
10,338
Deposits
7,053
  Central banks
18
44
  Credit institutions
18
5,718
  Customers
19
1,291
Marketable debt securities
20
Other financial liabilities
22
FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR
LOSS
12,743
16,890
Deposits
12,743
16,890
  Central banks
18
607
1,469
  Credit institutions
18
1,067
4,496
  Customers
19
11,069
10,925
Marketable debt securities
20
Other financial liabilities
22
Memorandum items: subordinated liabilities
FINANCIAL LIABILITIES AT AMORTIZED COST
510,272
474,619
Deposits
396,154
376,837
  Central banks
18
64,649
60,372
  Credit institutions
18
35,262
40,725
  Customers
19
296,243
275,740
Marketable debt securities
20
104,094
87,902
Other financial liabilities
22
10,024
9,880
Memorandum items: subordinated liabilities
20 & 21
20,399
17,124
HEDGING DERIVATIVES
32
2,076
1,780
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF
INTEREST RATE RISK
PROVISIONS
23
4,349
5,007
Pensions and other post-retirement obligations
1,677
1,849
Other long term employee benefits
1,053
1,581
Taxes and other legal contingencies
516
496
Contingent liabilities and commitments
190
157
Other provisions
913
924
TAX LIABILITIES
24
1,697
1,555
Current tax liabilities
176
45
Deferred tax liabilities
1,521
1,510
OTHER LIABILITIES
17
3,271
3,567
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
TOTAL LIABILITIES
591,377
564,432
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the balance sheet as of 31 December 2021.
4
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain
(see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
BALANCE SHEETS AS OF 31 DECEMBER 2021 AND 2020
EUR Million
EQUITY
Note
2021
2020*
SHAREHOLDERS’ EQUITY
26
68,375
66,498
CAPITAL
8,670
8,670
Called up paid capital
27
8,670
8,670
Unpaid capital which has been called up
Memorandum items: uncalled up capital
SHARE PREMIUM
28
47,979
52,013
EQUITY INSTRUMENTS ISSUED OTHER THAN CAPITAL
30
658
627
  Equity component of compound financial instruments
  Other equity instruments issued
658
627
OTHER EQUITY INSTRUMENTS
30
147
157
ACCUMULATED RETAINED EARNINGS
29
9,683
9,683
REVALUATION RESERVES
OTHER RESERVES
29
(1,017)
(1,095)
(-) OWN SHARES
30
(841)
RESULTS FOR THE PERIOD
4
3,932
(3,557)
(-) INTERIM DIVIDENDS
4
(836)
OTHER COMPREHENSIVE INCOME OR LOSS
(1,802)
(1,561)
    ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS
25
(1,858)
(1,882)
Actuarial gains or - losses in defined benefit pension plans
(1,329)
(1,351)
Non-current assets and disposal groups that have been classified as held for sale
Changes in the fair value of equity instruments measured at fair value with changes in
other comprehensive income
(468)
(537)
Ineffectiveness of fair value hedges of equity instruments measured at fair value with
changes in other comprehensive income
Changes in the fair value of equity instruments measured at fair value with changes
in other comprehensive income [hedged item]
271
154
Changes in the fair value of equity instruments measured at fair value with changes
in other comprehensive income [hedging instrument]
(271)
(154)
Changes in the fair value of financial liabilities at fair value through profit or loss
attributable to changes in credit risk
(61)
6
    ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS
25
56
321
Hedge of net investments in foreign operations [effective part]
Currency conversion
Hedging derivatives. Cash flow hedge reserve [effective part]
(87)
(189)
Changes in the fair value of debt instruments measured at fair value with changes in
other comprehensive income
143
510
Hedging instruments [non-designated items]
Non-current assets and disposal groups that have been classified as held for sale
TOTAL EQUITY
66,573
64,937
TOTAL LIABILITIES AND EQUITY
657,950
629,369
MEMORANDUM ITEMS
Financial guarantees granted
31
10,489
10,135
Loan commitments granted
31
111,410
96,959
Other commitments granted
31
59,421
50,686
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the balance sheet as of 31 December 2021.
5
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain
(see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
EUR Million
Interest income
34
6,405
6,528
  Financial assets at fair value through other comprehensive income
236
256
  Financial assets at amortized cost
4,847
5,078
  Other interest income
1,322
1,194
Interest expense
35
(2,785)
(3,160)
Expenses for capital stock repayable on demand
Interest income/(changes)
3,620
3,368
Dividend income
36
5,489
5,642
Commission income
37
3,119
2,811
Commission expense
38
(541)
(494)
Gains or losses on financial assets and liabilities not measured at fair value through profit or
loss, net
39
318
578
  Financial assets at amortized cost
39
19
10
  Other financial assets and liabilities
39
299
568
Gains or losses on financial assets and liabilities held for trading, net
39
175
(29)
  Reclassification of financial assets at fair value through other comprehensive income
  Reclassification of financial assets at amortized cost
  Other gains (losses)
175
(29)
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value
through profit or loss
39
(45)
(290)
  Reclassification of financial assets at fair value through other comprehensive income
  Reclassification of financial assets at amortized cost
  Other gains (losses)
(45)
(290)
Gains or losses on financial assets and liabilities measured at fair value through profit or loss,
net
39
38
4
Gains or losses from hedge accounting, net
39
(28)
10
Exchange differences, net
40
(205)
372
Other operating income
41
441
404
Other operating expenses
41
(894)
(785)
Total income
11,487
11,591
Administrative expenses
(4,673)
(4,602)
  Staff costs
42
(2,707)
(2,586)
  Other general administrative expenses
43
(1,966)
(2,016)
Depreciation and amortisation cost
15 & 16
(570)
(625)
Provisions or reversal of provisions, net
23
(758)
(1,133)
Impairment or reversal of impairment at financial assets not measured at fair value through
profit or loss and net gains and losses from changes
7 &10
(2,287)
(2,559)
  Financial assets at fair value through other comprehensive income
(1)
(4)
  Financial assets at amortized cost
(2,286)
(2,555)
Impairment or reversal of impairment of investments in subsidiaries, joint ventures and
associates, net
44
800
(5,921)
Impairment or reversal on non-financial assets, net
(85)
(63)
  Tangible assets
15
(85)
(62)
  Intangible assets
16
(1)
  Others
Gain or losses on non-financial assets and investments, net
45
1,142
 (Debit) Credit
Note
2021
2020*
6
Negative goodwill recognised in results
Gains or losses on non-current assets held for sale not classified as discontinued operations
12 & 46
(50)
(77)
Operating profit/(loss) before tax
3,864
(2,247)
Tax expense or income from continuing operations
24
68
(1,310)
Profit/(loss) from continuing operations
3,932
(3,557)
Profit/(loss) after tax
Profit/(loss) for the year
3,932
(3,557)
 (Debit) Credit
Note
2021
2020*
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the income statement the year ended  as of 31 December 2021.
7
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain
(see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
STATEMENTS OF RECOGNISED INCOME AND EXPENSES  FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
EUR Million
Note
2021
2020*
PROFIT/LOSS FOR THE YEAR
3,932
(3,557)
OTHER RECOGNISED INCOME AND EXPENSES
25
(662)
(1,221)
  Items that will not be reclassified to profit or loss
(397)
(858)
Actuarial gains and losses on defined benefit pension plans
29
(77)
Other recognised income and expense of investments in subsidiaries, joint venture and
associates
Changes in the fair value of equity instruments measured at fair value through other
comprehensive income, net
(347)
(796)
Gains or losses resulting from the accounting for hedges of equity instruments measured
at fair value through other comprehensive income, net
Changes in the fair value of equity instruments measured at fair value through other
comprehensive income  (hedged item)
117
4
Changes in the fair value of equity instruments measured at fair value through other
comprehensive income  (hedging instrument)
(117)
(4)
Changes in the fair value of financial liabilities at fair value through profit or loss
attributable to changes in credit risk
(93)
4
Income tax relating to items that will not be reclassified
24
14
11
  Items that may be reclassified to profit or loss
(265)
(363)
Hedges of net investments in foreign operations (Effective portion)
Revaluation gains (losses)
  Amounts transferred to income statement
  Other reclassifications
Exchanges differences
  Revaluation gains (losses)
  Amounts transferred to income statement
  Other reclassifications
Cash flow hedges (Effective portion)
146
(206)
  Revaluation gains or (losses)
152
(239)
  Amounts transferred to income statement
(6)
33
  Transferred to initial carrying amount of hedged items
  Other reclassifications
Hedging instruments (items not designated)
  Revaluation gains (losses)
  Amounts transferred to income statement
  Other reclassifications 
Debt instruments at fair value with changes in other comprehensive income
(524)
(316)
  Revaluation gains (losses)
(243)
244
  Amounts transferred to income statement
(281)
(560)
  Other reclassifications
Non-current assets held for sale
  Revaluation gains (losses)
  Amounts transferred to income statement
  Other reclassifications
Income tax related to items that may be reclassified to profit or loss
24
113
159
Total recognised income and expenses for the year
3,270
(4,778)
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the statement of recognized income and expenses for the year ended  as of
31 December 2021.
8
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain (see notes 1 and 50). In the event of a discrepancy, the Spanish-language version prevails.
STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
EUR Million
Capital
Share
premium
Equity
instruments
issued (not
capital)
Other equity
instruments
Accumulated
retained
earnings
Revaluation
reserves
Other
reserves
(-) Own
Equity
shares
Result for
the period
(-) Interim
dividends
Other
comprehensive
income
Total
Balance at 31 December 2020*
8,670
52,013
627
157
9,683
(1,095)
(3,557)
(1,561)
64,937
Adjustments due to errors
Adjustments due to changes in
accounting policies
Opening balance at 1 January
2021*
8,670
52,013
627
157
9,683
(1,095)
(3,557)
(1,561)
64,937
Total recognised income and
expense
3,932
(662)
3,270
Other changes in equity
(4,034)
31
(10)
78
(841)
3,557
(836)
421
(1,634)
Issuance of ordinary shares
Issuance of preferred shares
Issuance of other financial
instruments
Maturity of other financial
instruments
Conversion of financial liabilities
into equity
Capital reduction
Dividends
(477)
(836)
(1,313)
Purchase of equity instruments
(1,446)
1,446
Disposal of equity instruments
605
605
Transfer from equity to liabilities
Transfer from liabilities to equity
Transfers between equity items
(3,557)
(421)
3,557
421
Increases (decreases) due to
business combinations
Share-based payment
(62)
(62)
Others increases or (-) decreases
of the equity
31
52
499
582
Of which, discretionary allocation
to social funds (only savings banks
and credit cooperatives)
Balance at 31 December 2021
8,670
47,979
658
147
9,683
(1,017)
(841)
3,932
(836)
(1,802)
66,573
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the statement of changes in total equity for the year ended  as of 31 December 2021.
9
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain (see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
EUR Million
Capital
Share
premium
Equity
instruments
issued (not
capital)
Other equity
instruments
Accumulated
retained
earnings
Revaluation
reserves
Other
reserves
(-) Own
Equity
shares
Result for
the period
(-) Interim
dividends
Other
comprehensive
income
Total
Balance at 31 December 2019*
8,309
52,446
598
144
7,814
(617)
3,530
(1,662)
(340)
70,222
Adjustments due to errors
Adjustments due to changes in
accounting policies
Opening balance at 1 January
2020*
8,309
52,446
598
144
7,814
(617)
3,530
(1,662)
(340)
70,222
Total recognised income and
expense
(3,557)
(1,221)
(4,778)
Other changes in equity
361
(433)
29
13
1,869
(478)
(3,530)
1,662
(507)
Issuance of ordinary shares
361
(72)
70
359
Issuance of preferred shares
Issuance of other financial
instruments
Maturity of other financial
instruments
Conversion of financial liabilities
into equity
Capital reduction
Dividends
(361)
(361)
Purchase of equity instruments
(615)
(615)
Disposal of equity instruments
615
615
Transfer from equity to liabilities
Transfer from liabilities to equity
Transfers between equity items
(1)
1,869
(3,530)
1,662
Increases (decreases) due to
business combinations
Share-based payment
(53)
(53)
Other increases or (-) decreases of
the equity
29
67
(548)
(452)
Of which, discretionary allocation
to social funds (only savings banks
and credit cooperatives)
Balance at 31 December 2020*
8,670
52,013
627
157
9,683
(1,095)
(3,557)
(1,561)
64,937
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the statements of changes in total equity for the year ended 31 December 2021.
10
Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain
(see notes 1 and 49). In the event of a discrepancy, the Spanish-language version prevails.
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
EUR Million
A. CASH FLOWS FROM OPERATING ACTIVITIES
20,034
37,842
Profit or loss for the year
4
3,932
(3,557)
Adjustments made to obtain the cash flows from operating activities
2,052
12,938
Depreciation and amortization cost
15 & 16
570
625
Other adjustments
1,482
12,313
Net increase/(decrease) in operating assets
9,622
(7,513)
Financial assets held-for-trading
4,648
(5,146)
Non-trading financial assets mandatorily at fair value through profit or loss
130
(394)
Financial assets designated at fair value through profit or loss
(20,496)
(15,962)
Financial assets at fair value through other comprehensive income
(7,166)
(9,299)
Financial assets at amortized cost
36,675
26,903
Other operating assets
(4,169)
(3,615)
Net increase/(decrease) in operating liabilities
24,024
21,199
Financial liabilities held-for-trading
(4,045)
(3,341)
Financial liabilities designated at fair value through profit or loss
(4,147)
(7,374)
Financial liabilities at amortized cost
32,660
35,268
Other operating liabilities
(444)
(3,354)
Income tax recovered/(paid)
(352)
(251)
B. CASH FLOWS FROM INVESTING ACTIVITIES
4,083
(3,263)
Payments
2,266
8,001
Tangible assets
15
501
489
Intangible assets
16
110
73
Investments
13
1,655
7,439
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
Other payments related to investing activities
Proceeds
6,349
4,738
Tangible assets
15
119
118
Intangible assets
16
Investments
13 & 36
5,959
4,398
Subsidiaries and other business units
Non-current assets held for sale and associated liabilities
271
222
Other proceeds related to investing activities
C. CASH FLOW FROM FINANCING ACTIVITIES
(277)
1,087
Payments
5,322
3,250
Dividends
4
1,313
Subordinated liabilities
21
2,248
2,348
Redemption of own equity instruments
Acquisition of own equity instruments
1,446
615
Other payments related to financing activities
315
287
Proceeds
5,045
4,337
Subordinated liabilities
21
4,440
3,722
Issuance of own equity instruments
Disposal of own equity instruments
605
615
Other proceeds related to financing activities
D. EFFECT OF FOREIGN EXCHANGE RATE CHANGES
335
(576)
Note
2021
2020*
11
E. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
24,175
35,090
F. CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
67,561
32,471
G. CASH AND CASH EQUIVALENTS AT END OF THE YEAR
91,736
67,561
MEMORANDUM ITEMS
COMPONENTS OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR
Cash
1,184
1,302
Cash equivalents at central banks
88,268
63,984
Other financial assets
2,284
2,275
Less - Bank overdrafts refundable on demand
TOTAL OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR
91,736
67,561
Note
2021
2020*
* Presented for comparison purposes only (note 1.d).
The accompanying notes 1 to 49 and Appendices are an integral part of the statement of cash flows for the year ended as of 31 December 2021.
12
Translation of annual accounts originally issued in
Spanish and prepared in accordance with the regulatory
financial reporting framework applicable to Banco
Santander in Spain (see notes 1 and 49). In case of
discrepancy, the Spanish version prevails.
Banco
Santander,
S.A.
Notes to the financial statements (annual accounts) for
the year ended 31 December 2021.
1. Introduction, basis of
presentation of the financial
statements (annual accounts)
and other information
a) Introduction
Banco Santander, S.A. ('the Bank' or 'Banco Santander')
is a private-law entity subject to the rules and
regulations applicable to banks operating in Spain,
where it was constituted and currently maintains its
legal domicile, which is Paseo de Pereda, numbers 9 to
12 (39004, Santander, Spain).
The principal headquarters of Banco Santander are
located in Ciudad Grupo Santander, Avenida Cantabria s/
n (28660, Boadilla del Monte, Madrid, Spain).
The corporate purpose of Banco Santander, S.A., mainly
entails carrying out all kinds of activities, operations and
services inherent to the banking business in general and
permitted by current legislation, and the acquisition,
holding, enjoyment and disposal of all kinds of
securities.
In addition to the operations carried on directly by it,
Banco Santander is the head of a group of subsidiaries
that engage in various business activities and which
compose, together with it, Grupo Santander ('Grupo
Santander' or 'the Group'). Therefore, Banco Santander is
obliged to prepare, in addition to its own separate
financial statements, the Group's consolidated financial
statements, which also include the interests in joint
ventures and investments in associates.
Banco Santander annual accounts for the financial year
2020 were approved in the Banco Santander general
shareholders' meeting held on 26 March 2021. The
Group's 2021 consolidated financial statements, the
financial statements of Banco Santander and of
substantially all the Group companies have not been
approved yet by their shareholders at the respective
annual general meetings. However, Banco Santander
board of directors considers that the aforementioned
financial statements will be approved without any
significant changes.
Appendix IX includes the list of agents that assist Banco
Santander on the performance of its business activities in
Spain.
b) Basis of presentation of the financial statements
(annual accounts)
Banco Santander financial statements for the year ended
2021 have been formulated by Banco Santander
directors (at the Board of Directors meeting on February
24, 2022) in accordance with Bank of Spain Circular
4/2017 and subsequent amendments, as well as the
commercial regulations applicable to the Bank.
Accounting principles, policies and measurement criteria
are applied by the bank as set forth in note 2, in order to
faithfully represent Banco Santander´s equity and
financial position as of 31 December 2021 and 2020,
results of its operations, recognized revenue and
expenditure, changes in total equity and cash flows
pertaining to financial year 2021 and 2020. These annual
accounts have been prepared using the accounting
records maintained by Banco Santander.
The notes to the financial statements contain additional
information to that presented on the balance sheet,
income statement, statement of recognized income and
expense, statement of changes in total equity and
statement of cash flows. The notes provide, in a clear,
relevant, reliable and comparable manner, narrative
descriptions and breakdowns of these statements. 
Adoption of new standards and related interpretations
The following is a summary of the main Bank of Spain
Circulars issued that became applicable to Banco 
Santander in financial year 2021:
Bank of Spain Circular 1/2021, of January 28, which
modifies Circular 1/2013, of May 24, on the Risk
Information Center, and Circular 5/2012, of June 27 , to
credit institutions and payment service providers, on
transparency of banking services and responsibility in
granting loans. (BOE of January 30, 2021).
The main objective of this circular is to adapt Bank of
Spain Circulars 1/2013 of May 24 over the Risk
Information Center and Circular 5/2012 over the
transparency of banking services and responsibility in
the granting of loans to the changes in the regulation of
the Risk Information Center (CIR), as well as to update 
the official reference rates by Order ETD/699/2020 (by
13
which the order Order ECO/ 697/2004 and Order 23
EHA/2899/2011, on transparency and protection of
banking services clients).  
On July 27, the Rev. Credit OM was published in the
Official State Bulletin (BOE) where, among other
regulations, Order ECO/697/2004 of March 11 on the
Central Risk Information (hereinafter,'OM de la CIR') was
modified. Among the objectives of this order is to
improve the information available to lenders in
performing solvency analyses of potential borrowers, 
avoiding over-indebtedness positions that lead
borrowers to fail to comply with their financial
obligations. Having the appropriate information that
allows a solid assessment of solvency to prevent
situations of excessive indebtedness, takes on special
relevance in the context of the economic and social
impact caused by the covid-19 health crisis. 
On the other hand, the exceptional situation created by
covid-19 has made it necessary to deploy different
financial measures to mitigate the economic impact of
the pandemic. These measures have been articulated in
four royal decree-laws that describe the conditions to
finance individuals, companies and the self-employed in
relation to the implementation of moratoriums and
government guarantees, as well as private moratoriums
promoted by associated entities. In order to comply with
the regulations over information possessed by lenders,
imposed  by said royal decree laws, and to support  the
supervision and inspection efforts by the Bank of Spain,
reporting entities were requested to send the CIR certain
information regarding the characteristics of  loans
affected by the aforementioned measures. 
Additionally, the second rule of the circular modifies
certain  aspects of Circular 5/2012, in regards to official
interest rates by the modification of Order
EHA/2899/2011. This change is intended, among other
ends, to increase the amount of official interest rate
alternatives  available to entities, who then apply them
in granting loans and modifying existing contracts. In
order to accomplish this,  a review is conducted of the
different official reference rates available and
modifications are made to naming conventions of
existing rates. In this regard, the circular updates the list
of official rates within the Transparency OM and
establishes the scope and procedures for determining
the new indices.
The application of the circular has not had a significant
effect on the  Bank's annual accounts.
Bank of Spain Circular 2/2021, of January 28, which
modifies Bank of Spain Circular 8/2015, of December 18,
to the entities and branches subscribed to the Deposit
Guarantee Fund of Credit Institutions, over information to
determine the basis for calculating contributions to the
Deposit Guarantee Fund for Credit Institutions. (BOE of
February 2, 2021).
The objective of this circular is to incorporate changes
made to Royal Decree 2017/2008 into the Bank of Spain
circular 8/2015, establishing how to collect new
information which must be made available to the Bank
of Spain, credit institutions, and FGD-subscribed
branches. This is outlined within 'Information in
determining the basis for calculating contributions to the
Deposit Guarantee Fund'  as well as the 'Received
deposit registry’, which appear in annexes 1 and 2,
respectively, of the aforementioned Circular 8/2015. 
The regulation modifies Circular 8/2015 as follows: 
The fourth rule has been modified to set the
minimum frequency by which entities and FGD-
subscribed branches must update the detailed
deposits received registry (as regulated in annex 2).
Specifically, updates must include information
related to securities and cash balances held by
investment companies, opened with the entity or
FGD-subscribed branch and in the name of the
investment services company on behalf of its clients. 
Schedule 1, 'Information to determine the basis for
calculating contributions to the Deposit Guarantee
Fund', has been replaced by another schedule of the
same name, schedule 1, which consists of two parts,
A and B. In part A’s template, 'Information regarding
the compartmentalization of deposit and securities
guarantees', information is kept until the
establishment of this circular are sent by the entities
attached to the FGD and the necessary adjustments
are made to collect the information on the deposits
constituted by investment services companies in
instrumental and temporary cash accounts opened in
the name of the investment services company in the
reporting entity on behalf of its clients, as
established in articles 30 quater and 43.3 of the
Royal Decree 217/2008. In addition, for admissible
deposits, the detail is disaggregated between those
by offices located in Spain ('Business in Spain') and
those branches in other European Union countries
('Business in branches in other Member States of the
European Union'). Lastly, part B has been added to
annex 1 of Circular 8/2015, which includes a
breakdown by country of residence of the branches
containing eligible and guaranteed deposits.
The application of the circular has not had a significant
effect on the  Bank's annual accounts. 
14
Bank of Spain Circular 3/2021 of May 13, which modifies
Circular 5/2012, of June 27,  regarding the definition of
the reference interest rate based on the Euro short-term
rate (EUR STR) to credit institutions and payment service
providers, on transparency of banking services and
responsibility in granting loans. (BOE of May 17, 2021).
The main objective of this circular is to adapt the
definition of the index based on the Euro short-term rate
(EUR STR). For the purposes of its consideration as an
official rate, included in annex 8, section six, of Circular
5/2012, of June 27, to credit institutions and payment
service providers, on transparency of banking services
and responsibility in granting loans, following the
publication of the European Central Bank's Guideline
(EU) 2021/565, of 17 March 2021, which modifies
Guideline (EU) 2019/1265, on the short-term interest
rate of the euro (EUR STR) (ECB / 2021/10), which
establishes the preparation and daily publication, as of
April 15, 2021, of compound average rates based on EUR
STR. 
The application of the circular has not had a significant
effect on the  Bank's annual accounts. 
Bank of Spain Circular 4/2021 of 25 November, to credit
institutions and other supervised entities, on models of
reserved statements in matters of market conduct,
transparency and customer protection, and on the
registration of claims. (BOE of 1 December 2021).
The purpose of this circular is to establish the content
and frequency of the models of reserved statements in
matters of market conduct, transparency and customer
protection that must be sent to the Bank of Spain.
Further, the circular declares minimum amounts of
claims information that said entities must have at the
disposal of the Bank of Spain. 
The application of the circular has not had a significant
effect on the  Bank's annual accounts.
Bank of Spain Circular 5/2021 of 22 December, which
modifies Circular 2/2016 of February 2 to credit
institutions, on supervision and solvency, which
completes the adaptation of the Spanish legal system to
Directive 2013/36/EU and Regulation (EU) No. 575/2013.
(BOE of 23 December 2021) (Correction of BOE errors of
December 30, 2021).
This circular covers the principles of necessity,
effectiveness, proportionality, legal certainty,
transparency, and efficiency, as outlined in article 129 of
Law 39/2015 of October 1, on the Common
Administrative Procedure of Public Administrations. 
In regards to the principles of necessity and
effectiveness, this circular is a necessary tool for the
development of the framework applicable to the new
macroprudential tools that the Bank of Spain has at its
disposal, in accordance with Royal Decree-Law 22 /2018
and Royal Decree 102/2019. This Decree-Law’s ultimate
objective is to identify, prevent and mitigate the
development of systemic risk and ensure a sustainable
contribution by the financial system to economic growth: 
Capital buffer requirements, as established in
articles 43 to 49 of Law 10/2014. 
The establishment of limits to sector concentration,
in accordance with article 69 ter of Law 10/2014.   
The setting of conditions over the granting of loans
and other operations, by virtue of article 69 quater of
Law 10/2014. 
The application of the circular has not had a significant
effect on the  Bank's annual accounts. 
Bank of Spain Circular 6/2021 of 22 December, which
modifies Circular 4/2017 of 27 November, to credit
institutions, on public and reserved financial information
standards, and models of financial statements, and
Circular 4/2019 of November 26, to financial credit
establishments, on standards of public and reserved
financial information, and models of financial
statements. (BOE of 29 December 2021).
The main objective of this circular is to update Circular
4/2017 (27 of November), pertaining to credit
institutions, specifically over public and reserved
financial information standards, as well as financial
statement models.
Firstly, among the modifications that this circular
incorporates in Circular 4/2017 of November 27, there
includes changes in the international financial reporting
standards adopted in the European Union (IFRS-EU) with
regard to International Accounting Standard No. 39 and
International Financial Reporting Standards 4, 7, 9 and
16. The mentioned changes are the result of an
International Accounting Standards Board (IASB) project
that responds to the reform of benchmark interest rate
indices known as IBOR (InterBank Offered Rates). 
The additional detail required by the amendments to
Circular 6/2021 relating to hedging relationships are
included in note 32. Note 49 includes a description of
Group and Bank management progress in the transition
to reference rate alternatives, as well as detail over
changes in risk management strategy. 
15
The following is a breakdown of the carrying amount, at
31 December 2021, of financial assets, financial
liabilities, derivatives and loan commitments that
continue to reference the indices subject to IBOR Reform:
EUR million
Gross Carrying amount
Loans and
advances
Debt
securities
acquired
(Assets)
Deposits
Debt
securities
issued
(Liabilities)
Derivatives
(Assets)
Derivatives
(Liabilities)
Loan
Commitments
Referenced to EONIA
68
524
284
121
244
Referenced to LIBOR
17,608
1,649
56
2,419
9,101
13,335
948
  of which USD
15,740
491
56
2,419
5,719
8,383
764
  of which GBP
1,656
1,158
3,370
4,922
162
TOTAL
17,608
1,717
580
2,703
9,222
13,579
948
Secondly, the models and instructions used in preparing
the confidential financial statements known as FINREP,
among other aspects, have been modified by
Commission Execution Regulation (EU) 2021/451 of
December 17, 2020, which establishes technical
standards for the implementation of Regulation (EU) No.
575/2013 of the European Parliament and of the Council
in relation to the communication of information for
supervisory purposes by entities, which also  repeals the
Execution Regulation (EU) No. 680/2014. By virtue of
this implemented regulation, changes have been made
to FINREP in relation to restructured, refinanced or
refinancing operations (forborne exposures). This
circular makes adjustments to the treatment of
restructured, refinanced or refinancing operations
included in annex 9, ‘Analysis and coverage of credit
risk’, of Circular 4/2017 dated November 27, in order to
keep it aligned with that of FINREP. 
Thirdly, the European Banking Authority (EBA) guidelines
on the granting and monitoring of loans (EBA/
GL/2020/06) aim to, among other objectives, to improve
practices, processes and procedures related to the
granting of credit operations. The aforementioned
guidelines have been leveraged by the Bank of Spain, the
scope of which applying to both less significant credit
institutions and for credit financial establishments. The
European Central Bank has within it’s domain significant
credit institutions. 
Fourthly, this circular modifies annex 9 of Circular
4/2017, dated November 27, updating the alternative
solutions for collective estimations of credit risk loss
coverage and discounts on the reference value of the
assets awarded or received in the payment of debts. Said
modification includes updates to data used in the
operations declared by  entities under the periphery of
the Bank of Spain and, in the case of alternative
solutions, it incorporates updated forecasts on future
macroeconomic conditions. 
Regarding the use of updated alternative solutions, it
should be noted that, in accordance with the provisions
of points 52 and 53 of annex 9 of Circular 4/2017, dated 
November 27, the decision over whether to develop
internal methodologies for collective estimations of the
provisions for credit losses or resort to alternative
solutions is one the entity makes itself. Although these
alternative solutions will not be established until June
30, 2022, Banco Santander uses internal methodologies
to calculate value corrections for impairment (see notes
2.d.iii and 2.i). 
Fifthly, Circular 4/2017, dated November 27, was
modified to reflect the update in the statistical data
requirements of the Economic and Monetary Union
(EMU), in accordance with the modifications established
by Regulation (EU) 2021 /379 of the European Central
Bank, dated January 22, regarding balance sheet items
of credit institutions and the monetary financial
institutions sector (recast) (ECB/2021/2). The new
information that has been requested consists, on the one
hand, of additional data requirements to improve the
analysis of monetary and credit evolution and, on the
other, of modifications of some of the existing data
requirements and definitions to facilitate better
integration with other statistical data sets. 
Finally, specific modifications are made to the reserved
individual financial statements pertaining to Circular
4/2017, dated  November 27, in order to introduce new
data requirements to verify compliance with regulations
or collect statistical information, as well as to make the
adjustments and corrections identified as necessary
since the last update of said circular. 
The application of the circular has not had a significant
effect on the  Bank's annual accounts. 
16
Bank of Spain Circular 5/2020, of November 25, to
payment institutions and electronic money institutions,
on public and reserved financial reporting rules and
model financial statements, and amending Circular
6/2001 of 29 October on holders of currency exchange
establishments and Circular 4/2017 of 27 November, to
credit institutions, on public and reserved financial
reporting rules, and model financial statements. (Official
Gazette of 4 December 2020).
This circular establishes the accounting framework for
payment and electronic money institutions. It also sets
out the accounting documents that such entities and
their affiliates have to draw up, including the model
public and reserved financial statements. It also
determines the rules for recognition, valuation,
presentation, and information to be included in the
report, as well as a breakdown of model financial
statement information to be used in preparing the
annual accounts. This circular acts as the accounting
regulation for credit institutions, either by setting criteria
similar to those communicated directly from credit
institutions, or referring to the rules of Bank of Spain
Circular 4/2017 of November 27 on credit rules on public
and reserved financial information and models of
financial statements.
The application of the circular has not had a significant
effect on the  Bank's annual accounts.
c)  Use of critical estimates
The results and the determination of equity are sensitive
to the accounting policies, measurement bases and
estimates used by the directors of Banco Santander in
preparing the financial statements.
The main accounting policies and measurement bases
are set forth in note 2.
In the financial statements estimates were occasionally
made by the senior management of Banco Santander in
order to quantify certain of the assets, liabilities, income,
expenses and obligations reported herein. These
estimates, which were made on the basis of the highest
quality information available, relate primarily to the
following:
The impairment losses on certain assets: it applies to
financial assets at fair value through other
comprehensive income, financial assets at amortised
cost, non-current assets held for sale, investments,
tangible assets and intangible assets (see notes 6, 7,
8, 10, 12, 13, 15, 16 and 49).
The assumptions used in the actuarial calculation of
the post-employment benefit liabilities and
commitments and other obligations  (see note 23).
The useful life of the tangible and intangible assets
(see notes 15 and 16).
Assessment of the impairment of investments in
group, joint venture and associated entities (see note
13).
The measurement of goodwill (see note 16).
The calculation of provisions and the consideration of
contingent liabilities (see note 23).
The fair value of certain unquoted assets and
liabilities (see notes 6, 7, 8, 9, 10, 11, 18, 19 and 20).
The recoverability of deferred tax assets and the
income tax expense (see note 24).
The fair value of the identifiable assets acquired and
the liabilities assumed in business combinations (see
note 3).
To update the estimates described above, the Bank’s
Management has taken into account the current
situation as a result of covid-19, classified as a pandemic
by the World Health Organization, which significantly is
affecting the economic activity worldwide and, as a
result, the Bank's operations and financial results, and
which generates uncertainty in the Bank's estimates.
Therefore, the Bank's Management has made an
assessment of the current situation according to the best
information available to date, disclosing in the notes the
main estimates made and the potential impacts of
covid-19 on them for the period ended 31 December
2021 (see notes 16, 24 and 49).
Although these estimates have been made on the basis
of the best information available at the end of the year
2021, and considering information updated at the date
of preparation of these annual accounts, it is possible
that events that may take place in the future may make
it necessary to modify them (upwards or downwards) in
the coming years, which would be done, if appropriate,
in a prospective manner, recognising the effects of the
change in estimate in the corresponding income
statement.
d) Comparative information
The information contained in the 2021 annual accounts
for the 2020 financial year is presented, solely and
exclusively, for comparison with the information relating
to 2021.
e) Capital management
i. Regulatory and economic capital
Credit institutions must meet a number of minimum
capital and liquidity requirements. These minimum
requirements are governed by the European Capital
Requirements Regulation, better known as CRR, and the
Capital Requirements Directive, CRD. In June 2019, these
regulations were significantly amended. The applicable
regulations are now CRR II and CRD V.
17
As the Directives need to be transposed into the legal
systems of the different Member States in order to be
applicable, in the case of Spain, Royal Legislative Decree
7/2021 and Royal Decree 970/2021 were published for
this purpose in 2021.
In June 2019, CRR II introduced the minimum TLAC (Total
Loss Absorbing Capacity) requirement, which only
applies to global systemically important banks (G-SIBs).
This requirement introduces two metrics: i) a minimum
requirement for own funds and eligible liabilities as a
percentage of the Total Risk Exposure Amount (TREA) set
at 16% during the transition period and 18% from 1
January 2022 after the end of the transition period; and
ii) a metric to set a minimum requirement for own funds
and eligible liabilities as a percentage of the Total Risk
Exposure Amount of 6% during the transition period and
6.75% from 1 January 2022 after the end of the
transition period.
This year saw the implementation of the EBA Guidelines
on the Definition of New Default, which were prepared
in accordance with CRR II, on 1 January 2021. The
changes to CRR II that are applicable from June 2021
include the introduction of a minimum leverage ratio of
3%, the new standardised EAD calculation for
counterparty risk, known as SA-CCR, the long-term
liquidity ratio (NSFR), the new limits for large exposures
and the requirement to report under the standardised
approach for market risk.
The CRD V introduces important modifications such as
the regulation of Pillar 2G ('guidance', orientation of
requirements by Pillar 2).
On 27 October 2021, the European Commission
published the draft review of  European banking
legislation: CRR III and  CRD VI.
The banking package consists of the following elements:
1) Implementation of the final Basel III reforms, 2)
Contribution to sustainability and green transition and 3)
Stronger supervision: ensuring sound management of EU
banks and better protection of financial stability.
In general, the Commission proposes to start applying
the new rules from 1.1.2025, but the amendments to
the regulation that concern resolution issues could come
into force in the first months of 2022.
With regard to the resolution rules, institutions must
have an adequate funding structure to ensure that, in the
event of financial distress, the institution has sufficient
liabilities to absorb losses in order to recover its position
or be resolved, while ensuring the protection of
depositors and financial stability.
The directive that governs the resolution framework
mentioned above is the Bank Recovery and Resolution
Directive (BRRD). Like the CRR and the CRD, the BRRD
was amended in June 2019, so BRRD II refers to all of
these amendments. The transposition of this directive
into the Spanish legal system took place in 2021 through
a Royal Decree.
BRRDII has introduced important changes to the
Minimum Requirement for Own Funds and Eligible
Liabilities (MREL). For example, the TLAC requirement is
now considered a Pillar 1 resolution requirement for G-
SIBs. For large banks (defined as banks with total assets
of more than EUR 100 billion) or banks deemed
systemically important by the resolution authority,
BRRDII sets a minimum subordination requirement of
13.5% of risk-weighted assets or 5% of the leverage
ratio, whichever is higher. For all other institutions, the
subordination requirement is set by the resolution
authority on a case-by-case basis.
Finally, Deposit Guarantee Schemes (DGS) are regulated
by Directive 2014/49 or DSGD, which has not undergone
any significant changes since its publication in 2014. It
aims to harmonise the deposit guarantee schemes of the
Member States, thus ensuring stability and balance in
the different countries.  It creates an appropriate
framework for depositors to have better access to DGSs
than was the case before the publication of this Directive
through clear coverage, shorter repayment periods,
better information and robust funding requirements.
This Directive is transposed into Spanish law by Law
11/2015, Royal Decree 1012/2015 and Royal Decree
1041/2021.
In 2020, the national governments took measures to
address the economic and social impact of the vine
population, in particular legislative moratoria that were
aimed at containing NPLs and helping the population to
meet liquidity needs. Throughout 2020, the EBA adopted
a series of guidelines, including the Guidelines on
legislative and non-legislative moratoria applied in the
context of the Cov19 crisis on 2 April 2020 (EBA/
GL/2020/08). These guidelines clarified the
requirements for public and private moratoria to avoid
classification of exposures affected by moratoria as
forborne exposures.
Although these guidelines were initially going to apply
to moratoria granted before 30 June 2020, the EBA
decided on 2 December 2020 to reactivate the
application of these guidelines (EBA/GL/2020/02) for
moratoria requested before 31 March 2021 and for a
period not exceeding 9 months.
Another measure adopted in 2020 to provide flexibility in
meeting the requirements was the approval and entry
into force of the CRR "Quick Fix" amending CRR II (urgent
and extraordinary amendments to bring about a more
flexible regulatory framework in response to COVID-19).
The Quick Fix introduces a number of new features,
18
including the extension of the transitional period granted
before the pandemic for the entry into force of IFRS 9,
due to the sudden and significant increase in expected
credit loss provisions to be recognised. The
implementation of certain provisions of CRR II has also
been delayed, such as those relating to the leverage
ratio buffer (postponed until 1 January 2023); the
possibility of excluding exposures to central banks from
the calculation of the leverage ratio, which should have
been applied from June 2021 on, has been brought
forward. Other provisions beneficial to institutions have
also been brought forward. These include the support
factors for SMEs and infrastructure, and the new
treatment for software (applicable from the day
following the publication date of the Delegated
Regulation that implements it).
At 31 December 2021, the Bank met the minimum
capital requirements established by current legislation 
(see note 49.d).
ii. Plan for the roll-out of advanced approaches and
authorisation from the supervisory authorities
Banco Santander following the Group's policies,
continues adopting, over the next few years, the
advanced internal ratings-based (AIRB) approach under
Basel II for substantially all its banks. The commitment
assumed before the supervisor still implies the adoption
of advanced models within the ten key markets where
Santander Group operates.
This objective of covering IRB models in the Group and
the Bank should be seen in the context of the current
supervisory focus on the robustness and adequacy of
existing models, as well as the simplification strategy
recently agreed with the ECB.
Grupo Santander has obtained authorisation from the
supervisory authorities to use the AIRB approach for the
calculation of regulatory capital requirements for credit
risk for Banco Santander and the main subsidiaries in
Spain, the United Kingdom and Portugal, as well as for
certain portfolios in Germany, Mexico, Brazil, Chile, the
Nordic countries (Norway, Sweden and Finland), France
and the United States.
As regards the other risks explicitly addressed under
Basel Pillar I, the Group is authorised to use its internal
model for market risk for its treasury trading activities in
Spain, Chile and Mexico.
For the purpose of calculating regulatory capital for
operational risk, the Group and the Bank use the
standardised approach provided for the CRR. In 2017 the
European Central Bank authorised the use of the
Alternative Standardised Approach to calculate the
capital requirements at consolidated level in Banco
Santander México, S.A., Institución de Banca Múltiple,
Grupo Financiero Santander México, in addition to the
approval obtained in 2016 in Brazil.
f) Environmental impact
In view of the business activities carried on by the Group
entities, and therefore the Bank, do not have any
environmental liability, expenses, assets, provisions or
contingencies that might be material with respect to its
equity, financial position or results.
Grupo and Banco Santander consider the aspects related
to climate change in the preparation of the ratings of its
wholesale clients if they are relevant. These ratings
influence the subsequent assignment of credit
parameters for the calculation of the expected loss'
estimate.
With the reasonable and supportable information
available at the date of approval of these consolidated
annual accounts, the potential additional impacts of
expected losses on the time horizons of the Group's
portfolios, taking into account as well the mitigation
measures, are not considered material.
Grupo Santander, together with the rest of the financial
industry, is working on developing the appropriate
methodologies to improve the measurement of these
losses, when the necessary regulatory developments are
more advanced and information is available to carry out
a more precise measurement.
See additional information in note 49.a.
g) Customer Care Service Annual Report
As required by the Article 17 of Ministry of Economy
Order ECO/734/2004, of 11 March, on the services and
departments of Customer Service and the Customer
Ombudsmen of Financial Institutions, the annual report
presented by the Head of the department to the board
meeting held on March 2022 is summarised in the
directors' report.
h) Deposit Guarantee Fund and Resolution Fund
i.Deposit Guarantee Fund
Banco Santander participates in the Deposit Guarantee
Fund (DGF). The annual contribution to be made by the
entities to this fund, established by Royal Decree - Law
16/2011 of October 14, by which the DGF is created in
accordance with the wording given by the Tenth Final
Disposition of Law 11/2015 of June 18 on Recovery and
Resolution of credit institutions and investment services
companies (in force since June 20, 2015), is determined
by the Management Committee of the DGF and is
established based on the guaranteed deposits of each
entity and their risk profile. The annual contribution to be
made by the entities to this fund is determined by the
Management Committee of the FGD, and consists of the
contribution based on the guaranteed deposits of each
entity corrected for their risk profile, which includes the
phase of the economic cycle and the impact of pro-
cyclical contributions, according to section 3 of article 6
of the Royal Decree-Law 16/2011.
19
The purpose of the FGD is to guarantee deposits with
credit institutions up to the limit established in the
mentioned Royal Decree-Law. The expense incurred by
the contributions accrued to this organism in the year
2021 has amounted to EUR 225 million (EUR 239 million
in the year 2020), which are recorded under ‘Other
operating expenses’ in the profit and loss account
attached (see note 41).
ii. National Resolution Fund
Law 11/2015 regulates the creation of the National
Resolution Fund, whose financial resources should
reach, by 31 December 2024, at least 1% of the amount
of secured deposits, through contributions from credit
institutions and investment firms established in Spain.
The details of the calculation of contributions to this
Fund is regulated by Commission Delegated Regulation
(EU) 2015/63 of 21 October 2014 and is calculated by
the Orderly Banking Resolution Fund, on the basis of the
information provided by each entity.
iii. Single Resolution Fund
On January 1, 2016, the Single Resolution Fund (SRF),
which was implemented by Regulation (EU) No.
806/2014 of the European Parliament and of the
Council, became operational. The rules governing the
banking union provide that banks will pay contributions
to the SRF over eight years.
The Single Resolution Board (SRB) is responsible for
calculating the contributions to be made by credit
institutions and investment firms to the SRF. These
contributions are based, as of fiscal year 2016, on: (a) a
flat-rate contribution (or base annual contribution), pro
rata with respect to the total liabilities, excluding own
funds, guaranteed deposits of all institutions authorized
in the territory of the participating member states; and
(b) a risk-adjusted contribution, which will be based on
the criteria set out in Article 103(7) of Directive 2014/59/
EU, taking into account the principle of proportionality,
without creating distortions between structures of the
banking sector of the member states. The amount of this
contribution will accrue from the 2016 financial year, on
an annual basis.
The expenditure incurred by the contribution made to
the National Fund and the Single Resolution Fund
amounted to EUR 307 million in 2021 (EUR 262 million
in the year 2020), which are recognised under ‘Other
operating expenses’ in the accompanying income
statement (see note 41).
i) Merger by absorption
i. Merger by absorption between Banco Santander, S.A.
(as absorbing company) and Popular Spain Holding de
Inversiones, S.L.U., Santander Investment I, S.A.U. and
Administración de Bancos Latinoamericanos Santander,
S.L. (as absorbed companies).
On June 29, 2021, the members of the respective boards
of directors of Banco Santander, S.A. (as absorbing
company) and Popular Spain Holding de Inversiones,
S.L.U., Santander Investment I, S.A.U. and Administration
of Latin American Banks Santander, S.L. (as absorbed
companies) drafted and signed the common project for
the merger by absorption.
Under Articles 49 and 51 of Law 3/2009, of April 3, on
Structural Modifications of Commercial Companies
("LME"), it was not necessary for this merger to be
approved by the general shareholders' meetings (or, as
the case may be, by the sole shareholder) of the
absorbed companies, since Banco Santander, S.A. had a
direct holding in the case of Popular Spain Holding de
Inversiones, S.L.U. and Santander Investment I, S.A.U.,
and in the case of Administración de Bancos
Latinoamericanos Santander, S.L., partly directly and
partly indirectly through another absorbed company
(Santander Investment I, S.A.U.), partly through another
absorbed company (Santander Investment I, S.A.U.), and,
in the case of Administración de Bancos
Latinoamericanos Santander, S.L., partly directly and
partly indirectly through another of the absorbed
companies (Santander Investment I, S.A.U.); nor was
approval by the shareholders' meeting of Banco
Santander, S.A. necessary, since shareholders
representing at least 1% of the share capital did not
require it, in accordance with Article 51.1 of the LME.
Consequently, the board of directors of Banco Santander,
S.A. on June 29, 2021 approved both the common
merger plan and the merger that is the object of the
merger.
Once the mandatory authorization by the Minister of
Economic Affairs and Digital Transformation was
obtained (twelfth additional provision of Law 10/2014,
of June 26, on the regulation, supervision and solvency
of credit institutions), on 16 December 2021, the
corresponding merger deed was executed and, having
been registered in the Commercial Registry of Cantabria,
the dissolution without liquidation of Popular Spain
Holding de Inversiones, S.L.U. took place with effect
from 20 December 2021, Santander Investment I, S.A.U.
and Administración de Bancos Latinoamericanos
Santander, S.L. and the transfer en bloc, on a universal
basis, of all their respective assets and liabilities to
Banco Santander, S.A., which acquired them by universal
succession and without solution of continuity. It should
be noted that the merger, for accounting purposes, was
recorded by Banco Santander, S.A. in 2021.
20
Since the absorbed companies were fully owned by
Banco Santander, S.A., in the case of Popular Spain
Holding de Inversiones, S.L.U. and Santander Investment
I, S.A.U. and directly and indirectly in the case of
Administración de Bancos Latinoamericanos Santander,
S.L., in accordance with article 49.1, in relation to article
26, of the LME, the Bank did not increase capital. Once
the merger became effective on December 20, 2021, all
the shares and participations of the absorbed companies
were fully amortized, extinguished and cancelled.
The merger balance sheets were considered to be those
included in the financial statements for the year ended
December 31, 2020, prepared by the administrative
bodies of each of the companies participating in the
merger. The merger balance sheets of Banco Santander,
S.A., Popular Spain Holding de Inversiones, S.L.U.,
Santander Investment I, S.A.U. and Administración de
Bancos Latinoamericanos Santander, S.L. were duly
verified by their respective auditors.
In accordance with the provisions of the applicable
accounting regulations, for accounting purposes, 1
January 2021 was set as the date from which the
transactions of the absorbed companies were to be
considered as carried out by Banco Santander, S.A. for
the merger.
Likewise, the transaction constitutes a merger of those
regulated in article 76.1.c) of Law 27/2014, of November
27, on Corporate Income Tax ("LIS"). Pursuant to Article
89.1 of the LIS, the merger was subject to the tax regime
established in Chapter VII of Title VII and in the second
additional provision of the LIS, as well as in Article 45,
paragraph I.B.10 of the Consolidated Text of the Law on
Transfer Tax and Stamp Duty, approved by Royal
Legislative Decree 1/1993, of September 24. The
information required by Article 86.1 of the Law with
respect to the merger is included in these notes to the
consolidated financial statements (appendix VIII).
The following are the balance sheets of companies
absorbed as of 31 December 2020:
POPULAR SPAIN HOLDING DE INVERSIONES, S.L.U.
Balance as of December 31, 2020
EUR thousands
ASSETS
2020
EQUITY AND
LIABILITIES
2020
NON-CURRENT ASSETS
90,882
EQUITY
500,854
Deferred tax asset
90,882
SHAREHOLDERS
EQUITY
500,854
Capital
100
Share premium
726,127
Reserves
40
Loss for the period
(225,413)
CURRENT ASSETS
410,154
CURRENT LIABILITIES
182
Clients, Group
companies and
Associates
60,095
Commercial creditors
and other accounts
payable
182
Other credits with
public administrations
44
Cash and other
equivalent liquid
assets
350,015
TOTAL ASSETS
501,036
TOTAL EQUITY AND
LIABILITIES
501,036
SANTANDER INVESTMENT I, S.A.U.
Balance as of December 31, 2020
EUR thousands
ASSETS
2020
EQUITY AND
LIABILITIES
2020
NON-CURRENT
ASSETS
1,857,418
EQUITY
217,897
Long term
investments in Group
companies and
Associates
1,857,417
SHAREHOLDERS
EQUITY
217,897
Other long term
financial assets
1
Capital
601
Reserves
228,318
Loss form previous
periods
(11,022)
NON-CURRENT
LIABILITIES
1,640,630
Long term debts to
Group companies and
Associates
1,629,500
Deferred tax liabilities
11,130
CURRENT ASSETS
2,682
CURRENT LIABILITIES
1,573
Long-term
investments in Group
companies and
Associates. Loans to
companies
4
Short term debts to
Group companies and
Associates
1,548
Cash and other
equivalent liquid
assets
2,678
Commercial creditors
and other accounts
payable
25
TOTAL ASSETS
1,860,100
TOTAL EQUITY AND
LIABILITIES
1,860,100
21
ADMINISTRACIÓN DE BANCOS LATINOAMERICANOS SANTANDER,
S.L.
Balance as of December 31, 2020
EUR thousands
ASSETS
2020
EQUITY AND
LIABILITIES
2020
NON-CURRENT ASSETS
2,513,961
EQUITY
2,537,251
Long-term equity
investments in Group
companies and
Associates
569,949
SHAREHOLDERS
EQUITY
2,537,251
Long-term debt
investments in Group
companies and
Associates
1,944,003
Capital
394,685
Other long-term
financial assets
8
Reserves
2,176,029
Long-term debt
investments in  third
parties
1
Negative results
from previous
exercises
(24,034)
Loss of the period
(9,429)
NON-CURRENT
LIABILITIES
22,931
Deferred tax
liabilities
22,931
CURRENT ASSETS
46,671
CURRENT LIABILITIES
450
Commercial debts
receivable  and others
accounts bills
2
Short term debts
19
Short-term debt
investments in Group
companies and
Associates
843
Debts with Group
companies and
Associates in the
short term
408
Cash and cash
equivalents
45,826
Commercial debts
and other accounts
payable
23
TOTAL ASSETS
2,560,632
TOTAL EQUITY AND
LIABILITIES
2,560,632
In accordance with the provisions of the applicable
regulations, because of the accounting record of the
merger by absorption carried out by the Bank in 2021, an
increase of EUR 1,037 million in the Bank's voluntary
reserves in that year was recorded as a result of the
decrease on the participation of the absorbed companies
(see note 29).
ii. Merger by absorption between Banco Santander, S.A.
(absorbing company) and Santander Global Property,
S.L.U., Inmobiliaria Viagracia, S.A.U. and BPE
Financiaciones, S.A.U. (as absorbed companies)
On 30 June 2020, the directors of Banco Santander, S.A.,
the joint administrators of Santander Global Property,
S.L.U. and the respective solidary administrators of
Inmobiliaria Viagracia, S.A.U. and BPE Financiaciones,
S.A.U. approved and signed the joint merger project
between Banco Santander, S.A. (as an absorbing
company) and Santander Global Property, S.L.U.,
Inmobiliaria Viagracia, S.A.U. and BPE Financiaciones,
S.A.U. (as absorbed companies).
Under Articles 49.1 and 51 of Law 3/2009 of 3 April on
Structural Modifications of Commercial Companies
(’LME’), approval of this merger was not required by the
sole partner of the companies acquired, as it was entirely
owned by Banco Santander, nor by the shareholders
meeting of Banco Santander, to not required by its
shareholders in accordance with Article 51 of the LME.
Likewise, the said transaction constitutes a merger of
those regulated in Article 76.1.c) of Law 27/2014, of 27
November, on Corporate Tax (‘LIS’). The information
required in Article 86.1 of the aforementioned Act with
regard to merger is incorporated into this report (Annex
VIII).
Once obtained the mandatory authorization of the
Ministry of Economic Affairs and Digital Transformation
(additional provision twelfth Law 10/2014, of 26 June,
on the management, supervision and solvency of credit
institutions) on December 23, 2020, the corresponding
merger deed was granted and, registered in the
Commercial Register of Cantabria, with effect from
December 23, 2020, the extinction without liquidation of
Santander Global Property, S.L.U., Inmobiliaria Viagracia,
S.A.U. and BPE Financiaciones, S.A.U., respectively, and
the bulk transfer of all of their respective assets to Banco
Santander, S.A., which acquired them by succession
universal and without continuity solution. It should be
noted that the merger, for accounting purposes, was
registered by Banco Santander, S.A. in the financial year
2020.
Since the companies acquired were wholly owned by
Banco Santander, in accordance with Article 49.1 in
conjunction with Article 26 of the LME, Banco Santander
did not increase capital. The merger with effect from 23
December 2020 became effective, all the shares of the
companies absorbed were fully amortized, extinguished
and cancelled.
For the purposes of Spanish legislation, those included in
the annual accounts for the financial year ended 31
December 2019, formulated by the board of directors of
each of the companies participating in the merger, were
considered as merger balance sheets. The merger
balance sheets of Banco Santander, S.A. and BPE
Financiaciones, S.A.U. have been duly verified by their
respective auditors. The merger balance sheets of the
remaining companies absorbed have not been subject to
auditor verification, as they were not required to audit
their accounts.
In accordance with the provisions of the applicable
accounting rules, for accounting purposes, the merger
was fixed on 1 January 2020 as the date from which the
transactions of the companies absorbed were to be
considered to be carried out by Banco Santander, S.A.
22
Furthermore, in accordance with Article 89.1 of the LIS,
the merger was subject to the tax regime laid down in
Title VII, Chapter VII and the second additional provision
of the LIS, as well as Article 45, paragraph I.B.10 of the
Consolidated Text of the Law on Tax on Property
Transfers and Documented Legal Acts, approved by
Royal Legislative Decree 1/1993 of 24 September.
The following are the balance sheets of companies
absorbed as of 31 December 2019:
SANTANDER GLOBAL PROPERTY, S.L.U.
Balance at December 31, 2019
EUR thousands
ASSETS
2019
EQUITY AND LIABILITIES
2019
NON-CURRENT ASSETS
94
EQUITY
252,984
Deferred tax asset
94
SHAREHOLDERS EQUITY
252,984
Capital
211,087
Share premium
36,414
Reserves
10,560
Loss for previous
periods
(5,071)
Loss for the period
(6)
CURRENT ASSETS
252,893
CURRENT LIABILITIES
3
Other credits with
Public Administrations
29
Short term debt
3
Investments in Group
companies and
Associates
2
Cash and cash
equivalent
252,862
TOTAL ASSETS
252,987
TOTAL EQUITY AND
LIABILITIES
252,987
INMOBILIARIA VIAGRACIA, S.A.U.
Balance at December 31, 2019
EUR thousands
ASSETS
2019
EQUITY AND LIABILITIES
2019
NON-CURRENT ASSETS
37,295
EQUITY
92,554
Real Estate Investments
7,666
SHAREHOLDERS EQUITY
90,876
Long term investments
in Group companies and
Associates
26,634
Capital
4,688
Long term financial
investments
2,990
Share premium
10,370
Deferred tax asset
5
Reserves
86,604
Loss for previous
periods
(12,237)
Loss for the period
1,451
ADJUSTMENTS FOR
CHANGES IN VALUE
1,678
Financial instruments
HTC&S
1,678
NON-CURRENT
LIABILITIES
802
Long term debts to
Group companies and
Associates
83
Deferred tax liabilities
719
CURRENT ASSETS
56,513
CURRENT LIABILITIES
452
Cash and cash
equivalent
56,513
Short term debts with
Group companies and
Associates
428
Commercial debts and
other accounts payable
24
TOTAL ASSETS
93,808
TOTAL EQUITY AND
LIABILITIES
93,808
BPE FINANCIACIONES, S.A.U.
Balance at December 31, 2019
EUR thousands
ASSETS
2019
EQUITY AND LIABILITIES
2019
NON-CURRENT ASSETS
EQUITY
880
SHAREHOLDERS
EQUITY
880
Capital
100
Reserves
840
Loss for the period
(60)
CURRENT ASSETS
662,680
CURRENT LIABILITIES
661,800
Short term
investments in Group
companies and
Associates
661,797
Short term debit
500,916
Cash and cash
equivalent
883
Short term debts to
Group companies and
Associates
160,772
Commercial debts and
other accounts payable
11
Accruals expenses
101
TOTAL ASSETS
662,680
TOTAL EQUITY AND
LIABILITIES
662,680
Pursuant to the provisions of the applicable legislation,
as a result of the accounting record of the above-
mentioned merger by absorption by Banco Santander in
the financial year 2020, Banco Santander's voluntary
reserves have been reduced by EUR 1 million due to the
decrease in the financial year participation of the
absorbed companies (see note 29).
j) Events after the reporting period
No significant events occurred from 1 January 2022 to
the date on which these financial statements were
authorized for issue, other than those described in these
annual accounts.
23
2. Accounting policies
The following accounting principles, policies and
measurement criteria have been applied in the
preparation of the financial statements:
a) Foreign currency transactions
The functional currency of Banco Santander is the euro. 
Therefore, all balances and transactions denominated in
currencies other than the euro are deemed to be
denominated in foreign currency.
The balances in the financial statements whose
functional currency is not the euro are translated to
euros as follows:
Assets and liabilities, at the closing rates.
Income and expenses, at the average exchange rates
for the year.
Equity items, at the historical exchange rates.
In general, balances denominated in foreign currencies,
including those branches in countries outside the
Monetary Union, have been converted to euros using the
official average exchange rates of the Spanish spot
currency market ((through the US dollar's quotation on
local markets, for non-monetary currencies. listed on the
Spanish market) at the end of each fiscal year.
The exchange differences arising on the translation of
foreign currency balances to the functional currency are
generally recognised at their net amount under
'Exchange differences, net' in the income statement,
except for exchange differences arising on financial
instruments at fair value through profit or loss, which
are recognised in the income statement without
distinguishing them from other changes in fair value,
and for exchange differences arising on non-monetary
items measured at fair value through equity, which are
recognised under 'Other comprehensive income–Items
that may be reclassified to profit or loss–Exchange
differences' (except for exchange differences on equity
instruments, where the option to irrevocably elect to be
measured at fair value through changes in accumulated
other comprehensive income, which are recognised in
accumulated 'Other Comprehensive Income - Items not
to be reclassified to profit or loss - Changes in fair value
of equity instruments measured at fair value' through
other comprehensive income (see note 25).
b) Investments in group entities, joint ventures and
associates
Group entities are those over which the Bank has the
capacity to exercise control; capacity which is generally
but not exclusively manifested by the direct or indirect
ownership of at least 50% of the voting rights of the
investees or, even if this percentage is lower or zero, if,
as in the case of agreements with their shareholders, the
Bank is granted such control.
Control is understood to be the power to direct the
financial and operating policies, by law, by statute or by
agreement, of an entity in order to obtain benefits from
its activities.
Joint ventures are deemed to be entities that are not
subsidiaries but which are jointly controlled by two or
more unrelated entities. This is evidenced by contractual
arrangements whereby two or more parties have
interests in entities so that decisions about the relevant
activities require the unanimous consent of all the
parties sharing control.
Associated entities are those over which Banco
Santander is in a position to exercise significant
influence, but not control or joint control. It is presumed
that Banco Santander exercises significant influence if it
holds 20% or more of the voting power of the investee.
The shareholdings in group, multi-group and associated
entities are presented on the balance sheet at their
acquisition cost, net of any deterioration that, where
relevant, those shares may have suffered.
Where there is evidence of impairment of these shares,
the amount of such impairment is equivalent to the
difference between their recoverable amount and their
book value. Impairment losses are recorded under the
heading ‘Impairment or reversal of impairment of
investments in joint ventures or associates’ in the profit
and loss account.
Appendices I and II contain significant information on
these companies. In addition, note 13 provides
information on the most significant acquisitions and
disposals in 2021 and 2020.
c) Definitions and classification of financial
instruments
i. Definitions
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity.
An equity instrument is a contract that evidences a
residual interest in the assets of the issuing entity after
deducting all of its liabilities.
A financial derivative is a financial instrument whose
value changes in response to the change in an
observable market variable (such as an interest rate,
foreign exchange rate, financial instrument price, market
index or credit rating), whose initial investment is very
small compared with other financial instruments with a
similar response to changes in market factors, and which
is generally settled at a future date.
24
Hybrid financial instruments are contracts that
simultaneously include a non-derivative host contract
together with a derivative, known as an embedded
derivative, that is not separately transferable and has the
effect that some of the cash flows of the hybrid contract
vary in a way similar to a stand-alone derivative.
Compound financial instruments are contracts that
simultaneously create for their issuer a financial liability
and an own equity instrument (such as convertible
bonds, which entitle their holders to convert them into
equity instruments of the issuer).
The preference shares contingently convertible into
ordinary shares eligible as Additional Tier 1 capital
(CCPSs) -perpetual shares, which may be repurchased by
the issuer in certain circumstances, the interest on which
is discretionary, and would convert into variable number
of newly issued ordinary shares if the capital ratio of the
Bank or its consolidated group falls below a
given percentage (trigger event), as those two terms are
defined in the related issue prospectuses- are recognised
for accounting purposes by the Bank as compound
instruments. The liability component reflects the issuer’s
obligation to deliver a variable number of shares and the
equity component reflects the issuer’s discretion in
relation to the payment of the related coupons. In order
to effect the initial allocation, Banco Santander 
estimates the fair value of the liability as the amount
that would have to be delivered if the trigger event were
to occur immediately and, accordingly, the equity
component, calculated as the residual amount, is zero. In
view of the aforementioned discretionary nature of the
payment of the coupons, they are deducted directly from
equity.
Capital perpetual preference shares (CPPS), with the
possibility of purchase by the issuer in certain
circumstances, whose remuneration is discretionary, and
which will be amortised permanently, totally or partially,
in the event that the Bank or its consolidated group
submits a capital ratio lesser than a certain percentage
(trigger event), as defined in the corresponding
prospectuses, are accounted for by Banco Santander as
equity instruments.
The following transactions are not treated for accounting
purposes as financial instruments:
Investments in associates and joint ventures (see
note 13).
Rights and obligations under employee benefit plans
(see note 23).
Contracts and obligations relating to employee
remuneration based on own equity instruments  (see
note 30).
ii. Classification of financial assets for measurement
purposes
Financial assets are initially classified into the various
categories used for management and measurement
purposes, unless they have to be presented as 'Non-
current assets held for sale' or they relate to 'Cash, cash
balances at central banks and other deposits on
demand', 'Changes in the fair value of hedged items in
portfolio hedges of interest rate risk (asset side)',
'Hedging derivatives and Investments', which are
reported separately.
Classification of financial instruments: the classification
criteria for financial assets depends on the business
model for their management and the characteristics of
their contractual flows.
Banco Santander´s business models refer to the way in
which it manages its financial assets to generate cash
flows. In defining these models, the Bank  takes into
account the following factors:
How key management staff are assessed and
reported on the performance of the business model
and the financial assets held in the business model.
The risks that affect the performance of the business
model (and the financial assets held in the business
model) and, specifically, the way in which these risks
are managed.
How business managers are remunerated.
The frequency and volume of sales in previous years,
as well as expectations of future sales.
The analysis of the characteristics of the contractual
flows of financial assets requires an assessment of the
congruence of these flows with a basic loan agreement.
Banco Santander determines if the contractual cash
flows of its financial assets that are only principal and
interest payments on the outstanding principal amount
at the beginning of the transaction. This analysis takes
into consideration four factors (performance, clauses,
contractually linked products and currencies).
Furthermore, among the most significant judgements
used by Banco Santander in carrying out this analysis,
the following ones are included:
The return on the financial asset, in particular in
cases of periodic interest rate adjustments where the
term of the reference rate does not coincide with the
frequency of the adjustment. In these cases, an
assessment is made to determine whether or not the
contractual cash flows differ significantly from the
flows without this change in the time value of
money, establishing a tolerance level of 2%.
The contractual clauses that may modify the cash
flows of the financial asset, for which the structure
of the cash flows before and after the activation of
such clauses is analysed.
25
Financial assets whose cash flows have different
priority for payment due to a contractual link to
underlying assets (e.g. securitisations) require a
look-through analysis by the Bank so as to review
that both the financial asset and the underlying
assets are only principal and interest payments and
that the exposure to credit risk of the set of
underlying assets belonging to the tranche analysed
is less than or equal to the exposure to credit risk of
the set of underlying assets of the instrument.
Depending on these factors, the asset can be measured
at amortised cost, at fair value with changes in other
comprehensive income, or at fair value with changes
through profit and loss. Bank of Spain Circular 4/2017
also establishes an option to designate an instrument at
fair value with changes in profit or loss, when doing so
eliminates or significantly reduces a measurement or
recognition inconsistency (sometimes referred to as
'accounting asymmetry') that would otherwise arise
from measuring assets or liabilities or recognising gains
and losses on different bases.
Banco Santander uses the following criteria for the
classification of financial debt instruments:
Amortised cost: financial instruments under a
business model whose objective is to collect
principal and interest flows, over which there is no
significant unjustified sales and fair value is not a key
element in the management of these assets and
contractual conditions they give rise to cash flows on
specific dates, which are only payments of principal
and interest on the outstanding principal amount. In
this sense, unjustified sales are considered to be
those other than those related to an increase in the
credit risk of the asset, unanticipated funding needs
(stress case scenarios). Additionally, the
characteristics of its contractual flows represent
substantially a “basic financing agreement”.
Fair value with changes in other comprehensive
income: financial instruments held in a business
model whose objective is to collect principal and
interest cash flows and the sale of these assets,
where fair value is a key factor in their management.
Additionally, the contractual cash flow
characteristics substantially represent a 'basic
financing agreement'.
Fair value with changes in profit or loss: financial
instruments included in a business model whose
objective is not obtained through the above
mentioned models, where fair value is a key factor in
managing of these assets, and financial instruments
whose contractual cash flow characteristics do not
substantially represent a 'basic financing
agreement'. In this section it can be enclosed the
portfolios classified under 'Financial assets held for
trading', 'Non-trading financial assets mandatorily at
fair value through profit or loss' and 'Financial assets
at fair value through profit or loss'. In this regard,
most of the financial assets presented in the
category of 'Financial assets designated at value
reasonable with change in results' are instruments
financial services that, not being part of the portfolio
of negotiation, are contracted jointly with other
financial instruments that are recorded in the
category of 'held for trading', and that by both are
recorded at fair value with changes in results, so your
record in any other category would produce
accounting asymmetries.
Equity instruments will be classified at fair value under
Bank of Spain Circular 4/2017 and subsequent
amendments with changes in profit or loss, unless the
Bank, decides, for non-trading assets, to classify them at
fair value with changes in other comprehensive income
(irrevocably) at initial recognition.
iii. Classification of financial assets for presentation
purposes
Financial assets are classified by nature into the
following items in the consolidated balance sheet:
Cash, cash balances at Central Banks and other
deposits on demand: cash balances and balances
receivable on demand relating to deposits with
central banks and credit institutions.
Loans and advances: includes the debit balances of
all credit and loans granted by the Bank, other than
those represented by securities, as well as finance
lease receivables and other debit balances of a
financial nature in favour of the Bank, such as
cheques drawn on credit institutions, balances
receivable from clearing houses and settlement
agencies for transactions on the stock exchange and
organised markets, bonds given in cash, capital calls,
fees and commissions receivable for financial
guarantees and debit balances arising from
transactions not originating in banking transactions
and services, such as the collection of rentals and
similar items. They are classified, on the basis of the
institutional sector to which the debtor belongs, into:
26
Central banks: credit of any nature, including
deposits and money market transactions received
from the Bank of Spain or other central banks.
Credit institutions: credit of any nature, including
deposits and money market transactions, in the
name of credit institutions.
Customers: includes the remaining credit, including
money market transactions through central
counterparties.
Debt instruments: bonds and other securities that
represent a debt for their issuer, that generate an
interest return, and that are in the form of
certificates or book entries.
Equity instruments: financial instruments issued by
other entities, such as shares, which have the nature
of equity instruments for the issuer, other than
investments in subsidiaries, joint ventures or
associates. Investment fund units are included in this
item.
Derivatives: includes the fair value in favour of the
Bank of derivatives which do not form part of hedge
accounting, including embedded derivatives
separated from hybrid financial instruments.
Changes in the fair value of hedged items in portfolio
hedges of interest rate risk: this item is the balancing
entry for the amounts credited to the income
statement in respect of the measurement of the
portfolios of financial instruments which are
effectively hedged against interest rate risk through
fair value hedging derivatives.
Hedging derivatives: Includes the fair value in favour
of the Bank of derivatives, including embedded
derivatives separated from hybrid financial
instruments, designated as hedging instruments in
hedge accounting.
iv. Classification of financial liabilities for measurement
purposes
Financial liabilities are initially classified into the various
categories used for management and measurement
purposes, unless they have to be presented as 'Liabilities
associated with non-current assets held for sale' or they
relate to 'Hedging derivatives' or changes in the fair
value of hedged items in portfolio hedges of interest rate
risk (liability side), which are reported separately.
In most cases, changes in the fair value of financial
liabilities designated at fair value through profit or loss,
caused by the entity's credit risk, are recognized in other
comprehensive income.
Financial liabilities are included for measurement
purposes in one of the following categories:
Financial liabilities held for trading (at fair value
through profit or loss): this category includes
financial liabilities incurred for the purpose of
generating a profit in the near term from fluctuations
in their prices, financial derivatives not designated as
hedging instruments, and financial liabilities arising
from the outright sale of financial assets acquired
under reverse repurchase agreements (“reverse
repos”) or borrowed (short positions).
Financial liabilities designated at fair value through
profit or loss: financial liabilities are included in this
category when they provide more relevant
information, either because this eliminates or
significantly reduces recognition or measurement
inconsistencies (accounting mismatches) that would
otherwise arise from measuring assets or liabilities
or recognising the gains or losses on them on
different bases, or because a group of financial
liabilities or financial assets and liabilities is
managed and its performance is evaluated on a fair
value basis, in accordance with a documented risk
management or investment strategy, and
information about the group is provided on that basis
to the Bank's key management personnel. Liabilities
may only be included in this category on the date
when they are incurred or originated.
Liabilities may only be included in this portfolio at
the date of issue or origination.
Financial liabilities at amortised cost: financial
liabilities, irrespective of their instrumentation and
maturity, not included in any of the above-
mentioned categories which arise from the ordinary
borrowing activities carried on by financial
institutions.
v. Classification of financial liabilities for presentation
purposes
Financial liabilities are classified by nature into the
following items in the consolidated balance sheet:
Deposits: includes all repayable balances received in
cash by the Bank, other than those instrumented as
marketable securities and those having the
substance of subordinated liabilities (amount of the
loans received, which for credit priority purposes are
after common creditors), except for the debt
instruments. This item also includes cash bonds and
cash consignments received the amount of which
may be invested without restriction. Deposits are
classified on the basis of the creditor’s institutional
sector into:
27
Central banks: deposits of any nature, including
credit received and money market transactions
received from the Bank of Spain or other central
banks.
Credit institutions: deposits of any nature,
including credit received and money market
transactions in the name of credit institutions.
Customer: includes the remaining deposits,
including money market transactions through
central counterparties.
On 6 June 2019, the European Central Bank announced a
new program of targeted longer-term refinancing
operations (TLTRO III); additionally, the conditions of the
initial program were successively modified in the
months of March and April 2020, reducing the interest
rate by 25 bps to -0.5% from June 2020 to June 2021
and providing that, for banks meeting a certain volume
of eligible loans, the interest rate could be -1% for that
period. These conditions were extended on December
10, 2020 for the period from June 2021 to June 2022,
including the option to cancel or reduce the amount of
financing before maturity in windows coinciding with the
interest rate review and adjustment periods.
The accounting standards indicate that for the recording
of amortized cost the entity 'shall use a shorter period
when the fees, basis points paid or received, transaction
costs, premiums or discounts relate to it, this being the
case when the variable to which the fees, basis points
paid or received, transaction costs, and discounts or
premiums relate is adjusted to market rates prior to the
expected maturity of the financial instrument. In this
case, the appropriate amortization period is the period
until the next adjustment date'.
In this case, the applicable interest rate of -1% from June
2020 to June 2021 and from June 2021 to June 2022
corresponds to a specific period after which the funding
is adjusted to market rates (specifically, the average rate
applied in the Eurosystem's main refinancing operations)
and must therefore be accrued until the next adjustment
date. The early repayment windows of this funding
program are substantive terms, given that at that time of
adjustment of the funding cost to market, the entity may
opt for renewal or cancellation and obtain new funding
at more favorable terms.
Banco Santander has opted to accrue interest in
accordance with the specific periods of adjustment to
market rates, so that the interest corresponding to that
period (-1%) will be recorded in the income statement
from June 2020 to June 2022, assuming compliance with
the threshold of eligible loans that gives rise to the extra
rate.
Compliance with the qualifying loan thresholds is
assessed at each reporting date and is based on the
financial budgets approved by the Bank's directors, as
well as on the evolution of macroeconomic variables
(GDP, unemployment rate, inflation, etc.). If, subsequent
to the initial recording of the financial liability, there is a
change in the expectations of meeting this threshold of
eligible loans, the Bank would adjust the carrying
amount of the financial liability to the amount resulting
from discounting the new estimated flows at the original
Effective Interest Rate (EIR), recognizing this difference
in profit or loss, without modifying the original EIR.
At the end of both periods, the Bank has met the
financing objective established in the program, although
the data relating to the second reference period (October
2020 to December 2021), will not be sent until next
May, after validation by the external auditor, as
established in the program conditions.
Marketable debt securities: includes the amount of
bonds and other debt represented by marketable
securities, other than those having the substance of
subordinated liabilities (amount of the loans
received, which for credit priority purposes are after
common creditors, and includes the amount of the
financial instruments issued by the Bank which,
having the legal nature of capital, do not meet the
requirements to qualify as equity, such as certain
preferred shares issued). This item includes the
component that has the consideration of financial
liability of the securities issued that are compound
financial instruments.
Derivatives: includes the fair value, with a negative
balance for Banco Santander, separated from the
host contract, which do not form part of hedge
accounting.
Short positions: includes the amount of financial
liabilities arising from the outright sale of financial
assets acquired under reverse repurchase
agreements or borrowed.
Other financial liabilities: includes the amount of
payment obligations having the nature of financial
liabilities not included in other items (includes,
among others, the balance of lease liabilities that
started to be recorded in 2019 as a result of the
application of Bank of Spain Circular 2/2018 and
liabilities under financial guarantee contracts, unless
they have been classified as non-performing.
Changes in the fair value of hedged items in portfolio
hedges of interest rate risk: this item is the balancing
entry for the amounts charged to the income
statement in respect of the measurement of the
portfolios of financial instruments which are
effectively hedged against interest rate risk through
fair value hedging derivatives.
Hedging derivatives: includes the fair value of the
Bank liability in respect of derivatives, including
embedded derivatives separated from hybrid
financial instruments, designated as hedging
instruments in hedge accounting.
28
d) Measurement of financial assets and liabilities
and recognition of fair value changes
In general, financial assets and liabilities are initially
recognised at fair value which, in the absence of
evidence to the contrary, is deemed to be the transaction
price.
In this regard, Bank of Spain Circular 4/2017 states that
regular way purchases or sales of financial assets shall
be recognised and derecognised on the trade date or on
the settlement date. Banco Santander has opted to make
such recognition on the trading date or settlement date,
depending on the convention of each of the markets in
which the transactions are carried out. For example, in
relation to the purchase or sale of debt securities or
equity instruments traded in the Spanish market,
securities market regulations stipulate their effective
transfer at the time of settlement and, therefore, the
same time has been established for the accounting
record to be made.
The fair value of instruments not measured at fair value
through profit and loss is adjusted by transaction costs.
Subsequently, and on the occasion of each accounting
close, they are valued in accordance with the following
criteria:
i. Measurement of financial assets
Financial assets are measured at fair value are valued
mainly at their fair value without deducting any
transaction cost for their sale.
The fair value of a financial instrument on a given date is
taken to be the price that would be received to sell an
asset or paid to transfer a liability in an orderly
transaction between market participants. The most
objective and common reference for the fair value of a
financial instrument is the price that would be paid for it
on an active, transparent and deep market (quoted price
or market price). At 31 December 2021, there were no
significant investments in quoted financial instruments
that had ceased to be recognised at their quoted price
because their market could not be deemed to be active.
If there is no market price for a given financial
instrument, its fair value is estimated on the basis of the
price established in recent transactions involving similar
instruments and, in the absence thereof, of valuation
techniques commonly used by the international financial
community, taking into account the specific features of
the instrument to be measured and, particularly, the
various types of risk associated with it.
All derivatives are recognised in the balance sheet at fair
value from the trade date. If the fair value is positive,
they are recognised as an asset and if the fair value is
negative, they are recognised as a liability. The fair value
on the trade date is deemed, in the absence of evidence
to the contrary, to be the transaction price. The changes
in the fair value of derivatives from the trade date are
recognised in 'Gains/losses on financial assets and
liabilities held for trading (net)' in the income statement.
Specifically, the fair value of financial derivatives traded
in organised markets included in the portfolios of
financial assets or liabilities held for trading is deemed to
be their daily quoted price and if, for exceptional
reasons, the quoted price cannot be determined on a
given date, these financial derivatives are measured
using methods similar to those used to measure
derivatives.
The fair value of derivatives is taken to be the sum of the
future cash flows arising from the instrument,
discounted to present value at the date of measurement
(present value or theoretical close) using valuation
techniques commonly used by the financial markets: net
present value, option pricing models and other methods.
The amount of debt securities and loans and advances
under a business model whose objective is to collect the
principal and interest flows are valued at their amortised
cost, as long as they comply with the 'SPPI' (Solely
Payments of Principal and Interest) test, using the
effective interest rate method in their determination.
Amortised cost refers to the acquisition cost of a
corrected financial asset or liability (more or less, as the
case may be) for repayments of principal and the part
systematically charged to the income statement of the
difference between the initial cost and the
corresponding reimbursement value at expiration. In the
case of financial assets, the amortised cost includes, in
addition, the corrections to their value due to the
impairment. In the loans and advances covered in fair
value hedging transactions, the changes that occur in
their fair value related to the risk or the risks covered in
these hedging transactions are recorded.
The effective interest rate is the discount rate that
exactly matches the carrying amount of a financial
instrument to all its estimated cash flows of all kinds
over its remaining life. For fixed rate financial
instruments, the effective interest rate coincides with
the contractual interest rate established on the
acquisition date plus, where applicable, the fees and
transaction costs that, because of their nature, form part
of their financial return. In the case of floating rate
financial instruments, the effective interest rate
coincides with the rate of return prevailing in all
connections until the next benchmark interest reset
date.
Equity instruments and contracts related with these
instruments are measured at fair value. However, in
certain circumstances the Bank estimates cost value as a
suitable estimate of the fair value. This can happen if the
recent event available information is not enough to
measure the fair value or if there is a broad range of
possible measures and the cost value represents the
best estimates of fair value within this range.
29
The amounts at which the financial assets are recognised
represent, in all material respects, the Bank maximum
exposure to credit risk at each reporting date. Also,
Banco Santander has received collateral and other credit
enhancements to mitigate its exposure to credit risk,
which consist mainly of mortgage guarantees, cash
collateral, equity instruments and personal security,
assets leased out under finance lease and full-service
lease agreements, assets acquired under repurchase
agreements, securities loans and credit derivatives.
ii. Measurement of financial liabilities
In general, financial liabilities are measured at amortised
cost, as defined above, except for those included under
'Financial liabilities held for trading' and 'Financial
liabilities designated at fair value through profit or loss'
and financial liabilities designated as hedged items (or
hedging instruments) in fair value hedges, which are
measured at fair value. The changes in credit risk arising
from financial liabilities designated at fair value through
profit or loss are recognised in accumulated other
comprehensive income, unless they generate or increase
an accounting mismatch, in which case changes in the
fair value of the financial liability in all respects are
recognised in the income statement.
iii. Valuation techniques
The following table shows a summary of the fair values,
at the end of 2021 and 2020 of financial assets and
liabilities classified on the basis of the various
measurement methods used by the Bank to determine
their fair value:
EUR million
2021
2020
Published
price
quotations in
active
Markets
(Level 1)
Internal Models
(Level 2 and 3)
Total
Published
price
quotations in
active
Markets
(Level 1)
Internal Models
(Level 2 and 3)
Total
Financial assets held for trading
28,995
57,090
86,085
27,514
53,923
81,437
Non-trading financial assets mandatorily at
fair value through profit or loss
454
1,901
2,355
48
2,177
2,225
Financial assets designated at fair value
through profit or loss
13,403
13,403
33,899
33,899
Financial assets at fair value through other
comprehensive income
9,857
5,178
15,035
14,315
8,308
22,623
Hedging derivatives (assets)
1,648
1,648
3,137
3,137
Financial liabilities held for trading
9,404
47,565
56,969
10,562
50,452
61,014
Financial liabilities designated at fair value
through profit or loss
12,743
12,743
16,890
16,890
Hedging derivatives (liabilities)
2,076
2,076
1,780
1,780
30
The financial instruments at fair value determined on the
basis of published price quotations in active markets
(level 1) include government debt securities, private-
sector debt securities, derivatives traded in organised
markets, securitised assets, shares, short positions and
fixed-income securities issued.
In cases where price quotations cannot be observed,
management makes its best estimate of the price that
the market would set, using its own internal models. In
most cases, these internal models use data based on
observable market parameters as significant inputs
(level 2) and, in cases, they use significant inputs not
observable in market data (level 3). In order to make
these estimates, various techniques are employed,
including the extrapolation of observable market data.
The best evidence of the fair value of a financial
instrument on initial recognition is the transaction price,
unless the fair value of the instrument can be obtained
from other market transactions performed with the
same or similar instruments or can be measured by
using a valuation technique in which the variables used
include only observable market data, mainly interest
rates.
Grupo Santander has developed a formal process for the
systematic valuation and management of financial
instruments, which has been implemented worldwide
across all the Group´s  units. The governance scheme for
this process which applies to the Bank, distributes
responsibilities between two independent divisions:
Treasury (development, marketing and daily
management of financial products and market data) and
Risk (on a periodic basis, validation of pricing models and
market data, computation of risk metrics, new
transaction approval policies, management of market
risk and implementation of fair value adjustment
policies).
The approval of new products follows a sequence of
steps (request, development, validation, integration in
corporate systems and quality assurance) before the
product is brought into production. This process ensures
that pricing systems have been properly reviewed and
are stable before they are used.
The following subsections set forth the most important
products and families of derivatives, and the related
valuation techniques and inputs, by asset class:
Fixed income and inflation
The fixed income asset class includes basic instruments
such as interest rate forwards, interest rate swaps and
cross currency swaps, which are valued using the net
present value of the estimated future cash flows
discounted taking into account basis swap and cross
currency spreads determined on the basis of the
payment frequency and currency of each leg of the
derivative. Vanilla options, including caps, floors and
swaptions, are priced using the Black-Scholes model,
which is one of the benchmark industry models. More
exotic derivatives are priced using more complex models
which are generally accepted as standard across
institutions.
These pricing models are fed with observable market
data such as deposit interest rates, futures rates, cross
currency swap and constant maturity swap rates, and
basis spreads, on the basis of which different yield
curves, depending on the payment frequency, and
discounting curves are calculated for each currency. In
the case of options, implied volatilities are also used as
model inputs. These volatilities are observable in the
market for cap and floor options and swaptions, and
interpolation and extrapolation of volatilities from the
quoted ranges are carried out using generally accepted
industry models. The pricing of more exotic derivatives
may require the use of non-observable data or
parameters, such as correlation (among interest rates
and cross-asset), mean reversion rates and prepayment
rates, which are usually defined from historical data or
through calibration.
Inflation-related assets include zero-coupon or year-on-
year inflation-linked bonds and swaps, valued with the
present value method using forward estimation and
discounting. Derivatives on inflation indices are priced
using standard or more complex bespoke models, as
appropriate. Valuation inputs of these models consider
inflation-linked swap spreads observable in the market
and estimations of inflation seasonality, on the basis of
which a forward inflation curve is calculated. Also,
implied volatilities taken from zero-coupon and year-on-
year inflation options are also inputs for the pricing of
more complex derivatives.
Equity and foreign exchange
The most important products in these asset classes are
forward and futures contracts; they also include vanilla,
listed and OTC (Over-The-Counter) derivatives on single
underlying assets and baskets of assets. Vanilla options
are priced using the standard Black-Scholes model and
more exotic derivatives involving forward returns,
average performance, or digital, barrier or callable
features are priced using generally accepted industry
models or bespoke models, as appropriate. For
derivatives on illiquid stocks, hedging takes into account
the liquidity constraints in models.
31
The inputs of equity models consider yield curves, spot
prices, dividends, asset funding costs (repo margin
spreads), implied volatilities, correlation among equity
stocks and indices, and cross-asset correlation. Implied
volatilities are obtained from market quotes of European
and American-style vanilla call and put options. Various
interpolation and extrapolation techniques are used to
obtain continuous volatility for illiquid stocks. Dividends
are usually estimated for the mid and long term.
Correlations are implied, when possible, from market
quotes of correlation-dependent products. In all other
cases, proxies are used for correlations between
benchmark underlyings or correlations are obtained
from historical data.
The inputs of foreign exchange models include the yield
curve for each currency, the spot foreign exchange rate,
the implied volatilities and the correlation among assets
of this class. Volatilities are obtained from European call
and put options which are quoted in markets as of-the-
money, risk reversal or butterfly options. Illiquid
currency pairs are usually handled by using the data of
the liquid pairs from which the illiquid currency can be
derived. For more exotic products, unobservable model
parameters may be estimated by fitting to reference
prices provided by other non-quoted market sources.
Credit
The most common instrument in this asset class is the
credit default swap (CDS), which is used to hedge credit
exposure to third parties. In addition, models for first-to-
default (FTD), n-to-default (NTD) and single-tranche
collateralised debt obligation (CDO) products are also
available. These products are valued with standard
industry models, which estimate the probability of
default of a single issuer (for CDS) or the joint probability
of default of more than one issuer for FTD, NTD and
CDO.
Valuation inputs are the yield curve, the CDS spread
curve and the recovery rate. For indices and important
individual issuers, the CDS spread curve is obtained in
the market. For less liquid issuers, this spread curve is
estimated using proxies or other credit-dependent
instruments. Recovery rates are usually set to standard
values. For listed single-tranche CDO, the correlation of
joint default of several issuers is implied from the
market. For FTD, NTD and bespoke CDO, the correlation
is estimated from proxies or historical data when no
other option is available.
Valuation adjustment for counterparty risk or default risk
The Credit valuation adjustment (CVA) is a valuation
adjustment to over the counter (OTC) derivatives as a
result of the risk associated with the credit exposure
assumed to each counterparty.
The CVA is calculated taking into account potential
exposure to each counterparty in each future period. The
CVA for a specific counterparty is equal to the sum of the
CVA for all the periods. The following inputs are used to
calculate the CVA:
Expected exposure: including for each transaction
the mark-to-market (MtM) value plus an add-on for
the potential future exposure for each period.
Mitigating factors such as collateral and netting
agreements are taken into account, as well as a
temporary impairment factor for derivatives with
interim payments.
Severity: percentage of final loss assumed in a
counterparty credit event/default.
Probability of default: for cases where there is no
market information (the CDS quoted spread curve,
etc.), proxies based on companies holding exchange-
listed CDS, in the same industry and with the same
external rating as the counterparty, are used.
Discount factor curve.
The Debit Valuation Adjustment (DVA) is a valuation
adjustment similar to the CVA but, in this case, it arises
as a result of the Bank’s own risk assumed by its
counterparties in OTC derivatives.
The CVA at 31 December 2021 amounted to EUR 237
million (resulting in a decrease of 41.9% compared to 31
December 2020) and DVA amounted to EUR 162 million
(resulting in a decrease of 30.4% compared to 31
December 2020). These impacts are mainly due to the
continuous improvement in credit markets, the creation
of particular credit curves for certain counterparties and
the introduction of methodological improvements in the
calculation of exposures.
The CVA at 31 December 2020 amounted to EUR
408 million (resulting in an increase of 49.8% compared
to 31 December 2019) and DVA amounted to EUR
233 million (resulting in an increase of 36.0% compared
to 31 December 2019). These impacts were due to the
fact that credit spread levels were at levels above 25%
compared to 2019 due to the covid-19 pandemic.
The CVA at 31 December 2021 amounted to EUR 178
million (resulting in a reduction of 29.36% compared to
31 December 2020) and DVA amounted to EUR 63
million (resulting in a reduction of 8.69% compared to
31 December 2020). The variations are due to the fact
that credit spreads for the most liquid maturities have
been decreased in percentages over 40%.
At the end of December 2020, CVA adjustment of EUR
252 million (an increase of 25.50% compared to 31
December 2019) and DVA adjustment of EUR 69 million
(an increase of 25,45% compared to 31 December 2019)
were recorded. Variations are due to the reduction of
credit spreads by percentages exceeding 25% in more
liquid terms.
32
In addition, the Group amounts the funding fair value
adjustment (FFVA) is calculated by applying future
market funding spreads to the expected future funding
exposure of any uncollateralised component of the OTC
derivative portfolio. This includes the uncollateralised
component of collateralised derivatives in addition to
derivatives that are fully uncollateralised. The expected
future funding exposure is calculated by a simulation
methodology, where available. The FFVA impact is not
material for the consolidated financial statements as of
31 December 2021 and 2020.
Grupo Santander has not carried out significant
reclassifications of financial instruments between levels
other than those disclosed in level 3 movement table
during 2021 continuing the trend observed in  2020. The
main variations over the last few years in the Level 3
volume have been due to purchases/sales of these
instruments. There have been no significant variations in
the market observability conditions, nor relevant
changes in the criteria used for the classification of
instruments within the fair value hierarchy.
In 2021, the amount reclassified to Level 3 by Banco
Santander is EUR 626 million (EUR 523 million in 2020).
They are mainly due to reclassifications to level 3 of loan
positions for which there has been less access to price
contributors and actual market transactions with which
to demonstrate their observability, and to a lesser extent
to certain debt instruments which, based on the Bank's
criteria, do not qualify as observable instruments.
Valuation adjustments due to model risk
The valuation models described above do not involve a
significant level of subjectivity, since they can be
adjusted and recalibrated, where appropriate, through
internal calculation of the fair value and subsequent
comparison with the related actively traded price.
However, valuation adjustments may be necessary when
market quoted prices are not available for comparison
purposes.
The sources of risk are associated with uncertain model
parameters, illiquid underlying issuers, and poor quality
market data or missing risk factors (sometimes the best
available option is to use limited models with
controllable risk). In these situations, the Group and the
Bank calculate and apply valuation adjustments in
accordance with common industry practice. The main
sources of model risk are described below:
In the fixed income markets, the sources of model
risk include bond index correlations, basis spread
modelling, the risk of calibrating model parameters
and the treatment of near-zero or negative interest
rates. Other sources of risk arise from the estimation
of market data, such as volatilities or yield curves,
whether used for estimation or cash flow discounting
purposes.
In the stock markets, the sources of model risk
include forward skew modelling, the impact of
stochastic interest rates, correlation and multi-curve
modelling. Other sources of risk arise from managing
hedges of digital callable and barrier option
payments. Also worthy of consideration as sources of
risk are the estimation of market data such as
dividends and correlation for quanto and composite
basket options.
For specific financial instruments relating to home
mortgage loans secured by financial institutions in
the UK (which are regulated and partially financed by
the Government) and property asset derivatives, the
main input is the Halifax House Price Index (HPI). In
these cases, risk assumptions include estimations of
the future growth and the volatility of the HPI, the
mortality rate and the implied credit spreads.
Inflation markets are exposed to model risk resulting
from uncertainty around modelling the correlation
structure among various Consumer Price Index (CPI)
rates. Another source of risk may arise from the bid-
offer spread of inflation-linked swaps.
The currency markets are exposed to model risk
resulting from forward skew modelling and the
impact of stochastic interest rate and correlation
modelling for multi-asset instruments. Risk may also
arise from market data, due to the existence of
specific illiquid foreign exchange pairs.
The most important source of model risk for credit
derivatives relates to the estimation of the
correlation between the probabilities of default of
different underlying issuers. For illiquid underlying
issuers, the CDS spread may not be well defined.
Set forth below are Grupo Santander´s financial
instruments at fair value whose measurement was
based on internal models (levels 2 and 3) at 31
December 2021 and 2020:
33
EUR million
Fair values calculated
using internal models at
2021*
Level 2
Level 3
Valuation techniques
Main assumptions
ASSETS
121,640
7,667
Financial assets held for trading
76,738
537
Central banks**
3,608
Present value method
Yield curves, FX market prices
Credit institutions**
10,397
Present value method
Yield curves, FX market prices
Customers**
6,829
Present value method
Yield curves, FX market prices
Debt and equity instruments
2,312
24
Present value method
Yield curves, FX market prices
Derivatives
53,592
513
Swaps
43,700
224
Present value method,
Gaussian Copula
Yield curves, FX market prices,
HPI, Basis, Liquidity
Exchange rate options
539
12
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
2,112
182
Black's Model, multifactorial
advanced models interest
rate
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate futures
409
Present value method
Yield curves, FX market prices
Index and securities options
439
41
Black's Model, multifactorial
advanced models interest
rate
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends,  Liquidity
Other
6,393
54
Present value method,
Advanced stochastic volatility
models and other
Yield curves, Volatility surfaces,
FX and EQ market prices,
Dividends, Correlation, HPI,
Credit, Others
Hedging derivatives
4,761
Swaps
4,204
Present value method
Yield curves, FX market prices,
Basis
Interest rate options
9
Black's Model
Yield curves, FX market prices,
Volatility surfaces
Other
548
Present value method,
Advanced stochastic volatility
models and other
Yield curves, Volatility surfaces,
FX market prices, Credit,
Liquidity, Others
Non-trading financial assets
mandatorily at fair value through
profit or loss
1,273
1,865
Equity instruments
415
1,231
Present value method
Market price, Interest rates
curves, Dividends and Others
Debt instruments
589
366
Present value method
Yield curves
Loans and receivables
269
268
Present value method, swap
asset model & CDS
Yield curves and Credit curves
Financial assets designated at fair
value through profit or loss
13,426
418
Credit institutions
3,152
Present value method
Yield curves, FX market prices
Customers***
10,270
18
Present value method
Yield curves, FX market prices,
HPI
Debt instruments
4
400
Present value method
Yield curves, FX market prices
Financial assets at fair value
through other comprehensive
income
25,442
4,847
Equity instruments
74
821
Present value method
Market price, Yield curves,
Dividends and Others
Debt instruments
21,585
146
Present value method
Yield curves, FX market prices
Loans and receivables
3,783
3,880
Present value method
Yield curves, FX market prices
and Credit curves
34
EUR million
Fair values calculated
using internal models at
2021*
Level 2
Level 3
Valuation techniques
Main assumptions
LIABILITIES
103,807
629
Financial liabilities held for trading
68,930
160
Central banks**
1,038
Present value method
Market price, Yield curves,
Dividends and Others
Credit institutions**
6,488
Present value method
Yield curves, FX market prices
Customers
6,141
Present value method
Yield curves, FX market prices
and Credit curves
Derivatives
53,234
160
Swaps
42,438
44
Present value method, Gaussian
Copula
Yield curves, FX market prices,
Basis, Liquidity, HPI
Exchange rate options
658
7
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Index and securities options
446
67
Black-Scholes Model
Yield curves, FX market prices
Interest rate options
2,720
26
Black's Model, multifactorial
advanced models interest rate
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Futures on interest rate and
variable income
184
Present value method
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Correlation, Liquidity,
HPI
Other
6,788
16
Present value method, Advanced
stochastic volatility models
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Correlation, Liquidity,
HPI, Credit, Others
Short positions
2,029
Present value method
Yield curves ,FX & EQ market
prices, Equity
Hedging derivatives
5,463
Swaps
4,149
Present value method
Yield curves ,FX & EQ market
prices, Basis
Other
1,314
Present value method, Advanced
stochastic volatility models and
other
Yield curves , Volatility surfaces,
FX market prices, Credit,
Liquidity, Other
Financial liabilities designated at
fair value through profit or loss
28,644
469
Present value method
Yield curves, FX market prices
Liabilities under insurance contracts
770
Present Value Method with
actuarial techniques
Mortality tables and interest rate
curves
*Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market data.
**Includes mainly short-term loans and reverse repurchase agreements with corporate customers (mainly brokerage and investment companies).
***    Includes, mainly, structured loans to corporate clients.
35
EUR million
Fair values calculated
using internal models at
2020*
Level 2
Level 3
Valuation techniques
ASSETS
146,468
8,543
Financial assets held for trading
67,826
740
Credit institutions
3
Present Value method
Customers**
296
Present Value method
Debt and equity instruments
1,453
10
Present Value method
Derivatives
66,074
730
Swaps
54,488
272
Present Value method, Gaussian Copula
Exchange rate options
696
22
Black-Scholes Model
Interest rate options
3,129
241
Black's Model, advanced multifactor interest rate
models
Interest rate futures
1,069
Present Value method
Index and securities options
554
94
Black's Model, advanced multifactor interest rate
models
Other
6,138
101
Present Value method, Advanced stochastic volatility
models and other
Hedging derivatives
8,325
Swaps
6,998
Present Value method
Interest rate options
25
Black’s Model
Other
1,302
Present Value method, Advanced stochastic volatility
models and other
Non-trading financial assets mandatorily at fair
value through profit or loss
1,796
934
Equity instruments
984
505
Present Value method
Debt securities issued
555
134
Present Value method
Loans and receivables
257
295
Present Value method, swap asset model & CDS
Financial assets designated at fair value through
profit or loss
45,559
649
Central banks
9,481
Present Value method
Credit institutions
11,973
163
Present Value method
Customers
24,102
19
Present Value method
Debt instruments
3
467
Present Value method
Financial assets  at fair value through other
comprehensive  income
22,962
6,220
Equity instruments
75
1,223
Present Value method
Debt instruments
18,410
206
Present Value method
Loans and receivables
4,477
4,791
Present Value method
36
EUR million
Fair values calculated
using internal models at
2020*
Level 2
Level 3
Valuation techniques
LIABILITIES
124,098
905
Financial liabilities held for trading
71,009
295
Derivatives
63,920
295
Swaps
51,584
81
Present Value method, Gaussian Copula
Interest rate options
4,226
49
Black's Model, advanced multifactor interest rate
models
Exchange rate options
724
1
Black-Scholes Model
Index and securities options
456
97
Black-Scholes Model
Interest rate and equity futures
1,054
2
Present Value method
Other
5,876
65
Present Value method, Advanced stochastic volatility
models and other
Short positions
7,089
Present Value method
Hedging derivatives
6,869
Swaps
5,821
Present Value method
Interest rate options
13
Black’s Model
Other
1,035
Present Value method, Advanced stochastic volatility
models and other
Financial liabilities designated at fair value through
profit or loss
45,310
610
Present Value method
Liabilities under insurance contracts
910
Present Value method with actuarial techniques
*Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market data.
**Includes mainly short-term loans and reverse repurchase agreements with corporate customers (mainly brokerage and investment companies).
37
The same information from the previous table, but referred to Banco Santander, S.A., is presented below:
EUR million
Fair values calculated using
internal models at
2021*
Level 2
Level 3
Valuation techniques
Main assumptions
ASSETS
74,210
5,010
Financial assets held for trading
56,612
478
Central banks **
1,118
Present value method
Yield curves, FX market prices
Credit institutions**
6,980
Present value method
Yield curves, FX market prices
Customers**
7,025
Present value method
Yield curves, FX market prices
Debt and equity instruments
120
Present value method
Yield curves, FX market prices
Derivatives
41,369
478
Swaps
33,316
281
Present value method, Gaussian
Copula
Yield curves, FX market prices,
HPI, Basis, Liquidity
Exchange rate options
5,554
9
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
2,186
183
Black's Model, multifactorial
advanced models interest rate
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate futures
10
Present value method
Yield curves, FX market prices
Index and securities options
210
5
Black's Model, multifactorial
advanced models interest rate
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends,  Liquidity
Other
93
Present value method, Advanced
stochastic volatility models and
other
Yield curves, Volatility surfaces,
FX and EQ market prices,
Dividends, Correlation, HPI,
Credit, Others
Hedging derivatives
1,648
Swaps
1,447
Present value method
Yield curves, FX market prices,
Basis
Exchange rate options
195
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
6
Black's Model
Yield curves, FX market prices,
Volatility surfaces
Non-trading financial assets
mandatorily at fair value through
profit or loss
1,360
541
Equity instruments
87
369
Present value method
Market price, Interest rates
curves, Dividends and Others
Debt instruments
585
148
Present value method
Yield curves
Loans and receivables
688
24
Present value method, swap
asset model & CDS
Yield curves and Credit curves
Financial assets designated at fair
value through profit or loss
13,403
Credit institutions
3,445
Present value method
Yield curves, FX market prices
Customers***
9,958
Present value method
Yield curves, FX market prices,
HPI
Financial assets at fair value
through other comprehensive
income
1,187
3,991
Equity instruments
753
Present value method
Market price, Yield curves,
Dividends and Others
Debt instruments
489
Present value method
Yield curves, FX market prices
Loans and receivables
698
3,238
Present value method
Yield curves, FX market prices
and Credit curves
38
EUR million
Fair values calculated using
internal models at
2021*
Level 2
Level 3
Valuation techniques
Main assumptions
LIABILITIES
62,058
326
Financial liabilities held for trading
47,382
183
Central banks**
44
Present value method
Market price, Yield curves,
Dividends and Others
Credit institutions**
5,718
Present value method
Yield curves, FX market prices
Customers
1,291
Present value method
Yield curves, FX market prices
and Credit curves
Derivatives
40,329
183
Swaps
31,529
114
Present value method, Gaussian
Copula
Yield curves, FX market prices,
Basis, Liquidity, HPI
Exchange rate options
5,368
7
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Index and securities options
2,686
33
Black-Scholes Model
Yield curves, FX market prices
Interest rate options
10
18
Black's Model, multifactorial
advanced models interest rate
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Futures on interest rate and
variable income
494
Present value method
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Correlation, Liquidity,
HPI
Other
242
11
Present value method, Advanced
stochastic volatility models
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Correlation, Liquidity,
HPI, Credit, Others
Hedging derivatives
2,076
Swaps
1,244
Present value method
Yield curves ,FX & EQ market
prices, Basis
Exchange rate options
608
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
1
Black's Model
Yield curves , Volatility surfaces,
FX market prices, Liquidity
Other
223
Present value method, Advanced
stochastic volatility models and
other
Yield curves , Volatility surfaces,
FX market prices, Credit,
Liquidity, Other
Financial liabilities designated at
fair value through profit or loss
12,600
143
Central banks
607
Present value method
Yield curves, FX market prices
Credit institutions
1,067
Present value method
Yield curves, FX market prices
Customers
10,926
143
Present value method
Yield curves, FX market prices
Liabilities under insurance contracts
Present Value Method with
actuarial techniques
Mortality tables and interest rate
curves
*Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market data.
**Includes mainly short-term loans and reverse repurchase agreements with corporate customers (mainly brokerage and investment companies).
***    Includes, mainly, structured loans to corporate clients.
39
EUR million
Fair values calculated using
internal models at
2020*
Level 2
Level 3
Valuation techniques
Main assumptions
ASSETS
94,940
6,504
Financial assets held for trading
53,331
592
Credit institutions
Present value method
Yield curves, FX market prices
Customers **
74
Present value method
Yield curves, FX market prices
Debt and equity instruments
781
Present value method
Yield curves, FX market prices
Derivatives
52,476
592
Swaps
44,123
326
Present value method, Gaussian
Copula
Yield curves, FX market prices,
HPI, Basis, Liquidity
Exchange rate options
5,692
19
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
1,708
241
Black’s Model, multifactorial
advanced models interest rate
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate futures
56
Present value method
Yield curves, FX market prices
Index and securities options
820
6
Black’s Model, multifactorial
advanced models interest rate
and others
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Liquidity
Other
77
Present value method, Advanced
stochastic volatility models and
other
Yield curves, Volatility surfaces,
FX and EQ market prices,
Dividends, Correlation, HPI,
Credit, Others
Hedging derivatives
3,137
Swaps
2,429
Present value method
Yield curves, FX market prices,
Basis
Exchange rate options
688
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
20
Black´s Model
Yield curves, FX market prices,
Volatility surfaces
Other
Present value method, Advanced
stochastic volatility models and
other
Yield curves, Volatility surfaces,
FX marketprices, Credit, Liquidity,
Others
Non-trading financial assets
mandatorily at fair value through
profit or loss
1,835
342
Equity instruments
82
185
Present value method
Market price, Interest rates
curves, Dividends and Others
Debt instruments
530
131
Present value method
Yield curves
Loans and receivables
1,223
26
Present value method, swap
asset model & CDS
Yield curves and Credit curves
Financial assets designated at fair
value through profit or loss
33,736
163
Central banks
482
Present value method
Yield curves, FX market prices
Credit institutions
9,725
163
Present value method
Yield curves, FX market prices
Customers
23,529
Present value method
Yield curves, FX market prices,
HPI
Debt instruments
Present value method
Yield curves, FX market prices
Financial assets at fair value
through other comprehensive
income
2,901
5,407
Equity instruments
1,002
Present value method
Market price, Yield curves,
Dividends and Others
Debt instruments
1,771
Present value method
Yield curves, FX market prices
Loans and receivables
1,130
4,405
Present value method
Yield curves, FX market prices
and Credit curves
40
EUR million
Fair values calculated using
internal models at
2020*
Level 2
Level 3
Valuation techniques
Main assumptions
LIABILITIES
68,640
482
Financial liabilities held for trading
50,258
194
Derivatives
50,258
194
Swaps
40,047
127
Present value method, Gaussian
Copula
Yield curves, FX market prices,
Basis, Liquidity, HPI
Exchange rate options
5,224
1
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
3,825
50
Black's Model, multifactorial
advanced models interest rate
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Index and securities options
45
14
Black-Scholes Model
Yield curves, FX market prices,
Volatility surfaces, Liquidity
Interest rate and equity futures
424
Present value method
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Correlation, Liquidity,
HPI
Other
693
2
Present value method, Advanced
stochastic volatility models
Yield curves, Volatility surfaces,
FX & EQ market prices,
Dividends, Correlation, Liquidity,
HPI, Credit, Others
Short positions
Present value method
Yield curves ,FX & EQ market
prices, Equity
Hedging derivatives
1,780
Swaps
1,051
Present value method
Yield curves ,FX & EQ market
prices, Basis
Exchange rate options
386
Black-Scholes Model
Yield curves, Volatility surfaces,
FX market prices, Liquidity
Interest rate options
81
Black's Model
Yield curves , Volatility surfaces,
FX market prices, Liquidity
Other
262
Present value method, Advanced
stochastic volatility models and
other
Yield curves , Volatility surfaces,
FX market prices, Credit,
Liquidity, Other
Financial liabilities designated at
fair value through profit or loss
16,602
288
Central banks
1,470
Present value method
Yield curves, FX market prices
Credit institutions
4,496
Present value method
Yield curves, FX market prices
Customers
10,636
288
Present value method
Yield curves, FX market prices
Liabilities under insurance contracts
Present Value Method with
actuarial techniques
Mortality tables and interest rate
curves
*Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market data.
**Includes mainly short-term loans and reverse repurchase agreements with corporate customers (mainly brokerage and investment companies).
41
Financial Instruments (level 3)
Set forth below are the Group and the Bank´s main
financial instruments measured using unobservable
market data as significant inputs of the internal models
(level 3):
HTC&S (Hold to collect and sale) syndicated loans
classified in the fair value category with changes in
other comprehensive income, where the cost of
liquidity is not directly observable in the market, as
well as the prepayment option in favour of the
borrower.
Illiquid equity in non-trading portfolios, classified at
fair value through profit or loss and at fair value
through equity.
Instruments in Santander UK’s portfolio (loans, debt
instruments and derivatives) linked to the House
Price Index (HPI). Even if the valuation techniques
used for these instruments may be the same as
those used to value similar products (present value
in the case of loans and debt instruments, and the
Black-Scholes model for derivatives), the main
factors used in the valuation of these instruments
are the HPI spot rate, the growth and volatility
thereof, and the mortality rates, which are not
always observable in the market and, accordingly,
these instruments are considered illiquid.
Callable interest rate derivatives (Bermudan-style
options) where the main unobservable input is mean
reversion of interest rates.
Trading derivatives on interest rates, taking as an
underlying asset titling and with the amortization
rate (CPR, Conditional prepayment rate) as
unobservable main entry.
Derivatives from trading on inflation in Spain, where
volatility is not observable in the market.
Equity volatility derivatives, specifically indices and
equities, where volatility is not observable in the
long term.
Derivatives on long-term interest rate and FX in
some units (mainly South America)where for certain
underlyings it is not possible to demonstrate
observability to these terms.
Debt instruments referenced to certain illiquid
interest rates, for which there is no reasonable
market observability.
The measurements obtained using the internal models
might have been different if other methods or
assumptions had been used with respect to interest rate
risk, to credit risk, market risk and foreign currency risk
spreads, or to their related correlations and volatilities.
Nevertheless, the Bank’s directors consider that the fair
value of the financial assets and liabilities recognised in
the balance sheet and the gains and losses arising from
these financial instruments are reasonable.
The net amount recorded in the 2021 financial year
results of the Bank derived from valuation models
whose significant inputs are non-observable market data
(level 3) amounts to EUR 19 million profit for the Bank
(EUR 186 million profit in 2020).
The table below shows the effect, at 31 December 2021
and 2020 on the fair value of the main financial
instruments classified as level 3 of a reasonable change
in the assumptions used in the valuation. This effect was
determined by applying the probable valuation ranges of
the main unobservable inputs detailed in the following
table:
42
Financial assets held for trading
Derivatives
Cap&Floor
Volatility option model
Volatility
10% - 90%
36.30%
(0.50)
0.43
CCS
Discounted Cash Flows
Interest rate
(0.7)% - 0.7%
0.73%
(0.11)
0.11
CCS
Forward estimation
Interest rate
4bps - (4)bps
(0.09)%
(0.03)
0.03
Convertibility curve - inputs:
NDFs Offshore
Forward estimation
Price
0% - 2%
0.61%
(0.65)
0.28
EQ Options
EQ option pricing model
Volatility
0% - 90%
61.20%
(0.24)
0.52
EQ Options
Local volatility
Volatility
10% - 90%
40.00%
(6.82)
6.82
FRAs
Asset Swap model
Interest rate
0% - 4%
1.78%
(0.91)
0.73
FX Options
FX option pricing model
Volatility
0% - 50%
32.14%
(0.28)
0.50
Inflation Derivatives
Asset Swap model
Inflation Swap Rate
(50)% - 50%
50.00%
(0.56)
0.28
Inflation Derivatives
Volatility option model
Volatility
0% - 40%
13.29%
(0.47)
0.24
IR Futures
Asset Swap model
Interest rate
0% - 15%
5.91%
(1.09)
0.71
IR Options
IR option pricing model
Volatility
0% - 60%
36.28%
(0.20)
0.31
IRS
Asset Swap model
Interest rate
(6)% - 12.80%
10.36%
(0.07)
0.13
IRS
Discounted Cash Flows
Credit spread
103.10bps - 375.6bps
71.91%
(7.21)
4.16
IRS
Discounted Cash Flows
Inflation Swap Rate
(0.8)% - 6.5%
1.81%
(0.04)
0.01
IRS
Discounted Cash Flows
Swap Rate
7.7% - 8.2%
(2.87)%
(0.23)
0.10
IRS
Forward estimation
Interest rate
TIIE91 (8.98)bps  - TIIE91
+11.12bps
n.a.
(0.27)
0.17
IRS
Forward estimation
Prepayment rate
6% - 12%
n.a.
IRS
Others
Others
0.05%
n.a.
(1.49)
IRS
Prepayment modelling
Prepayment rate
2.5% - 6.2%
0.44%
(0.09)
0.05
Property derivatives
Option pricing model
Growth rate
0% - 5%
2.50%
(2.62)
2.62
Swaptions
IR option pricing model
Volatility
0% - 40%
26.67%
(0.13)
0.27
Debt securities
Corporate debt
Price based
Market price
85% - 115%
15.00%
Financial assets designated at fair
value through profit or loss
Loans and advances to customers
Loans
Discounted Cash Flows
Credit spreads
0.1% - 1.4%
0.66%
(0.26)
0.26
Mortgage portfolio
Black Scholes model
Growth rate
0%- 5%
2.50%
(1.90)
1.90
Debt securities
Corporate debt
Discounted Cash Flows
Credit spread
0% - 20%
9.88%
(1.23)
1.20
Government debt
Discounted Cash Flows
Discount curve
0% - 10%
8.33%
(4.14)
20.69
Other debt securities
Others
Inflation Swap Rate
0% - 10%
4.74%
(5.47)
4.92
2021
Portfolio/Instrument
Valuation technique
Main unobservable inputs
Range
Weighted average
Impacts (EUR million)
(Level 3)
Unfavourable
scenario
Favourable
scenario
43
Non-trading financial assets
mandatorily at fair value through
profit or loss
Debt securities
Corporate debt
Discounted Cash Flows
Margin of a reference portfolio
(1)bp - 1bp
1.00%
(0.56)
0.60
Property securities
Probability weighting
Growth rate
0% - 5%
2.50%
(1.19)
1.19
Equity instruments
Equities
Price Based
Price
90% - 110%
10.00%
(123.10)
123.10
Financial assets at fair value
through other comprehensive
income
Loans and advances to customers
Loans
Discounted Cash Flows
Credit spread
n.a.
n.a.
(19.84)
Loans
Discounted Cash Flows
Interest rate curve
(0.1)% - 0.1%
0.12%
(0.07)
0.07
Loans
Discounted Cash Flows
Margin of a reference portfolio
(1)bp - 1bp
1.00%
(13.12)
13.04
Loans
Forward estimation
Credit spread
77bps - 242bps
n.a.
Debt securities
Government debt
Discounted Cash Flows
Interest rate
0.6% - 0.8%
0.09%
(0.01)
0.01
Equity instruments
Equities
Price Based
Price
90% - 110%
10.00%
(82.13)
82.13
Financial liabilities held for
trading
Derivatives
Cap&Floor
Volatility option model
Volatility
10% - 90%
36.30%
(0.50)
0.43
Financial liabilities designated at
fair value through profit or loss
Loans and advances to customers
Repos/Reverse repos
Asset Swap Repo Model
Long-term repo spread
n.a
n.a.
(0.36)
2021
Portfolio/Instrument
Valuation technique
Main unobservable inputs
Range
Weighted average
Impacts (EUR million)
(Level 3)
Unfavourable
scenario
Favourable
scenario
44
Financial assets held for trading
Derivatives
Cap&Floor
Volatility option model
Volatility
10% - 90%
31.55%
(0.07)
0.05
CCS
Discounted Cash Flows
Interest rate
(0.30)% - 0.66%
0.66%
0.20
Convertibility curve - NDFs
Offshore
Forward estimation
Price
0% - 2%
0.61%
(0.72)
0.31
EQ Options
EQ option pricing model
Volatility
7.86% - 93.67%
48.37%
(1.46)
1.81
FRAs
Asset Swap model
Interest rate
0% - 5%
2.22%
(0.78)
0.63
FX Forward
Discounted Cash Flows
Swap Rate
(0.02)% - (0.30)%
0.11%
FX Options
FX option pricing model
Volatility
0% - 50%
32.14%
(0.39)
0.70
Inflation Derivatives
Asset Swap model
Inflation Swap Rate
(100)% - 50%
83.33%
(0.63)
0.31
Inflation Derivatives
Volatility option model
Volatility
0% - 50%
16.67%
(0.47)
0.23
IR Futures
Asset Swap model
Interest rate
0% - 15%
0.94%
(0.94)
0.06
IR Options
IR option pricing model
Volatility
0% - 100%
19.05%
(0.27)
0.06
IRS
Asset Swap model
Interest rate
(6)% - 12.50%
10%
(0.08)
0.13
IRS
Discounted Cash Flows
Swap Rate
5.90% - 6.31%
2.26%
(0.01)
0.02
IRS
Discounted Cash Flows
Credit spread
78.97 bps - 202.37 bps
9.82 bps
(2.81)
1.29
IRS
Prepayment modelling
Prepayment rate
2.47% - 6.22%
0.06%
(0.12)
0.05
Property derivatives
Option pricing model
HPI Forward growth rate and HPI
Spot rate
0% - 5%
2.50%
(17.82)
17.82
Swaptions
IR option pricing model
Volatility
0% - 50%
33.33%
(0.16)
0.31
Financial assets designated at fair
value through profit or loss
Loans and advances to customers
Repos / Reverse repos
Asset Swap Repo Model
Long-term repo spread
n/a
n/a
(0.18)
0.23
Mortgage portfolio
Black Scholes model
HPI Forward growth rate
0% - 5%
2.50%
(2.23)
2.23
Other loans
Present value method
Credit spreads
0.07% - 1.55%
0.74%
(0.35)
0.35
Debt securities
Government debt
Discounted Cash Flows
Interest rate
0% - 10%
8.33%
(0.78)
3.91
Other debt securities
Price based
Market Price
90% - 110%
10%
(0.15)
0.15
Property securities
Probability weighting
HPI Forward growth rate and HPI
Spot rate
0% - 5%
2.50%
(7.24)
7.24
Non-trading financial assets
mandatorily at fair value through
profit or loss
Equity instruments
Equities
Price Based
Price
90% - 110%
10.00%
(50.47)
50.47
2020
Portfolio/
Instrument
Valuation technique
Main unobservable inputs
Range
Weighted
average
Impacts (EUR million)
(Level 3)
Unfavourable
scenario
Favourable
scenario
45
Financial assets at fair value
through other comprehensive
income
Loans and advances to customers
Loans
Discounted Cash Flows
Credit spread
n/a
n/a
(6.72)
Loans
Discounted Cash Flows
Interest rate curve
(0.15)% - 0.15%
0.15%
(0.09)
0.09
Other loans
Present value method
Credit spreads
0.15% - 0.53%
0.19%
(0.04)
0.04
Debt securities
Government debt
Discounted Cash Flows
Interest rate
1.1% - 1.3%
0.10%
Equity instruments
Equities
Price Based
Price
90% - 110%
10%
(122.14)
122.14
Financial liabilities held for
trading
Derivatives
Cap&Floor
Volatility option model
Volatility
10% - 90%
34.61%
(0.02)
0.01
EQ Options
Option pricing model
HPI Forward growth rate and HPI
Spot rate
0% - 5%
2.50%
(6.35)
6.35
2020
Portfolio/
Instrument
Valuation technique
Main unobservable inputs
Range
Weighted
average
Impacts (EUR million)
(Level 3)
Unfavourable
scenario
Favourable
scenario
46
Lastly, the changes in the financial instruments classified as Level 3, at Grupo Santander, in 2021 and 2020:
01/01/2021
Changes
31/12/2021
EUR million
Fair value
calculated using
internal models
(Level 3)
Purchases/
Issuances
Sales/
Settlements
Changes in
fair value
recognised
in profit or
loss
Changes in
fair value
recognised
in equity
Level
reclassifications
Other
Fair value
calculated
using
internal
models
(level 3)
Financial assets held for trading
740
136
(124)
(181)
(15)
(19)
537
Debt instruments
7
20
(2)
(2)
(1)
22
Equity instruments
3
(1)
2
Trading derivatives
730
116
(121)
(179)
(15)
(18)
513
Swaps
272
5
(33)
(35)
33
(18)
224
Exchange rate options
22
14
(27)
3
12
Interest rate options
241
7
(39)
(27)
182
Index and securities options
94
18
(12)
(51)
(8)
41
Other
101
72
(10)
(69)
(40)
54
Financial assets at fair value through profit or loss
649
59
(120)
(11)
(163)
4
418
Credit entities
163
(163)
Loans and advances to customers
19
(2)
1
18
Debt instruments
467
59
(118)
(11)
3
400
Non-trading financial assets mandatorily at fair value through profit
or loss
934
534
(251)
127
485
36
1,865
Customers
295
122
(149)
(3)
3
268
Debt instruments
134
206
(28)
28
17
9
366
Equity instruments
505
206
(74)
99
471
24
1,231
Financial assets at fair value through other comprehensive income
6,220
5,681
(6,588)
(228)
(241)
3
4,847
Loans and advances
4,791
5,597
(6,298)
(37)
(173)
3,880
Debt instruments
206
75
(25)
(43)
(68)
1
146
Equity instruments
1,223
9
(265)
(148)
2
821
TOTAL ASSETS
8,543
6,410
(7,083)
(65)
(228)
66
24
7,667
Financial liabilities held for trading
295
85
(42)
(138)
(21)
(19)
160
Trading derivatives
295
85
(42)
(138)
(21)
(19)
160
Swaps
81
4
(10)
(36)
3
2
44
Exchange rate options
1
2
4
7
Interest rate options
49
26
(19)
(8)
(22)
26
Index and securities options
97
23
(5)
(27)
(22)
1
67
Securities and interest rate futures
2
(2)
Others
65
30
(6)
(71)
(2)
16
Financial liabilities designated at fair value through profit or loss
610
143
(289)
5
469
TOTAL LIABILITIES
905
228
(42)
(138)
(310)
(14)
629
47
01/01/2020
Changes
31/12/2020
EUR million
Fair value
calculated
using
internal
models
(level 3)
Purchases
/Issuances
Sales/
Settlements
Changes in
fair value
recognized
in profit or
loss
Changes in
fair value
recognized
in equity
Level
reclassifications
Other
Fair value
calculated
using
internal
models
(level 3)
Financial assets held for trading
598
52
(98)
330
(45)
(97)
740
Debt instruments
65
7
(27)
1
(39)
7
Equity instruments
3
3
Trading derivatives
533
42
(71)
329
(45)
(58)
730
Swaps
182
(8)
116
(8)
(10)
272
Exchange rate options
8
15
(1)
22
Interest rate options
177
15
(12)
61
241
Index and securities options
95
25
(43)
85
(38)
(30)
94
Other
71
2
(8)
52
1
(17)
101
Financial assets at fair value through profit or loss
664
280
(45)
17
(91)
(176)
649
Credit entities
50
164
(1)
(50)
163
Loans and advances to customers
32
(15)
3
(1)
19
Debt instruments
582
116
(30)
15
(41)
(175)
467
Non-trading financial assets mandatorily at fair value through profit
or loss
1,601
120
(292)
(36)
(119)
(340)
934
Loans and advances to customers
376
104
(136)
12
(30)
(31)
295
Debt instruments
675
(144)
(63)
2
(336)
134
Equity instruments
550
16
(12)
15
(91)
27
505
Financial assets at fair value through other comprehensive income
3,788
8,795
(7,616)
(390)
571
1,072
6,220
TOTAL ASSETS
6,651
9,247
(8,051)
311
(390)
316
459
8,543
Financial liabilities held for trading
290
40
(14)
130
(96)
(55)
295
Trading derivatives
290
40
(14)
130
(96)
(55)
295
Swaps
115
8
(7)
(26)
(9)
81
Exchange rate options
1
2
(2)
1
Interest rate options
34
11
(2)
6
49
Index and securities options
88
21
(8)
95
(70)
(29)
97
Securities and interest rate futures
2
2
Others
50
(4)
34
(15)
65
Financial liabilities designated at fair value through profit or loss
784
4
(3)
(12)
(32)
(131)
610
TOTAL LIABILITIES
1,074
44
(17)
118
(128)
(186)
905
48
The same information on the movement of financial instruments classified in Level 3, but referred to Banco Santander, S.A., in 2021 and 2020, is presented below:
01/01/2021
Changes
31/12/2021
EUR million
Fair value
calculated using
internal models
(Level 3)
Purchases/
Issuances
Sales/
Settlements
Changes in
fair value
recognised
in profit or
loss
Changes in
fair value
recognised
in equity
Level
reclassifications
Other
Fair value
calculated
using
internal
models
(level 3)
Financial assets held for trading
592
27
(86)
(65)
30
(20)
478
Debt instruments and equity instrument
2
(2)
Trading derivatives
592
25
(86)
(65)
30
(18)
478
Swaps
326
6
(21)
(45)
33
(18)
281
Exchange rate options
19
13
(27)
4
9
Interest rate options
241
6
(38)
(26)
183
Index and securities options
6
2
(3)
5
Other
Hedging derivatives (Assets)
Swaps
Financial assets at fair value through profit or loss
163
(163)
Credit entities
163
(163)
Loans and advances to customers
Debt instruments
Non-trading financial assets mandatorily at fair value through profit or loss
342
208
(17)
2
5
1
541
Customers
26
4
(4)
(2)
24
Debt instruments
131
18
(6)
5
148
Equity instruments
185
186
(7)
4
1
369
Financial assets at fair value through other comprehensive income
5,407
5,046
(5,959)
(263)
(240)
3,991
Loans and advances
4,405
4,972
(5,951)
(14)
(174)
3,238
Debt instruments
74
(8)
(66)
Equity instruments
1,002
(249)
753
TOTAL ASSETS
6,504
5,281
(6,062)
(63)
(263)
(368)
(19)
5,010
Financial liabilities held for trading
195
55
(39)
(35)
29
(22)
183
Trading derivatives
195
55
(39)
(35)
29
(22)
183
Swaps
128
6
(8)
(45)
33
114
Exchange rate options
1
2
4
7
Interest rate options
50
26
(19)
(2)
(22)
33
Index and securities options
14
(9)
17
(4)
18
Securities and interest rate futures
Others
2
21
(3)
(9)
11
Hedging derivatives (Liabilities)
Swaps
Financial liabilities designated at fair value through profit or loss
289
143
(289)
143
TOTAL LIABILITIES
484
198
(39)
(35)
(260)
(22)
326
49
01/01/2020
Changes
31/12/2020
EUR million
Fair value
calculated
using
internal
models
(level 3)
Purchases
/Issuances
Sales/
Settlements
Changes in
fair value
recognized
in profit or
loss
Changes in
fair value
recognized
in equity
Level
reclassifications
Other
Fair value
calculated
using
internal
models
(level 3)
Financial assets held for trading
449
21
(33)
200
11
(56)
592
Debt instruments and equity instrument
36
7
(11)
(32)
Trading derivatives
413
14
(22)
200
11
(24)
592
Swaps
209
(10)
123
8
(4)
326
Exchange rate options
5
15
(1)
19
Interest rate options
197
14
(12)
61
(19)
241
Index and securities options
2
1
3
6
Other
Hedging derivatives (Assets)
4
(4)
Swaps
4
(4)
Financial assets at fair value through profit or loss
50
164
(1)
(50)
163
Credit entities
50
164
(1)
(50)
163
Loans and advances to customers
Debt instruments
Non-trading financial assets mandatorily at fair value through profit or loss
620
18
(13)
1
(284)
342
Loans and advances to customers
26
2
(2)
26
Debt instruments
457
(9)
(2)
(315)
131
Equity instruments
137
16
(2)
3
31
185
Financial assets at fair value through other comprehensive income
2,924
8,356
(7,280)
(378)
558
1,227
5,407
TOTAL ASSETS
4,047
8,559
(7,326)
200
(378)
519.00
883
6,504
Financial liabilities held for trading
355
19
(12)
13
4
(185)
194
Trading derivatives
355
19
(12)
13
4
(185)
194
Swaps
127
8
(2)
(3)
2
(5)
127
Exchange rate options
1
2
(2)
1
Interest rate options
218
11
(6)
6
(179)
50
Index and securities options
3
(1)
9
2
1
14
Securities and interest rate futures
Others
6
(3)
(1)
2
Hedging derivatives (Liabilities)
4
(4)
Swaps
4
(4)
Financial liabilities designated at fair value through profit or loss
287
2
(1)
1
(1)
288
TOTAL LIABILITIES
646
21
(13)
14
4
(190)
482
50
iv. Recognition of fair value changes
As a general rule, changes in the carrying amount of
financial assets and liabilities are recognised in the
consolidated income statement. A distinction is made
between the changes resulting from the accrual of
interest and similar items, (which are recognised under
Interest income or Interest expense, as appropriate), and
those arising for other reasons, which are recognised at
their net amount under 'Gains/losses on financial assets
and liabilities'.
Adjustments due to changes in fair value arising from:
'Financial assets at fair value with changes in other
comprehensive income' are recorded temporarily, in
the case of debt instruments in 'Other
comprehensive income - Elements that can be
reclassified to profit or loss - Financial assets at fair
value with changes in other comprehensive income',
while in the case of equity instruments are recorded
in 'other comprehensive income - Elements that will
not be reclassified to line item - Changes in the fair
value of equity instruments valued at fair value with
changes in other comprehensive income'.
Exchange differences on debt instruments measured
at fair value with changes in other comprehensive
income are recognised under 'Exchange Differences,
net' of the income statement. Exchange differences
on equity instruments, in which the irrevocable
option of being measured at fair value with changes
in other comprehensive income has been chosen, are
recognised in 'Other comprehensive income - Items
that will not be reclassified to profit or loss -
Changes in the fair value of equity instruments
measured at fair value with changes in other
comprehensive income'.
Items charged or credited to 'Items that may be
reclassified to profit or loss – Financial assets at fair
value through other comprehensive income' and
'Other comprehensive income – Items that may be
reclassified to profit or loss – Exchange differences in
equity' remain in the Bank´s equity until the asset
giving rise to them is impaired or derecognised, at
which time they are recognised in the income
statement.
Unrealised gains on Financial assets classified as
Non-current assets held for sale because they form
part of a disposal group or a discontinued operation
are recognised in 'Other comprehensive income
under Items that may be reclassified to profit or loss
– Non-current assets held for sale'.
v. Hedging transactions
Banco Santander uses financial derivatives for the
following purposes: i) to facilitate these instruments to
customers who request them in the management of
their market and credit risks; ii) to use these derivatives
in the management of the risks of the Group entities’
own positions and assets and liabilities (hedging
derivatives); and iii) to obtain gains from changes in the
prices of these derivatives (derivatives).
Financial derivatives that do not qualify for hedge
accounting are treated for accounting purposes as
trading derivatives.
A derivative qualifies for hedge accounting if all the
following conditions are met:
1.The derivative hedges one of the following three
types of exposure:
a.Changes in the fair value of assets and liabilities
due to fluctuations, among others, in the interest
rate and/or exchange rate to which the position
or balance to be hedged is subject (fair value
hedge).
b.Changes in the estimated cash flows arising from
financial assets and liabilities, commitments and
highly probable forecast transactions (cash flow
hedge).
c.The net investment in a foreign operation (hedge
of a net investment in a foreign operation).
2.It is effective in offsetting exposure inherent in the
hedged item or position throughout the expected
term of the hedge, which means that:
a.At the date of arrangement the hedge is
expected, under normal conditions, to be highly
effective (prospective effectiveness).
b.There is sufficient evidence that the hedge was
actually effective during the whole life of the
hedged item or position (retrospective
effectiveness). To this end, the Bank checks that
the results of the hedge were within a range of
80% to 125% of the results of the hedged item.
3.There must be adequate documentation evidencing
the specific designation of the financial derivative to
hedge certain balances or transactions and how this
hedge was expected to be achieved and measured,
provided that this is consistent with the Bank's
management of own risks.
51
The changes in value of financial instruments
qualifying for hedge accounting are recognised as
follows:
a.In fair value hedges, the gains or losses arising on
both the hedging instruments and the hedged
items attributable to the type of risk being
hedged are recognised directly in the income
statement.
In fair value hedges of interest rate risk on a
portfolio of financial instruments, the gains or
losses that arise on measuring the hedging
instruments are recognised directly in income
statement, whereas the gains or losses due to
changes in the fair value of the hedged amount
(attributable to the hedged risk) are recognised in
income statement with a balancing entry under
Changes in the fair value of hedged items in
portfolio hedges of interest rate risk on the asset
or liability side of the balance sheet, as
appropriate.
b.In cash flow hedges, the effective portion of the
change in value of the hedging instrument is
recognised temporarily in Other comprehensive
income – under Items that may be reclassified to
profit or loss – Hedging derivatives – Cash flow
hedges (effective portion) until the forecast
transactions occur, when it is recognised in the
income statement, unless, if the forecast
transactions result in the recognition of non-
financial assets or liabilities, it is included in the
cost of the non-financial asset or liability.
c.In hedges of a net investment in a foreign
operation, the gains or losses attributable to the
portion of the hedging instruments qualifying as
an effective hedge are recognised temporarily in
Other comprehensive income under Items that
may be reclassified to profit or loss – Hedges of
net investments in foreign operations until the
gains or losses – on the hedged item are
recognised in profit or loss.
d.The ineffective portion of the gains or losses on
the hedging instruments of cash flow hedges and
hedges of a net investment in a foreign operation
is recognised directly under 'Gains/losses on
financial assets and liabilities (net)' in the income
statement, in Gains or losses from hedge
accounting, net.
If a derivative designated as a hedge no longer meets the
requirements described above due to expiration,
ineffectiveness or for any other reason, the derivative is
classified for accounting purposes as a trading
derivative.
When fair value hedge accounting is discontinued, the
adjustments previously recognised on the hedged item
are amortised to profit or loss at the effective interest
rate recalculated at the date of hedge discontinuation.
The adjustments must be fully amortised at maturity.
When cash flow hedge accounting is discontinued, any
cumulative gain or loss on the hedging instrument
recognised in equity under other comprehensive income
'Items that may be reclassified to profit or loss' (from the
period when the hedge was effective) remains in this
equity item until the forecast transaction occurs, at
which time it is recognised in profit or loss, unless the
transaction is no longer expected to occur, in which case
the cumulative gain or loss is recognised immediately in
profit or loss.
vi. Derivatives embedded in hybrid financial instruments
Derivatives embedded in other financial instruments or
in other host contracts are accounted for separately as
derivatives if their risks and characteristics are not
closely related to those of the host contracts, provided
that the host contracts are not classified as financial
assets/liabilities designated at fair value through profit
or loss or as 'Financial assets/liabilities held for trading'.
e) Derecognition of financial assets and liabilities
The accounting treatment of transfers of financial assets
depends on the extent to which the risks and rewards
associated with the transferred assets are transferred to
third parties:
1.If the Bank transfers substantially all the risks and
rewards to third parties unconditional -sale of
financial assets, sale of financial assets under an
agreement to repurchase them at their fair value at
the date of repurchase, sale of financial assets with a
purchased call option or written put option that is
deeply out of the money, securitisation of assets in
which the transferor does not retain a subordinated
debt or grant any credit enhancement to the new
holders, and other similar cases-, the transferred
financial asset is derecognised and any rights or
obligations retained or created in the transfer are
recognised simultaneously.
2.If the Bank retains substantially all the risks and
rewards associated with the transferred financial
asset -sale of financial assets under an agreement to
repurchase them at a fixed price or at the sale price
plus interest, a securities lending agreement in
which the borrower undertakes to return the same or
similar assets, and other similar cases-, the
transferred financial asset is not derecognised and
continues to be measured by the same criteria as
those used before the transfer. However, the
following items are recognised:
52
a.An associated financial liability, which is
recognised for an amount equal to the
consideration received and is subsequently
measured at amortised cost, unless it meets the
requirements for classification under 'Financial
liabilities designated at fair value through profit
or loss'.
b.The income from the transferred financial asset
not derecognised and any expense incurred on
the new financial liability, without offsetting.
3.If the Bank neither transfers nor retains substantially
all the risks and rewards associated with the
transferred financial asset -sale of financial assets
with a purchased call option or written put option
that is not deeply in or out of the money,
securitisation of assets in which the transferor
retains a subordinated debt or other type of credit
enhancement for a portion of the transferred asset,
and other similar cases- the following distinction is
made:
a.If the transferor does not retain control of the
transferred financial asset, the asset is
derecognised and any rights or obligations
retained or created in the transfer are recognised.
b.If the transferor retains control of the transferred
financial asset, it continues to recognise it for an
amount equal to its exposure to changes in value
and recognises a financial liability associated
with the transferred financial asset. The net
carrying amount of the transferred asset and the
associated liability is the amortised cost of the
rights and obligations retained, if the transferred
asset is measured at amortised cost, or the fair
value of the rights and obligations retained, if the
transferred asset is measured at fair
value.Accordingly, financial assets are only
derecognised when the rights to the cash flows
they generate have expired or when substantially
all the inherent risks and rewards have been
transferred to third parties. Similarly, financial
liabilities are only derecognised when the
obligations they generate have been
extinguished or when they are acquired with the
intention either to cancel them or to resell them.
Regarding contractual modifications of financial assets,
the Bank has differentiated them into two main
categories in relation to the conditions under which a
modification leads to a derecognition or disposal of the
financial asset (and the recognition of a new financial
asset) and those under which the accounting of the
original financial instrument with the modified terms is
maintained:
Contractual modifications for commercial or market
reasons, which are generally carried out at the
request of the debtor to apply current market
conditions to the debt. The new contract is
considered a new transaction and, consequently, it is
necessary to derecognize the original financial asset
and recognize a new financial asset subject to the
classification and measurement requirements
established by Bank of Spain Circular 4/2017 and
subsequent modifications. Also, the new financial
asset will be recorded at fair value and, if applicable,
the difference between the carrying amount of the
asset derecognized and the fair value of the new
asset will be recognized in profit or loss.
Modifications due to refinancing or restructuring, in
which the payment conditions are modified to allow
a customer that is experiencing financial difficulties
(current or foreseeable) to meet its payment
obligations and that, if such modification had not
been made, it would be reasonably certain that it
would not be able to meet such payment obligations.
In this case, the modification does not result in the
derecognition of the financial asset, but rather the
original financial asset is maintained and does not
require a new assessment of its classification and
measurement. When assessing credit impairment,
the current credit risk (considering the modified cash
flows) should be compared with the credit risk at
initial recognition. Finally, the gross carrying amount
of the financial asset (the present value of the
renegotiated or modified contractual cash flows that
are discounted at the original effective interest rate
of the financial asset) should be recalculated, with a
gain or loss recognized in profit or loss for the
difference.
53
f) Offsetting of financial instruments
Financial asset and liability balances are offset, i.e.
reported in the balance sheet at their net amount, only if
Banco Santander currently has a legally enforceable
right to off set the recognised amounts and intends to
either settle on a net basis, or to realise the asset and
settle the liability simultaneously.
On the table below is the detail of financial assets and
liabilities that were offset on the balance sheet as of 31
December 2021 and 2020:
EUR million
2021
Assets
Gross amount
of financial
assets
Gross amount
of financial
assets offset
on the balance
sheet
Net amount of
financial
assets
presented on
the balance
sheet
Derivatives
83,426
(39,755)
43,671
Repos
39,517
(11,298)
28,219
Total
122,943
(51,053)
71,890
EUR million
2020
Assets
Gross amount
of financial
assets
Gross amount
of financial
assets offset
on the balance
sheet
Net amount of
financial
assets
presented on
the balance
sheet
Derivatives
114,555
(58,056)
56,499
Repos
39,935
(8,856)
31,079
Total
154,490
(66,912)
87,578
EUR million
2021
Liabilities
Gross amount
of financial
liabilities
Gross amount
of financial
liabilities offset
on the balance
sheet
Net amount of
financial
liabilities
presented on
the balance
sheet
Derivatives
82,503
(39,755)
42,748
Repos
26,036
(11,298)
14,738
Total
108,539
(51,053)
57,486
EUR million
2020
Liabilities
Gross amount
of financial
liabilities
Gross amount
of financial
liabilities offset
on the balance
sheet
Net amount of
financial
liabilities
presented on
the balance
sheet
Derivatives
110,512
(58,056)
52,456
Repos
19,447
(8,856)
10,591
Total
129,959
(66,912)
63,047
Furthermore, most of the derivatives and temporary
acquisition of uncompensated assets on the balance
sheet are subject to netting and collateral agreements.
At December 31, 2021 the balance sheet amounts EUR
69,151 million on derivatives and temporary acquisition
of assets and EUR 54,875 million on derivatives and
repos as liabilities that are subject to netting and
collateral arrangements (EUR 85,714 million and EUR
61,252 million in 2020, respectively).
g) Impairment of financial assets
i. Definition
Banco Santander associates an impairment in the value
to financial assets measured at amortised cost, debt
instruments measured at fair value with changes in
other comprehensive income, lease receivables and
commitments and guarantees granted that are not
measured at fair value.
The impairment for expected credit losses is recorded
with a charge to the income statement for the period in
which the impairment arises. In the event of occurrence,
the recoveries of previously recognised impairment
losses are recorded in the income statement for the
period in which the impairment no longer exists or is
reduced.
In the case of purchased or originated credit-impaired
assets, the Bank only recognizes at the reporting date
the changes in the expected credit losses during the life
of the asset since the initial recognition as a credit loss.
In the case of assets measured at fair value with changes
in other comprehensive income, the changes in the fair
value due to expected credit losses are charged in the
income statement of the year where the change
happened, reflecting the rest of the valuation in other
comprehensive income.
As a rule, the expected credit loss is estimated as the
difference between the contractual cash flows to be
recovered and the expected cash flows discounted using
the original effective interest rate. In the case of
purchased or originated credit-impaired assets, this
difference is discounted using the effective interest rate
adjusted by credit rating.
Depending on the classification of financial instruments,
which is mentioned in the following sections, the
expected credit losses may be along 12 months or during
the life of the financial instrument:
12-month expected credit losses: arising from the
potential default events, as defined in the following
sections that are estimated to be likely to occur
within the 12 months following the reporting date.
These losses will be associated with financial assets
classified as 'normal risk' as defined in the following
sections.
54
Expected credit losses over the life of the financial
instrument: arising from the potential default events
that are estimated to be likely to occur throughout
the life of the financial instruments. These losses are
associated with financial assets classified as 'normal
risk under watchlist' or 'doubtful risk'.
With the purpose of estimating the expected life of the
financial instrument all the contractual terms have been
taken into account (e.g. prepayments, duration, purchase
options, etc.), being the contractual period (including
extension options) the maximum period considered to
measure the expected credit losses. In the case of
financial instruments with an uncertain maturity period
and a component of undrawn commitment (e.g.: credit
cards), the expected life is estimated through
quantitative analyses to determine the period during
which the entity is exposed to credit risk, also
considering the effectiveness of management
procedures that mitigate such exposure (e.g. the ability
to unilaterally cancel such financial instruments, etc.).
The following constitute effective guarantees:
a.Mortgage guarantees on housing as long as they are
first duly constituted and registered in favour of the
entity. The properties include:
i.Buildings and building elements,
distinguishing among:
Houses.
Offices, stores and multi-purpose
premises.
Rest of buildings such as non-multi-
purpose premises and hotels.
ii.Urban and developable ordered land.
iii. Rest of properties that classify as: buildings
and building elements under construction,
such as property development in progress
and halted development, and the rest of land
types, such as rustic lands.
b.Collateral guarantees on financial instruments in the
form of cash deposits and debt securities issued by
creditworthy issuers.
c.Other types of real guarantees, including properties
received in guarantee and second and subsequent
mortgages on properties, as long as the entity
demonstrates its effectiveness. When assessing the
effectiveness of the second and subsequent
mortgages on properties the entity will implement
particularly restrictive criteria. It will take into
account, among others, whether the previous
charges are in favour of the entity itself or not and
the relationship between the risk guaranteed by
them and the property value.
d.Personal guarantees, as well as the incorporation of
new owners, covering the entire amount of the
financial instruments and implying direct and joint
liability to the entity of persons or other entities
whose solvency is sufficiently proven to ensure the
repayment of the loan on the agreed terms.
The different aspects that the Bank considers for the
evaluation of effective guarantees are set out below in
relation to the individual analysis.
ii. Financial instruments presentation
For the purposes of estimating the impairment amount,
and in accordance with its internal policies, the Bank 
classifies its financial instruments (financial assets,
commitments and guarantees) measured at amortised
cost or fair value through other comprehensive income
in one of the following categories:
Normal Risk ('stage 1'): includes all instruments that
do not meet the requirements to be classified in the
rest of the categories.
Normal risk under watchlist ('stage 2'): includes all
instruments that, without meeting the criteria for
classification as doubtful or default risk, have
experienced significant increases in credit risk since
initial recognition.
In order to determine whether a financial instrument has
increased its credit risk since initial recognition and is to
be classified in stage 2, the Group and the Bank consider
the following criteria:
Quantitative
criteria
Changes in the risk of a default occurring through the
expected life of the financial instrument are analysed
and quantified with respect to its credit level in its
initial recognition.
With the purpose of determining if such changes are
considered as significant, with the consequent
classification into stage 2, each Group, and therefore
the Bank, unit has defined the quantitative thresholds
to consider in each of its portfolios taking into account
corporate guidelines ensuring a consistent
interpretation in all units.
Within the quantitative thresholds, two types are
considered: A relative threshold is those that compare
current credit quality with credit quality at the time of
origination in percentage terms of change. In addition,
an absolute threshold compares both references in
total terms, calculating the difference between the
two. These absolute/relative concepts are used
homogeneously (with different values) in all
geographies. The use of one type of threshold or
another (or both) is determined in accordance with the
process described in note 49, below, and is marked by
the type of portfolio and characteristics such as the
starting point of the average credit quality of the
portfolio.
Qualitative
criteria
In addition to the quantitative criteria indicated,
various indicators are used that are aligned with those
used by the Bank in the normal management of credit
risk. Irregular positions of more than 30 days and
renewals are common criteria applied by the Bank and
common to all the Group's  units. Also,, each unit can
define other qualitative indicators, for each of its
portfolios, according to the particularities and normal
management practices in line with the policies
currently in force (i.e. use of management alerts, etc.).
The use of these qualitative criteria is complemented
with the use of an expert judgement, under the
corresponding governance.
55
In the case of forbearances, instruments classified as
'normal risk under watchlist' may be generally
reclassified to 'normal risk' in the following
circumstances: at least two years have elapsed from the
date of reclassification to that category or from its
forbearance date, the client has paid the accrued
principal and interest balance, and the client has no
other instruments with more than 30 days past due
balances.
Doubtful Risk ('stage 3'): includes financial
instruments, overdue or not, in which, without
meeting the circumstances to classify them in the
category of default risk, there are reasonable doubts
about their total repayment (principal and interests)
by the client in the terms contractually agreed.
Likewise, off-balance-sheet exposures whose
payment is probable and their recovery doubtful are
considered in stage 3. Within this category, two
situations are differentiated:
Doubtful risk for non-performing loans: financial
instruments, irrespective of the client and
guarantee, with balances more than 90 days past
due for principal, interest or expenses
contractually agreed.
This category also includes all loan balances for a
client which overdue amount more than 90 days
past due is greater than 20% of the loan
receivable balance.
These instruments may be reclassified to other
categories if, as a result of the collection of part
of the past due balances, the reasons for their
classification in this category do not remain and
the client does not have balances more than 90
days past due in other loans.
Doubtful risk for reasons other than non-
performing loans: this category includes doubtful
recovery financial instruments that are not more
than 90 days past due.
Banco Santander considers that a financial instrument to
be doubtful for reasons other than delinquency when
one or more combined events have occurred with a
negative impact on the estimated future cash flows of
the financial instrument. To this end, the following
indicators, among others, are considered:
a)Negative net equity or decrease because of
losses of the client's net equity by at least 50%
during the last financial year.
b)Continued losses or significant decrease in
revenue or, in general, in the client's recurring
cash flows.
c)Generalised delay in payments or insufficient
cash flows to service debts.
d)Significantly inadequate economic or financial
structure or inability to obtain additional
financing by the client.
e)Existence of an internal or external credit rating
showing that the client is in default.
f)Existence of overdue customer commitments
with a significant amount to public institutions or
employees.
These financial instruments may be reclassified to other
categories if, as a result of an individualised study,
reasonable doubts do not remain about the total
repayment under the contractually agreed terms and the
client does not have balances with more than 90 days
past due.
In the case of forbearances, instruments classified as
doubtful risk may be reclassified to the category of
'normal risk under watchlist' when the following
circumstances are present: a minimum period of one
year has elapsed from the forbearance date, the client
has paid the accrued principal and interest amounts, and
the client has no other loan balance with more than 90
days past due.
Default Risk: includes all financial assets, or part of
them, for which, after an individualised analysis,
their recovery is considered remote due to a
notorious and irrecoverable deterioration of their
solvency.
In any case, except in the case of operations with real
guarantees that cover more than 10% of the amount
of the operation, in general the Bank considers as
remote recovery: the operations of holders that are
in the liquidation phase of the insolvency creditors,
doubtful operations due to delinquency that have
been in this category for more than 4 years and
doubtful operations due to delinquency whose part
not covered by real guarantees has been maintained
with 100% credit risk coverage. for more than two
years.
A financial asset amount is maintained in the balance
sheet until they are considered as a "default risk",
either all or a part of it, and the write-off is registered
against the balance sheet.
In the case of operations that have only been
partially derecognised, for forgiveness reasons or
because part of the total balance is considered
unrecoverable, the remaining amount shall be fully
classified in the category of 'doubtful risk', except
where duly justified.
The classification of a financial asset, or part of it, as
a 'default risk' does not involve the disruption of
negotiations and legal proceedings to recover the
amount.
56
iii. Impairment valuation assessment
Banco Santander has policies, methods and procedures
in place to hedge its credit risk, both due to the
insolvency attributable to counterparties and its
residence in a specific country.
These policies, methods and procedures are applied in
the concession, study and documentation of financial
assets, commitments and guarantees, as well as in the
identification of their impairment and in the calculation
of the amounts needed to cover their credit risk.
The asset impairment model in Bank of Spain Circular
4/2017 applies to financial assets measured at
amortised cost, debt instruments at fair value with
changes in other comprehensive income, lease
receivables and commitments and guarantees granted
that are not measured at fair value.
The impairment represents the best estimation of the
financial assets expected credit losses at the balance
sheet date, assessed both individually and collectively.
Individually: for the purposes of estimating the
provisions for credit risk arising from the insolvency
of a financial instrument, the Bank individually
assesses impairment by estimating the expected
credit losses on those financial instruments that are
considered to be significant and with sufficient
information to make such an estimate.
Therefore, this classification mostly includes
wholesale banking customers —Corporations,
specialised financing— as well as some of the largest
companies —Chartered and real estate developers—
from retail banking. The determination of the
perimeter in which the individualised estimate is
applied is detailed in a later section.
The individually assessed impairment estimate is
equal to the difference between the gross carrying
amount of the financial instrument and the
estimated value of the expected cash flows
receivable discounted using the original effective
interest rate of the transaction. The estimate of these
cash flows takes into account all available
information on the financial asset and the effective
guarantees associated with that asset. This
estimation process is detailed below.
Collectively: the Bank also assesses impairment by
estimating the expected credit losses collectively in
cases where they are not assessed on an individual
basis. This includes, for example, loans with
individuals, sole proprietors or businesses in retail
banking  subject to a standardised risk management.
For the purposes of the collective assessment of
expected credit losses,  the Bank has consistent and
reliable internal models. For the development of
these models, instruments with similar credit risk
characteristics that are indicative of the debtors'
capacity to pay are considered.
The credit risk characteristics used to group the
instruments are, among others: type of instrument,
debtor's sector of activity, geographical area of
activity, type of guarantee, aging of past due
balances and any other factor relevant to estimating
the future cash flows.
Banco Santander performs retrospective and
monitoring tests to evaluate the reasonableness of
the collective estimate.
On the other hand, the methodology required to
estimate the expected credit loss due to credit events is
based on an unbiased and weighted consideration by the
probability of occurrence of a series of scenarios,
considering a range of three to five possible future
scenarios, depending on the characteristics of each unit,
which could have an impact on the collection of
contractual cash flows, always taking into account the
time value of money, as well as all available and
relevant information on past events, current conditions
and forecasts of the evolution of macroeconomic
scenarios that are shown to be relevant for the
estimation of this amount (for example: GDP (Gross
Domestic Product), housing price, unemployment rate,
etc.).
The estimation of expected losses requires expert
judgment and the support of historical, current and
future information. The probability of loss is measured
considering past events, the present situation and future
trends of macroeconomic scenarios.
Banco Santander uses forward-looking information in
both internal risk management and prudential
regulation processes, so that for the calculation of the
impairment loss allowance, various scenarios are
incorporated that take advantage of the experience with
such information, thus ensuring consistency in obtaining
the expected loss.
The challenge of the exercise has focused on the
uncertainty of the economic outlook caused by the
covid-19 crisis, coupled with a complex environment for
value creation.
Banco Santander has internally ensured the criteria to be
followed for guarantees received from government
bodies, both through credit lines and other public
guarantees, so that when they are adequately reflected
in each of the contracts, they are recognised as
mitigating factors of the potential expected losses, and
therefore of the provisions to be recognised, based on
the provisions of the applicable standard. Furthermore,
where applicable, these guarantees are appropriately
reflected in the mitigation of the significant increase in
risk, considering their nature as personal guarantees.
57
For the estimation of the parameters used in the
estimation of impairment provisions -EAD (exposure at
default), PD (probability of default), LGD (loss given
default)-, the Bank based their experience in developing
internal models for the estimation of parameters both in
the regulatory area and for management purposes,
adapting the development of the impairment provision
models under Bank of Spain Circular 4/2017.
Exposure at default: is the amount of estimated risk
incurred at the time of the counterparty's analysis.
Probability of default: is the estimated probability
that the counterparty will default on its principal
and/or interest payment obligations.
Loss given default: is the estimate of the severity of
the loss incurred in the event of non-compliance. It
depends mainly on the updating of the guarantees
associated with the operation and the future cash
flows that are expected to be recovered.
In any case, when estimating the flows expected to be
recovered, portfolio sales are included. It should be
noted that due to the Bank's recovery policy and the
experience observed in relation to the prices of past
sales of assets classified as stage 3 and/or default risk,
there is no substantial divergence between the flows
obtained from recoveries after performing recovery
management of the assets with those obtained from the
sale of portfolios of assets discounting structural
expenses and other costs incurred.
The definition of default implemented by the Bank for
the purpose of calculating the impairment provision
models is based on the definition in Article 178 of
Regulation 575/2013 of the European Union (CRR),
which is fully aligned with the requirements of Bank of
Spain Circular 4/2017,which considers that a 'default'
exists in relation to a specific customer/contract when at
least one of the following circumstances exists: the
entity considers that there are reasonable doubts about
the payment of all its credit obligations or that the
customer/contract is in an irregular situation for more
than 90 days with respect to any significant credit
obligation.
Grupo Santander will partially and voluntarily align
during 2022 the accounting definition of Stage 3, as well
as for the calculation of impairment provision models, to
the New Definition of Default, incorporating the criteria
defined by the EBA in its implementation guide of the
definition of default, capturing the economic
deterioration of the operations (days in default - on a
daily basis - and materiality thresholds - minimum
amount in arrears). The alignment of criteria will be
done taking into account the criteria of IFRS 9 as well as
the accounting principles of unbiased presentation of
financial information. The expected increase in the
default rate is estimated at around 24 basis points, with
no material impact on the provision figures for credit
risk.
In addition, the Bank considers the risk generated in all
cross-border transactions due to circumstances other
than the usual commercial risk of insolvency (sovereign
risk, transfer risk or risks arising from international
financial activity, such as wars, natural catastrophes,
balance of payments crisis, etc.).
Bank of Spain Circular 4/2017 includes a series of
practical solutions that can be implemented by entities,
with the aim of facilitating its implementation. However,
in order to achieve a complete and high-level
implementation of the standard, and following the best
practices of the industry, the Bank does not apply these
practical solutions in a generalised manner:
Rebuttable presumption that the credit risk has
increased significantly, when payments are more
than 30 days past due: this threshold is used as an
additional, but not primary, indicator of significant
risk increase. Additionally, there may be cases in
Grupo Santander  where its use has been rebutted as
a result of studies that show a low correlation of the
significant risk increase with this past due threshold.
The volume rebutted does not exceed 0.1% of the
Group's total exposure.
Assets with low credit risk at the reporting date: the
Bank assesses the existence of significant risk
increase in all its financial instruments.
This information is provided in more detail in note 49 b.
iv. Detail of individual estimate of impairment
For the individual estimate of the assessment for
impairment of the financial asset, the Bank has a specific
methodology to estimate the value of the cash flows
expected to be collected:
Recovery through the debtor's ordinary activities
(going approach).
Recovery through the execution and sale of the
collateral guaranteeing the operations (gone
approach).
Gone approach:
a. Evaluation of the effectiveness of guarantees
Banco Santander the effectiveness of all the guarantees
associated considering the following:
The time required to execute these guarantees.
Banco Santander's ability to enforce or assert these
guarantees in its favour.
The existence of limitations imposed by each local
unit´s regulation on the foreclosure of collateral.
Under no circumstances the Bank considers that a
guarantee is effective if its effectiveness depends
substantially on the solvency of the debtor, as could be
the case:
58
Promises of shares or other securities of the debtor
himself when their valuation may be significantly
affected by a debtor's default.
Personal cross-collateralisation: when the
guarantor of a transaction is, at the same time,
guaranteed by the holder of that transaction.
On the basis of the foregoing, the following types of
guarantees are considered to be effective:
Mortgage guarantees on properties, which are first
charge, duly constituted and registered. Real estate
includes:
Buildings and finished building elements.
Urban and developable land in order.
Other real estate, including buildings under
construction, developments in progress or at
a standstill, and other land, such as rural
properties.
Pledges on financial instruments such as cash
deposits, debt securities of reputable issuers or
equity instruments.
Other types of security interests, including
movable property received as security and second
and subsequent mortgages on real state , provided
that they are proven to be effective under
particularly restrictive criteria.
Personal guarantees, including new holders,
covering the entire amount and involving direct
and joint liability to the entity, from persons or
entities whose equity solvency ensures repayment
of the transaction under the agreed terms.
b.Valuation of guarantees
Banco Santander assesses the guarantees on the basis of
their nature in accordance with the following:
Mortgage guarantees on properties associated
with financial instruments, using a complete
individual valuations carried out by independent
valuation experts and under generally accepted
valuation standards. If this is not possible,
alternative valuations are used with duly
documented and approved internal valuation
models.
Personal guarantees are valued individually on the
basis of the guarantor´s updated information.
The rest of the guarantees are valued based on
current market values.
c.Adjustments to the value of guarantees and
estimation of future cash flow inflows and outflows.
Banco Santander applies a series of adjustments to the
value of the guarantees in order to improve the
reference values:
Adjustments based on the historical sales
experience for certain types of assets.
Individual expert adjustments based on additional
management information.
Likewise, to adjust the value of the guarantees, the time
value of money is taken into account based on the
historical experience, estimating:
Period of adjudication.
Estimated time of sale of the asset.
In addition, the Bank takes into account all those cash
inflows and outflows linked to that guarantee until it is
sold:
Possible future income commitments in favour of
the borrower which will available after the asset is
awarded.
Estimated foreclosure costs.
Asset maintenance costs, taxes and community
costs.
Estimated marketing or sales costs.
Finally, since it is considered that the guarantee will be
sold in the future, the Bank applies an additional
adjustment ('index forward') in order to adjust the value
of the guarantees to future valuation expectations.
v. Impairment individual assessment scope
Banco  Santander determines the perimeter over which it
makes an estimate of the assessment for impairment on
an individual basis based on a relevance threshold and
the stage in which the operations are located. In general,
the Bank applies the individualised calculation of
expected losses to the significant exposures classified in
stage 3, although Banco Santander, S.A. has also
extended its analyses to some of the exposures
classified in stage 2.
It should be noted that, in any case and irrespective of
the stage in which their transactions are carried out, for
customers who do not receive standardised treatment, a
relational risk management model is applied, with
individualised treatment and monitoring by the assigned
risk analyst. In addition to wholesale customers
(Santander Corporate & Investment Banking or SCIB) and
large companies, this relational management model
also includes other segments of smaller companies for
which there is information and capacity for more
personalised and expert analysis and monitoring.  As
indicated in the Bank's wholesale credit model, the
individual treatment of the client facilitates the
continuous updating of information. The risk assumed
must be followed and monitored throughout its life
cycle, enabling anticipation and action to be taken in the
event of possible impairments. In this way, the
customer's credit quality is analysed individually, taking
into account specific aspects such as his competitive
59
position, financial performance, management, etc. In the
wholesale risk management model, every customer with
a credit risk position is assigned a rating, which has an
associated probability of customer default. Thus,
individual analysis of the debtor triggers a specific rating
for each customer, which determines the appropriate
parameters for calculating the expected loss, so that it is
the rating itself that initially modulates the necessary
coverage, adjusting the severity of the possible loss to
the guarantees and other mitigating factors that the
customer may have available. In addition, if as a result of
this individualised monitoring of the customer, the
analyst finally considers that his coverage is not
sufficient, he has the necessary mechanisms to adjust it
under his expert judgement, always under the
appropriate governance.
h) Repurchase agreements and reverse repurchase
agreements
Purchases (sales) of financial instruments under a non-
optional resale (repurchase) agreement at a fixed price
(repos) are recognised in the balance sheet as financing
granted (received), based on the nature of the debtor
(creditor), under 'Loans and advances with central
banks', 'Loans and advances to credit institutions' or
'Loans and advances to customers' (Deposits from
central banks, Deposits from credit institutions or
Customer deposits).
Differences between the purchase and sale prices are
recognised as interest over the contract term.
i) ‘Non-current assets’ and ‘liabilities associated
with non-current assets held for sale’
'Non-current assets held for sale' includes the carrying
amount of individual items, disposal groups or items
forming part of a business unit earmarked for disposal
(discontinued operations), whose sale in their present
condition is highly likely to be completed within one year
from the reporting date. Therefore, the recovery of the
carrying amount of these items -which can be of a
financial nature or otherwise- will foreseeably be
effected through the proceeds from their disposal.
Specifically, property or other non-current assets
received by Banco Santander as total or partial
settlement of their debtors’ payment obligations to them
are deemed to be 'Non-current assets held for sale',
unless the Bank has decided to make continuing use of
these assets. In this connection, for the purpose of its
consideration in the initial recognition of these assets,
the Bank obtains, at the foreclosure date, the fair value
of the related asset through a request for appraisal by
external appraisal agencies.
Banco Santander  has in place a corporate policy that
ensures the professional competence and the
independence and objectivity of the external appraisal
agencies, in accordance with the regulations, which
require appraisal agencies to meet independence,
neutrality and credibility requirements, so that the use of
their estimates does not reduce the reliability of its
valuations. This policy establishes that all the appraisal
companies and agencies with which the Bank works in
Spain should be registered in the Official Register of the
Bank of Spain and that the appraisals performed by them
should follow the methodology established in Ministry
of Economy Order ECO/805/2003, of 27 March. The
main appraisal companies and agencies with whichthe
Bank worked in Spain in 2021 are as follows: Gloval
Valuation, S.A.U., Tinsa Tasaciones Inmobiliarias, S.A.U.,
Gesvalt Sociedad de Tasacion, S.A. and Sociedad de
tasacion, S.A.
'Liabilities associated with non-current assets held for
sale' includes the balances payable arising from the
assets held for sale or disposal groups and from
discontinued operations.
'Non-current assets and disposal groups of items that
have been classified as held for sale' are generally
recognised at the date of their allocation to this category
and are subsequently valued at the lower of their fair
value less costs to sell or its book value. 'Non-current
assets and disposal groups of items that are classified as
held for sale' are not amortised as long as they remain in
this category.
At 31 December 2021 the fair value less costs to sell of
non-current assets held for sale exceeded their carrying
amount by EUR 229 million (EUR 198 million in 2020);
however, in accordance with the applicable legislation,
this unrealised gain could not be recognised.
The valuation of the portfolio of non-current assets held
for sale has been made in compliance with the
requirements of Bank of Spain Circular 4/2017  in
relation to the estimate of the fair value of tangible
assets and the value-in-use of financial assets.
The value of the portfolio is determined as the sum of
the values of the individual elements that compose the
portfolio, without considering any total or batch
grouping in order to correct the individual values.
Banco Santander, in compliance with Bank of Spain
Circular 4/2017, and subsequent amendments, on public
and private financial reporting standards and financial
statement models, has developed a methodology that
enables it to estimate the fair value and costs of sale of
assets foreclosed or received in payment of debts. This
methodology is based on the classification of the
portfolio of foreclosed assets into different segments.
Segmentation enables the intrinsic characteristics of
Banco Santander's portfolio of foreclosed assets to be
differentiated, so that assets with homogeneous
characteristics are grouped by segment.
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Thus, the portfolio is segmented into (i) finished assets
of a residential and tertiary nature, (ii) developments in
progress and (iii) land1.
In determining the critical segments in the overall
portfolio, assets are classified on the basis of the nature
of the asset and its stage of development. This
segmentation is made in order to seek the liquidation of
the asset (which should be carried out in the shortest
possible time).
When making decisions, the situation and/or
characteristics of the asset are fundamentally taken into
account, as well as the evaluation of all the determining
factors that favour the recovery of the debt. For them,
the following aspects are analyzed, among others:
The time that has elapsed since the adjudication.
The transferability and contingencies of the
foreclosed asset.
The economic viability from the real estate point of
view with the necessary investment estimate.
The expenses that may arise from the marketing
process.
The offers received, as well as the difficulties in
finding buyers.
In the case of real estate assets foreclosed in Spain,
which represent 91% of the Group’s total non-current
assets held for sale, the valuation of the portfolio is
carried out by applying the following models:
Market Value Model used in the valuation of finished
properties of a residential nature (mainly homes and
car parks) and properties of a tertiary nature (offices,
commercial premises and multipurpose buildings).
For the valuation of finished assets whose
availability for sale is immediate, a market sale value
provided by a third party external to Banco Santander
is considered, calculated under the AVM
methodology by the comparable properties method
adjusted by our experience in selling similar assets,
given the term, price, volume, trend in the value of
these assets and the time elapsing until their sale
and discounting the estimated costs of sale.
The market value is determined on the basis of the
definition established by the International Valuation
Standards drawn up by the IVSC (International
Valuation Standards Council), understood as the
estimated amount for which an asset or a liability
should be exchanged on the measurement date
between a willing buyer and a willing seller, in an
arm's length transaction, after appropriate
marketing, and in which the parties have acted with
sufficient information, prudently and without
coercion.
The current market value of the properties is
estimated on the basis of automated valuations
obtained by taking comparable properties as a
reference; simulating the procedure carried out by an
appraiser in a physical valuation according to Order
ECO 805/2003: selection of properties and obtaining
the unit value by applying homogenisation
adjustments. The selection of the properties is
carried out by location within the same real estate
cluster and according to the characteristics of the
properties, filtering by type2, surface area range and
age. The model enables a distinction to be made
within the municipality under study as to which areas
are similar and comparable and therefore have a
similar value in the property market, discriminating
between which properties are good comparators and
which are not.
Adjustments to homogenize the properties are made
according to: (i) the age of the property according to
the age of the property to be valued, (ii) the deviation
of the built area from the common area with respect
to the property to be valued and (iii) by age of the
date of capture of the property according to the price
evolution index of the real estate market.
In addition, for individually significant assets,
complete individual valuations are carried out,
including a visit to the asset, market analysis (data
relating to supply, demand, current sale or rental
price ranges and supply-demand and revaluation
expectations) and an estimate of expected income
and costs.
For this segmentation of assets, when they are
completed, the real costs are known and the actual
expenses for the marketing and sale of the asset
must be taken into account. Therefore, Banco
Santander uses the actual costs in its calculation
engine or, failing that, those estimated on the basis
of its observed experience.
Market Value Model according to Evolution of
Market Values used to update the valuation of
developments in progress. The valuation model
estimates the current market value of the properties
based on complete individual valuations by third
parties, calculated from the values of the feasibility
studies and development costs of the promotion, as
well as the selling costs, distinguishing by location,
size and type of property. The inputs used in the
valuation model for residential assets under
construction are actual revenues and costs.
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1 The assets in a situation of 'stopped development' are included under 'land'
2  Assets qualified as protected housing are taken into account. The maximum legal value of these assets is determined by the VPO module, obtained from the
result of multiplying the State Basic Module (MBE) by a zone coefficient determined by each autonomous community. To carry out the valuation of a protected
property, the useful surface area is used in accordance with current regulations.
For this purpose, in order to calculate the investment
flows, Banco Santander considers, on the basis of the
feasibility studies, the expenditure required for
construction, the professional fees relating to the
project and to project management, the premiums
for mandatory building insurance, the developer's
administrative expenses, licenses, taxes on new
construction and fees, and urban development
charges.
With respect to the calculation of income flows,
Banco Santander takes into account the square
metres built, the number of homes under
construction and the estimated selling price over 1.5
years.
The market value will be the result of the difference
between the income flows and the investment flows
estimated at each moment.
Land Valuation model. The methodology followed by
the Bank regarding land valuation consists of
updating the individual reference valuation of each
of the land on an annual basis, through updated
valuation valuations carried out by independent
professionals and following the methodology
established in the OM (Ministerial Order)
ECO/805/2003, of 27 March, whose main
verifications in the case of land valuation, regardless
of the degree of urbanisation of the land, correspond
to:
Visual verification of the assessed property.
Registry description.
Urban planning.
Visible easements.
Visible state of occupation, possession, use and
exploitation.
Protection regime.
Apparent state of preservation.
Correspondence with cadastral property.
Existence of expropriation procedure, expropriation
plan or project, administrative resolution or file
that may lead to expropriation.
Expiry of the urbanization or building deadlines.
Existence of a procedure for failure to comply with
obligations.
Verification of surfaces.
For the purposes of valuation, the land will be
classified in the following levels:
Level I: It will include all the lands that do not
belong to level II.
Level II: It shall include land classified as
undeveloped where building is not allowed for
uses other than agriculture, forestry, livestock or
linked to an economic exploitation permitted by
the regulations in force. Also included are lands
classified as developable that are not included in a
development area of urban planning or that, in
such an area, the conditions for its development
have not been defined.
In those cases where Banco Santander does not have an
updated reference value through an ECO valuation for
the current year, we use as a reference value the latest
available ECO valuation reduced or corrected by the
average annual coverage ratio of the land on which we
have obtained an updated reference value, through an
ECO valuation.
Banco Santander applies a discount to the
aforementioned reference values that takes into account
both the discount on the reference value in the sales
process and the estimated costs of marketing or selling
the land:
Discount on reference value = % discount on sales + %
marketing costs being:
% discount on Sales: = 100 - (sales price /
updated appraisal value).
marketing costs: calculated on the basis of our
historical experience in sales and in accordance
with the marketing management fees negotiated
with our suppliers of this type of service.
In this way Banco Santander obtains the corrected
market value, an amount that we compare with the net
cost of each piece of land to determine its correct
valuation and conclude with our valuation process.
In addition, in relation to the previously mentioned
valuations, less costs to sell, are contrasted with the
sales experience of each type of asset in order to confirm
that there is no significant difference between the sale
price and the valuation.
Impairment losses on an asset or disposal group arising
from a reduction in its carrying amount to its fair value
(less costs to sell) are recognised under 'Gains or (losses)
on non-current assets held for sale not classified as
discontinued operations' in the income statement.
The gains on a non-current asset held for sale resulting
from subsequent increases in fair value (less costs to
sell) increase its carrying amount and are recognised in
the consolidated income statement up to an amount
equal to the impairment losses previously recognised.
62
j) Insurance contracts linked to pensions
The item 'Insurance contracts linked to pensions',
included within the heading 'Other assets' (see note 2.n),
will include the fair value of the insurance policies to
cover pension commitments that must be recorded as a
Separate asset for not meeting the requirements
established in regulation 35 of Bank of Spain Circular
4/2017 and subsequent modifications, to be considered
plan assets.
k) Tangible assets
Tangible assets includes the amount of buildings, land,
furniture, vehicles, computer hardware and other
fixtures owned by Banco Santander or acquired under
finance leases. Tangible assets are classified by use as
follows:
i. Property, plant and equipment for own use
Property, plant and equipment for own use – including
tangible assets received by the Bank in full or partial
satisfaction of financial assets representing receivables
from third parties which are intended to be held for
continuing use and tangible assets acquired under
finance leases– are presented at acquisition cost, less
the related accumulated depreciation and any estimated
impairment losses (carrying amount higher than
recoverable amount).
Depreciation is calculated, using the straight-line
method, on the basis of the acquisition cost of the assets
less their residual value. The land on which the buildings
and other structures stand has an indefinite life and,
therefore, is not depreciated.
The period tangible asset depreciation charge is
recognised in the income statement and is calculated
using the following depreciation rates (based on the
average years of estimated useful life of the various
assets):
Average
annual rate
Buildings for own use
2.0%
Furniture
10.0%
Fixtures
5.0%
IT equipment
25.0%
Vehicles
16.0%
Other
5.0%
Lease use rights
Less than the lease
term or the useful life
of the underlying asset
At the end of each reporting period, Banco Santander
assesses whether there is any indication that the
carrying amount of an asset exceeds its recoverable
amount, in which case they write down the carrying
amount of the asset to its recoverable amount and
adjust future depreciation charges in proportion to its
adjusted carrying amount and to its new remaining
useful life, if the useful life needs to be re-estimated.
Similarly, if there is an indication of a recovery in the
value of a tangible asset, Banco Santander recognises
the reversal of the impairment loss recognised in prior
periods and adjust the future depreciation charges
accordingly. In no circumstances may the reversal of an
impairment loss on an asset raise its carrying amount
above that which it would have if no impairment losses
had been recognised in prior years.
The estimated useful lives of the items of property, plant
and equipment for own use are reviewed at least at the
end of the reporting period with a view to detecting
significant changes therein. If changes are detected, the
useful lives of the assets are adjusted by correcting the
depreciation charge to be recognised in the income
statement in future years on the basis of the new useful
lives.
Upkeep and maintenance expenses relating to property,
plant and equipment for own use are recognised as an
expense in the period in which they are incurred, since
they do not increase the useful lives of the assets.
ii. Investment property
'Investment property' reflects the net values of the land,
buildings and other structures held either to earn rentals
or for obtaining profits by sales due to future increase in
market prices.
The criteria used to recognise the acquisition cost of
investment property, to calculate its depreciation and its
estimated useful life and to recognise any impairment
losses thereon are consistent with those described in
relation to property, plant and equipment for own use.
In order to evaluate the possible impairment Banco
Santander determines periodically the fair value of its
investment property so that, at the end of the reporting
period, the fair value reflects the market conditions of
the investment property at that date. This fair value is
determined annually, taking as benchmarks the
valuations performed by independent experts. The
methodology used to determine the fair value of
investment property is selected based on the status of
the asset in question; thus, for properties earmarked for
lease, the valuations are performed using the sales
comparison approach, whereas for leased properties the
valuations are made primarily using the income
capitalisation approach and, exceptionally, the sales
comparison approach.
In the sales comparison approach, the property market
segment for comparable properties is analysed, inter
alia, and, based on specific information on actual
transactions and firm offers, current prices are obtained
for cash sales of those properties. The valuations
performed using this approach are considered as level 2
valuations.
63
In the income capitalisation approach, the cash flows
estimated to be obtained over the useful life of the
property are discounted taking into account factors that
may influence the amount and actual obtainment
thereof, such as: (i) the payments that are normally
received on comparable properties; (ii) current and
probable future occupancy; (iii) the current or
foreseeable default rate on payments. The valuations
performed using this approach are considered as Level 3
valuations, since significant unobservable inputs are
used, such as current and probable future occupancy
and/or the current or foreseeable default rate on
payments.
iii. Assets leased out under an operating lease
'Property, plant and equipment' - Leased out under an
operating lease reflects the amount of the tangible
assets, other than land and buildings, leased out by the
Bank under an operating lease.
The criteria used to recognise the acquisition cost of
assets leased out under operating leases, to calculate
their depreciation and their respective estimated useful
lives and to recognise the impairment losses thereon are
consistent with those described in relation to property,
plant and equipment for own use.
l) Accounting for leases
The main aspects contained in the regulation Bank of
Spain Circular 2/2018 adopted by the Bank are included
below:
When the Bank acts as lessee, it recognises a right-of-
use asset representing its right to use the underlying
leased asset with a corresponding lease liability on the
date on which the leased asset is available for use by the
Bank. Each lease payment is allocated between the
liability and the finance charge. The finance charge is
allocated to the income statement during the term of the
lease in such a way as to produce a constant periodic
interest rate on the remaining balance of the liability for
each year. The right-of-use asset is depreciated over the
useful life of the asset or the lease term, whichever is
shorter, on a straight-line basis. If the Bank is reasonably
certain to exercise a purchase option, the right-of-use
asset is amortized over the useful life of the underlying
asset.
Assets and liabilities arising from a lease are initially
measured at present value. Lease liabilities include the
net present value of the following lease payments:
Fixed payments (including inflation-linked
payments), less any lease incentive receivable.
Variable lease payments that depend on an index or
rate.
The amounts expected to be paid by the lessee under
residual value guarantees.
The exercise price of a purchase option if the lessee
is reasonably certain that it will exercise that option.
Lease termination penalty payments, if the term of
the lease reflects the lessee's exercise of that option.
Lease payments are discounted using the interest rate
implicit in the lease. Given in certain situations this
interest rate cannot be obtained, the discount rate used
in this cases, is the lessee's incremental borrowing rate
at the related date. For this purpose, the entity has
calculated this incremental borrowing rate taking as
reference the listed debt instruments issued by the Bank;
in this regard, the Bank has estimated different interest
rate curves depending on the currency and economic
environment in which the contracts are located.
In order to construct the incremental borrowing rate, a
methodology has been developed at the corporate level.
This methodology is based on the need for each entity to
consider its economic and financial situation, for which
the following factors must be considered:
Economic and political situation (country risk).
Credit risk of the company.
Monetary policy.
Volume and seniority of the company’s debt
instrument issues.
The incremental borrowing rate is defined as the interest
rate that a lessee would have to pay for borrowing, given
a similar period to the duration of the lease and with
similar security, the funds necessary to obtain an asset
of similar value to the right-of-use asset in a similar
economic environment. The Group entities have a wide
stock and variety of financing instruments issued in
different currencies to that of the euro (pound, dollar,
etc.) that provide sufficient information to be able to
determine an "all in rate" (reference rate plus
adjustment for credit spread at different terms and in
different currencies). In circumstances, where the Bank,
has its own financing this has been used as the starting
point for determining the incremental borrowing rate.
Right-of-use assets are valued at cost which includes the
following:
The amount of the initial measurement of the lease
liability.
Any lease payment made at or before the
commencement date less any lease incentive
received.
Any initial direct costs.
Restoration costs.
64
Banco Santander recognises the payments associated
with short-term leases and leases of low-value assets on
a straight-line basis as an expense in the income
statement. Short-term leases are leases with a lease
term less than or equal to 12 months (a lease that
contains a purchase option is not a short term lease).
m) Intangible assets
Intangible assets are identifiable non-monetary assets
(separable from other assets) without physical
substance which arise as a result of a legal transaction or
which are developed internally by the Bank.
Only assets whose cost can be estimated reliably and
from which the Bank considers it probable that future
economic benefits will be generated are recognised.
Intangible assets are recognised initially at acquisition or
production cost and are subsequently measured at cost
less any accumulated amortisation and any accumulated
impairment losses.
i. Goodwill
Any excess of the cost of the investments in the
subsidiaries, joint ventures and associates accounted for
using the equity method over the corresponding
underlying carrying amounts acquired, adjusted at the
date of first-time consolidation, is allocated as follows:
If it is attributable to specific assets and liabilities of
the companies acquired, by increasing the value of
the assets (or reducing the value of the liabilities)
whose fair values were higher (lower) than the
carrying amounts at which they had been recognised
in the acquired entities’ balance sheets.
If it is attributable to specific intangible assets, by
recognising it explicitly in the balance sheet provided
that the fair value of these assets within twelve
months following the date of acquisition can be
measured reliably.
The remaining amount is recognised as goodwill,
which is allocated to one or more cash-generating
units (CGUs) (a cash-generating unit is the smallest
identifiable group of assets that, as a result of
continuing operation, generates cash inflows that are
largely independent of the cash inflows from other
assets or groups of assets). The cash-generating
units represent the Banco Santander’s geographical
and/or business segments.
Goodwill (only recognised when it has been acquired by
consideration) represents, therefore, a payment made by
the acquirer in anticipation of future economic benefits
from assets of the acquired entity that are not capable of
being individually identified and separately recognised.
Goodwill, in accordance with Bank of Spain Circular
4/2017, is to be amortized over a 10-year period unless
otherwise stated. The debits to the income statements
for the amortisation of these assets are recorded under
the section ‘Amortisation’ in the income statement.
At the end of each annual reporting period or whenever
there is any indication of impairment goodwill is
reviewed for impairment (i.e. a reduction in its
recoverable amount to below its carrying amount) and, if
there is any impairment, the goodwill is written down
with a charge to 'Impairment or reversal of impairment
on non-financial assets, net - Intangible assets' in the 
income statement.
An impairment loss recognised for goodwill is not
reversed in a subsequent period.
In the event of sale or departure of an activity that is part
of a CGU, the part of the goodwill that can be assigned to
said activity would be written-off, taking as a reference
the relative value of the same over the total of the CGU
at the time of sale or abandonment. If applicable, the
distribution by currency of the remaining goodwill will
be performed based on the relative values of the
remaining activities.
ii. Other intangible assets
Other intangible assets includes the amount of
identifiable intangible assets, such as purchased
customer lists and computer software.
In accordance with Rule Twenty Eight of Bank of Spain
Circular 4/2017, for the financial statements (individual
and consolidated) not subject to the framework of
International Financial Reporting Standards, intangible
assets will be considered assets with a limited useful
life.
An intangible assets useful life may not exceed the
period during which the entity is entitled to use the
asset. If the right of use is for a limited period that can be
renewed, the useful life will include the renewal period
only when there is evidence that the renewal will be
carried out without significant cost.
When the useful life of assets cannot be estimated
reliably, they will be amortized over a period of ten
years. In the absence of evidence to the contrary, the
useful life of goodwill, if applicable, shall also be ten
years.
Intangible assets shall be amortized in accordance with
the criteria established for the tangible assets (a
maximum period of 10 years). Banco Santander reviews,
at least at the end of each year, the amortisation period
and the amortisation method of each of its intangible
assets and, if it considers that they are not appropriate,
the impact will be treated as a change in its accounting
estimates.
65
The intangible asset amortisation charge is recognised
under 'Depreciation and amortisation' in the income
statement.
In both cases, Banco Santander recognises any
impairment loss on the carrying amount of these assets
with a charge to 'Impairment or reversal of impairment
on non-financial assets, net - Intangible assets in the
income statement.
The criteria used to recognise the impairment losses on
these assets and, where applicable, the reversal of
impairment losses recognised in prior years are similar
to those used for tangible assets  (see note 2.k).
Internally developed computer software
Internally developed computer software is recognised as
an intangible asset if, among other requisites (basically
the Bank’s ability to use or sell it), it can be identified and
its ability to generate future economic benefits can be
demonstrated.
Expenditure on research activities is recognised as an
expense in the year in which it is incurred and cannot be
subsequently capitalised into the carrying amount of the
intangible asset.
n) Other assets
'Other assets' in the balance sheet includes the amount
of assets not recorded in other items, the breakdown
being as follows:
Inventories: this item includes the amount of assets,
other than financial instruments, that are held for
sale in the ordinary course of business, that are in the
process of production, construction or development
for such purpose, or that are to be consumed in the
production process or in the provision of services.
Inventories include land and other property held for
sale in the property development business.
Inventories are measured at the lower of cost and
net realisable value, which is the estimated selling
price of the inventories in the ordinary course of
business, less the estimated costs of completion and
the estimated costs required to make the sale.
Any write-downs of inventories -such as those due to
damage, obsolescence or reduction of selling price-
to net realisable value and other impairment losses
are recognised as expenses for the year in which the
impairment or loss occurs. Subsequent reversals are
recognised in the income statement for the year in
which they occur.
The carrying amount of inventories is derecognised
and recognised as an expense in the period in which
the revenue from their sale is recognised.
Other: this item includes the balance of all
prepayments and accrued income (excluding accrued
interest, fees and commissions), the net amount of
the difference between pension plan obligations and
the value of the plan assets with a balance in the
entity’s favour, when this net amount is to be
reported in the balance sheet, and the amount of any
other assets not included in other items.
o) Other liabilities
'Other liabilities' includes the balance of all accrued
expenses and deferred income, excluding accrued
interest, and the amount of any other liabilities not
included in other categories.
p) Provisions and contingent assets and liabilities
When preparing the financial statements of the Bank,
Banco Santander’s directors made a distinction between:
Provisions: credit balances covering present
obligations at the reporting date arising from past
events which could give rise to a loss for the Banco
Santander, which is considered to be likely to occur
and certain as to its nature but uncertain as to its
amount and/or timing.
Contingent liabilities: possible obligations that arise
from past events and whose existence will be
confirmed only by the occurrence or non-occurrence
of one or more future events not wholly within the
control of the Bank. They include the present
obligations of the Bank when it is not probable that
an outflow of resources embodying economic
benefits will be required to settle them. Banco
Santander does not recognise the contingent liability.
The Bank will disclose a contingent liability, unless
the possibility of an outflow of resources embodying
economic benefits is remote.
Contingent assets: possible assets that arise from
past events and whose existence is conditional on,
and will be confirmed only by, the occurrence or non-
occurrence of one or more uncertain future events
not wholly within the control of the Bank. Contingent
assets are not recognised in the  balance sheet or in
the income statement, but rather are disclosed in the
notes, provided that it is probable that these assets
will give rise to an increase in resources embodying
economic benefits.
Banco Santander`s financial statements include all the
material provisions with respect to which it is considered
that it is more likely than not the obligation will have to
be settled. In accordance with accounting standards,
contingent liabilities must not be recognised in the
consolidated financial statements, but must rather be
disclosed in the Notes.
66
Provisions (which are quantified on the basis of the best
information available on the consequences of the event
giving rise to them and are reviewed and adjusted at the
end of each year) are used to cater for the specific
obligations for which they were originally recognised.
Provisions are fully or partially reversed when such
obligations cease to exist or are reduced.
Provisions are classified according to the obligations
covered as follows (see note 23):
Provision for pensions and similar obligations:
includes the amount of all the provisions made to
cover post-employment benefits, including
obligations to pre-retirees and similar obligations.
Provisions for contingent liabilities and
commitments: include the amount of the provisions
made to cover contingent liabilities -defined as those
transactions in which the Bank guarantees the
obligations of a third party, arising as a result of
financial guarantees granted or contracts of another
kind- and contingent commitments -defined as
irrevocable commitments that may give rise to the
recognition of financial assets.
Provisions for taxes and other legal contingencies
and Other provisions: include the amount of the
provisions recognised to cover tax and legal
contingencies and litigation and the other provisions
recognised by Banco Santander. Other provisions
includes, inter alia, any provisions for restructuring
costs and environmental measures.
q) Court proceedings and/or claims in process
At the end of 2021 certain court proceedings and claims
were in process against Banco Santander arising from
the ordinary course of their operations (see note 23).
r) Own equity instruments
Own equity instruments are those meeting both of the
following conditions:
The instruments do not include any contractual
obligation for the issuer (i) to deliver cash or another
financial asset to a third party; or (ii) to exchange
financial assets or financial liabilities with a third
party under conditions that are potentially
unfavourable to the issuer.
The instruments will or may be settled in the issuer’s
own equity instruments and are: (i) a non-derivative
that includes no contractual obligation for the issuer
to deliver a variable number of its own equity
instruments; or (ii) a derivative that will be settled by
the issuer through the exchange of a fixed amount of
cash or another financial asset for a fixed number of
its own equity instruments.
Transactions involving own equity instruments, including
their issuance and cancellation, are charged directly to
equity.
Changes in the value of instruments classified as own
equity instruments are not recognised in the financial
statements. Consideration received or paid in exchange
for such instruments, including the coupons on
preference shares contingently convertible into ordinary
shares and the coupons associated with CCPP, is directly
added to or deducted from equity.
s) Equity-instrument-based employee remuneration
Own equity instruments delivered to employees in
consideration for their services, if the instruments are
delivered once the specific period of service has ended,
are recognised as an expense for services (with the
corresponding increase in equity) as the services are
rendered by employees during the service period. At the
grant date the services received (and the related increase
in equity) are measured at the fair value of the equity
instruments granted. If the equity instruments granted
are vested immediately  Banco Santander  recognises in
full, at the grant date, the expense for the services
received.
When the requirements stipulated in the remuneration
agreement include external market conditions (such as
equity instruments reaching a certain quoted price), the
amount ultimately to be recognised in equity will
depend on the other conditions being met by the
employees (normally length of service requirements),
irrespective of whether the market conditions are
satisfied. If the conditions of the agreement are met but
the external market conditions are not satisfied, the
amounts previously recognised in equity are not
reversed, even if the employees do not exercise their
right to receive the equity instruments.
t) Recognition of income and expenses
The most significant criteria used by Banco Santander to
recognise its income and expenses are summarised as
follows:
i. Interest income, interest expenses and similar items
Interest income, interest expenses and similar items are
generally recognised on an accrual basis using the
effective interest method. Dividends received from other
companies are recognised as income when the Banco
Santander  right to receive them arises.
ii. Commissions, fees and similar items
Fee and commission income and expenses are
recognised in the income statement using criteria that
vary according to their nature. The main criteria are as
follows:
Fee and commission income and expenses relating to
financial assets and financial liabilities measured at
fair value through profit or loss are recognised when
paid.
Those arising from transactions or services that are
performed over a period of time are recognised over
the life of these transactions or services.
67
Those relating to services provided in a single act are
recognised when the single act is carried out.
iii. Non-finance income and expenses
They are recognised for accounting purposes when the
good is delivered or the non-financial service is rendered.
To determine the amount and timing of recognition, a
five-step model is followed: identification of the contract
with the customer, identification of the separate
obligations of the contract, determination of the
transaction price, distribution of the transaction price
among the identified obligations and finally recording of
income as the obligations are satisfied.
iv. Deferred collections and payments
These are recognised for accounting purposes at the
amount resulting from discounting the expected cash
flows at market rates.
v. Loan arrangement fees
Loan arrangement fees, mainly loan origination,
application and information fees, are accrued and
recognised in income over the term of the loan.
u) Financial guarantees
Financial guarantees are defined as contracts whereby
an entity undertakes to make specific payments on
behalf of a third party if the latter fails to do so,
irrespective of the various legal forms they may have,
such as guarantees, insurance policies or credit
derivatives.
Banco Santander initially recognises the financial
guarantees provided on the liability side of the balance
sheet at fair value, which is generally the present value
of the fees, commissions and interest receivable from
these contracts over the term thereof, and
simultaneously the Bank recognises the amount of the
fees, commissions and similar interest received at the
inception of the transactions and a credit on the asset
side of the balance sheet for the present value of the
fees, commissions and interest outstanding.
Financial guarantees, regardless of the guarantor,
instrumentation or other circumstances, are reviewed
periodically so as to determine the credit risk to which
they are exposed and, if appropriate, to consider
whether a provision is required. The credit risk is
determined by application of criteria similar to those
established for quantifying impairment losses on debt
instruments carried at amortised cost (described in note
2.g above).
The provisions made for these transactions are
recognised under 'Provisions - Provisions for
commitments and guarantees given in the consolidated
balance sheet' (see note 23). These provisions are
recognised and reversed with a charge or credit,
respectively, to 'Provisions or reversal of provisions', net,
in the income statement.
If a specific provision is required for financial guarantees,
the related unearned commissions recognised under
'Financial liabilities at amortised cost - Other financial
liabilities in the balance sheet', are reclassified to the
appropriate provision.
v) Post-employment benefits
Under the collective agreements currently in force and
other arrangements, the Spanish banks included in the
Group and certain other Spanish and foreign
consolidated entities have undertaken to supplement
the public social security system benefits accruing to
certain employees, and to their beneficiary right holders,
for retirement, permanent disability or death, and the
post-employment welfare benefits.
Banco Santander’s post-employment obligations to its
employees are deemed to be defined contribution plans
when the Bank makes pre-determined contributions
(recognised under Personnel expenses in the income
statement) to a separate entity and will have no legal or
effective obligation to make further contributions if the
separate entity cannot pay the employee benefits
relating to the service rendered in the current and prior
periods. Post-employment obligations that do not meet
the aforementioned conditions are classified as defined
benefit plans (see note 23).
Defined contribution plans
The contributions made in this connection in each year
are recognised under 'Personnel expenses' in the income
statement.
The amounts not yet contributed at each year-end are
recognised, at their present value, under 'Provisions -
Provision for pensions' and similar obligations on the
liability side of the balance sheet.
Defined benefit plans
Banco Santander recognises under 'Provisions - Provision
for pensions and similar obligations on the liability side
of the balance sheet' (or under 'Other assets' on the
asset side, as appropriate) the present value of its
defined benefit post-employment obligations, net of the
fair value of the plan assets.
Plan assets are defined as those that will be directly
used to settle obligations and that meet the following
conditions:
They are not owned by Banco Santander, but by a
legally separate third party that is not a party related
to the  Bank.
They are only available to pay or fund post-
employment benefits and they cannot be returned to
the  Bank unless the assets remaining in the plan are
sufficient to meet all the benefit obligations of the
plan and of the entity to current and former
employees, or they are returned to reimburse
employee benefits already paid by the Bank.
68
If Banco Santander  can look to an insurer to pay part or
all of the expenditure required to settle a defined benefit
obligation, and it is practically certain that said insurer
will reimburse some or all of the expenditure required to
settle that obligation, but the insurance policy does not
qualify as a plan asset, the Bank  recognises its right to
reimbursement -which, in all other respects, is treated as
a plan asset- under 'Insurance contracts linked to
pensions' on the asset side of the balance sheet.
Banco Santander will recognise the following items in
the income statement:
Current service cost, (the increase in the present
value of the obligations resulting from employee
service in the current period), is recognised under
'Staff costs'.
The past service cost, which arises from changes to
existing post-employment benefits or from the
introduction of new benefits and includes the cost of
reductions, is recognised under 'Provisions or
reversal of provisions'.
Any gain or loss arising from a liquidation of the plan
is included in the Provisions or reversion of
provisions.
Net interest on the net defined benefit liability
(asset), i.e. the change during the period in the net
defined benefit liability (asset) that arises from the
passage of time, is recognised under 'Interest
expense' and similar charges ('Interest and similar
income' if it constitutes income) in the income
statement.
The remeasurement of the net defined benefit liability
(asset) is recognised in 'Other comprehensive income'
under Items not reclassified to profit or loss and
includes:
Actuarial gains and losses generated in the year,
arising from the differences between the previous
actuarial assumptions and what has actually
occurred and from the effects of changes in actuarial
assumptions.
The return on plan assets, excluding amounts
included in net interest on the net defined benefit
liability (asset).
Any change in the effect of the asset ceiling,
excluding amounts included in net interest on the net
defined benefit liability (asset).
w) Other long-term employee benefits
Other long-term employee benefits, defined as
obligations to pre-retirees -taken to be those who have
ceased to render services at the entity but who, without
being legally retired, continue to have economic rights
vis-à-vis the entity until they acquire the legal status of
retiree-, long-service bonuses, obligations for death of
spouse or disability before retirement that depend on
the employee’s length of service at the entity and other
similar items, are treated for accounting purposes,
where applicable, as established above for defined
benefit post-employment plans, except that actuarial
gains and losses are recognised under 'Provisions or
reversal of provisions', net, in the income statement
(see note 23).
x) Termination benefits
Termination benefits are recognised when there is a
detailed formal plan identifying the basic changes to be
made, provided that implementation of the plan has
begun, its main features have been publicly announced
or objective facts concerning its implementation have
been disclosed.
y) Income tax
The income tax expense is recognised in the income
statement, except when they arise from a transaction
whose results are recognised directly in equity.
The current income tax expense is calculated as the sum
of the current tax resulting from application of the
appropriate tax rate to the taxable profit for the year (net
of any deductions allowable for tax purposes), and of the
changes in deferred tax assets and liabilities recognised
in the income statement.
'Deferred tax assets' and liabilities include temporary
differences, which are identified as the amounts
expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities
and their related tax bases, and tax loss and tax credit
carryforwards. These amounts are measured at the tax
rates that are expected to apply in the period when the
asset is realised or the liability is settled.
'Tax assets' include the amount of all tax assets, which
are broken down into current -amounts of tax to be
recovered within the next twelve months- and deferred -
amounts of tax to be recovered in future years, including
those arising from tax loss or tax credit carryforwards.
'Tax liabilities' includes the amount of all tax liabilities
(except provisions for taxes), which are broken down
into current -the amount payable in respect of the
income tax on the taxable profit for the year and other
taxes in the next twelve months- and deferred -the
amount of income tax payable in future years.
Deferred tax liabilities are recognised in respect of
taxable temporary differences associated with
investments in subsidiaries, associates or joint ventures,
except when  the Bank is able to control the timing of the
reversal of the temporary difference and, in addition, it is
probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are only recognised for temporary
differences to the extent that it is considered probable
that the Bank will have sufficient future taxable profits
against which the deferred tax assets can be utilised, and
the deferred tax assets do not arise from the initial
69
recognition (except in a business combination) of other
assets and liabilities in a transaction that affects neither
taxable profit nor accounting profit. Other deferred tax
assets (tax loss and tax credit carryforwards) are only
recognised if it is considered probable that the Bank
entities will have sufficient future taxable profits against
which they can be utilised.
Differences generated by the different accounting and
tax treatment of any of the income and expenses
recorded directly in equity to be paid or recovered in the
future are accounted for as temporary differences.
The deferred tax assets and liabilities are reassessed at
the reporting date in order to ascertain whether any
adjustments need to be made on the basis of the
findings of the analyses performed (see note 24).
z) Residual maturity periods
In note 48 its presented the analysis of the maturities of
the balances of certain items in the balance sheet.
aa) Statement of recognised income and expenses
This statement presents the income and expenses
generated by the Bank as a result of its business activity
in the year, and a distinction is made between the
income and expenses recognised in the income
statement for the year and the other income and
expenses recognised directly in equity.
Accordingly, this statement presents:
a.Profit for the year.
b.The net amount of the income and expenses
recognised in 'Other comprehensive income' under
items that will not be reclassified to profit or loss.
c.The net amount of the income and expenses
recognised in Other comprehensive income under
items that may be reclassified subsequently to profit
or loss.
d.The income tax incurred in respect of the items
indicated in b and c above, except for the valuation
adjustments arising from investments in associates
or joint ventures accounted for using the equity
method, which are presented net.
e.Total recognised income and expense, calculated as
the sum of a) to d) above.
The statement presents the items separately by nature,
grouping together items that, in accordance with the
applicable accounting standards, will not be reclassified
subsequently to profit and loss since the requirements
established by the corresponding accounting standards
are met.
ab) Statement of changes in total equity
This statement presents all the changes in equity,
including those arising from changes in accounting
policies and from the correction of errors. Accordingly,
this statement presents a reconciliation of the carrying
amount at the beginning and end of the year of all the
equity items, and the changes are grouped together on
the basis of their nature into the following items:
a.Adjustments due to changes in accounting policies
and to errors: include the changes in consolidated
equity arising as a result of the retrospective
restatement of the balances in the financial
statements, distinguishing between those resulting
from changes in accounting policies and those
relating to the correction of errors.
b.Income and expense recognised in the year: includes,
in aggregate form, the total of the aforementioned
items recognised in the statement of recognised
'Income and expense'.
c.Other changes in equity: includes the remaining
items recognised in equity, including, inter alia,
increases and decreases in capital, distribution of
profit, transactions involving own equity
instruments, equity-instrument-based payments,
transfers between equity items and any other
increases or decreases in equity.
ac) Statement of cash flows
The following terms are used in the statements of cash
flows with the meanings specified:
Cash flows: inflows and outflows of cash and cash
equivalents, which are short-term, highly liquid
investments that are subject to an insignificant risk
of changes in value, irrespective of the portfolio in
which they are classified.
Banco Santander classifies as cash and cash
equivalents the balances recognised under 'Cash,
cash balances at central banks' and 'Other deposits
on demand' in the balance sheet.
Operating activities: the principal revenue-producing
activities of credit institutions and other activities
that are not investing or financing activities.
Investing activities: the acquisition and disposal of
long-term assets and other investments not included
in cash and cash equivalents.
Financing activities: activities that result in changes
in the size and composition of the equity and
liabilities that are not operating activities.
During 2021, Banco Santander received interest
amounting to EUR 6,242 million and paid interest
amount to EUR 3,424 million (EUR 6,510 and 3,447
million, respectively in 2020).
Also, the dividends received and paid by Banco
Santander are detailed in notes 4 and 36.
70
3. Santander Group
a) Banco Santander, S.A. and international Group
structure
The growth of Grupo Santander in the last decades has
led Banco Santander to also act, in practice, as a holding
entity of the shares of the various companies in its
Group, and its results are becoming progressively less
representative of the performance and earnings of the
Group. Therefore, each year the bank determines the
amount of the dividends to be distributed to its
shareholders on the basis of the consolidated net profit,
while maintaining the Group’s objectives of
capitalisation and taking into account that the
transactions of the Bank and of the rest of the Group are
managed on a consolidated basis (notwithstanding the
allocation to each company of the related net worth
effect).
At the international level, the various banks and other
subsidiaries, joint ventures and associates of the Group
are integrated in a corporate structure comprising
various holding companies which are the ultimate
shareholders of the banks and subsidiaries abroad.
The purpose of this structure, all of which is controlled
Banco Santander, is to optimise the international
organisation from the strategic, economic, financial and
tax standpoints, since it makes it possible to define the
most appropriate units to be entrusted with acquiring,
selling or holding stakes in other international entities,
the most appropriate financing method for these
transactions and the most appropriate means of
remitting the profits obtained by the group’s various
operating units to Spain.
The Appendices provide relevant data on the
consolidated group companies and on the companies
accounted for using the equity method.
b)  Acquisitions and disposals
Following is a summary of the main acquisitions and
disposals of ownership interests in the share capital of
other entities and other significant corporate
transactions performed in the last two years or pending
to be completed:
i. Purchase by SHUSA for shares of Santander Consumer
USA
In August 2021 Santander Holdings USA, Inc. ('SHUSA')
and Santander Consumer USA Holdings Inc. ('SC')
entered into a definitive agreement pursuant to which
SHUSA acquired all outstanding shares of common stock
of SC not already owned by SHUSA via an all-cash tender
offer (the 'Tender Offer') for USD 41.50 per SC common
share (the 'Offer Price'), followed by a second-step
consisting of a merge (together with the Offer, the
'Transaction') in which a wholly owned subsidiary of
SHUSA was merged with and into SC, with SC surviving
as a wholly owned subsidiary of SHUSA, and all
outstanding shares of common stock of SC not tendered
in the Tender Offer were converted into the right to
receive the Offer Price in cash. The Offer Price
represented a 14% premium to the closing price of SC
common stock of USD 36.43 as of 1 July 2021, the last
day prior to the announcement of SHUSA’s initial offer to
acquire the remaining outstanding shares of SC’s
common stock.
On 31 January 2022, after completion of the customary
closing conditions, the Transaction was performed and
SHUSA increased its share up to the 100% of SC's
common stock. The transaction has meant a
disbursement of USD 2,510 million (around EUR
2,239 million) for the Group.
ii. Acquisition of Amherst Pierpont, a U.S. fixed-income
broker dealer
On 15 July 2021, Santander Holdings USA, Inc. reached
an agreement to acquire Amherst Pierpont Securities, a
market-leading independent fixed-income and
structured products broker dealer, through the
acquisition of its parent holding company, Pierpont
Capital Holdings LLC, for a total consideration of
approximately USD 600 million (around EUR
530 million). Amherst Pierpont will become part of
Santander Corporate & Investment Banking (Santander
CIB) Global business line.
The transaction is expected to close upon receipt of
relevant regulatory approvals.
iii. Tender offer for shares of Banco Santander México,
S.A., Institución de Banca Múltiple, Grupo Financiero
Santander México
On 26 March 2021, Banco Santander, S.A. announced its
intention to make a tender offer for all shares of Banco
Santander Mexico, S.A., Institución de Banca Múltiple,
Grupo Financiero Santander México ('Santander México')
that were not owned by Grupo Santander, representing
(after the acquisition of shares of Banco Santander
México, S.A., Institución de Banca Múltiple, Grupo
Financiero Santander México in fiscal year 2019)
approximately 8.3% of the share capital of Santander
México. The announcement was subsequently
supplemented by other publications on 24 May, 8 June
and 28 October 2021, in which amendments to some of
the terms of the offer were announced.
The offer was finally launched on 3 November 2021 and
was settled on 10 December. Banco Santander accepted
all of the Santander Mexico Shares and Santander
Mexico American Depositary Share (ADS) (securities
listed on the New York Stock Exchange, each
representing 5 shares of Santander Mexico) tendered
and not withdrawn representing approximately 4.5% of
the share capital of Santander México. After the
transaction, Santander Group holds approximately
96.2% of Santander México share capital.
71
The shareholders who have tendered their shares in the
offer have received MXN 26.5 (approximately EUR 1) per
share of Santander México and USD 6.2486 in cash per
each ADS (the USD equivalent of MXN 132.50 per ADS
based on the USD/MXN exchange rate on the expiration
date of 7 December 2021) which has meant a
disbursement of approximately EUR 335 million.
This transaction has entailed a decrease of reserves of
EUR 41 million and a decrease of EUR 294 million of
minority interests, for the purposes of the Group.
iv. Agreement for the acquisition of a significant stake in
Ebury
On 28 April 2020, the investment in Ebury, a payments
and currencies platform for SMEs, announced on 4
November 2019, was completed. The transaction
involved a total outlay of GBP 357 million (EUR
409 million) of which GBP 70 million (approximately EUR
80 million) was for new shares. At 2019 year-end the
Group had already acquired 6.4% of the company for
GBP 40 million (approximately EUR 45 million).
Following the disbursement made in April 2020, the
Group is entitled to receive 50.38% of the dividends
distributed by the company. This interest is recognized
under 'Investments in Joint Ventures and Associates -
Associates' in the consolidated balance sheet.
v. Reorganization of the banking insurance business,
asset management and pension plans in Spain
On 24 June 2019, Banco Santander, S.A., reached an
agreement with the Allianz Group to terminate the
agreement that Banco Popular Español, S.A.U. ('Banco
Popular') held in Spain with the Allianz Group for the
exclusive distribution of certain life insurance products,
non-life insurance products, collective investment
institutions (IIC), and pension plans through the Banco
Popular network (the 'Agreement'). Under this
Agreement, the Group held a 40% stake in the capital of
Popular Spain Holding de Inversiones, S.L.U., classified
as investments in joint ventures and associated entities
for an overall amount of EUR 409 million on 31
December 2019.
The Agreement was executed on 15 January 2020 for the
non-life business and on 31 January 2020 for the
remaining businesses, once the regulatory
authorisations were obtained in the first half of 2020.
The execution of the Termination Agreement entailed
the payment by Banco Santander of a total consideration
of EUR 859 million (after deducting the dividends paid
until the end of the operation) and the acquisition of the
remaining 60% of the capital of Popular Spain Holding
de Inversiones, S.L.U.
On 10 July, 51% of the life-risk insurance business held
by Banco Santander and the 51% of the new General
Insurance business from Banco Popular's network not
transferred to Mapfre (in accordance with the agreement
indicated below) was acquired by Aegon, valuing these
businesses at a total of approximately EUR 557 million.
The total amount of the life-savings business, collective
investment institutions and pension plans is EUR
711 million and has resulted in the recognition of EUR
271 million of goodwill.
In addition, under the agreement reached between
Banco Santander and Mapfre on 21 January 2019,
50.01% of the car, commercial multi-risk, SME multi-risk
and corporate liability insurance business in the whole
network of Banco Santander in Spain was acquired by
Mapfre on 25 June 2019 amounting to EUR 82 million.
c)  Offshore entities
According to current Spanish regulation (Law 11/2021,
of 9 July and Royal Decree 1080/1991, of 5 July),
Santander has one subsidiary and three branches in the
non-cooperative jurisdictions of Jersey, the Isle of Man
and the Cayman Islands (offshore entities). Santander
also has three other subsidiaries incorporated in non-
cooperative jurisdictions that are tax resident in the UK
and subject to British tax law.
i. Offshore subsidiaries
A subsidiary resident in the Isle of Man was liquidated in
2021 so, at the reporting date, Grupo Santander has only
one subsidiary resident in Jersey: Abbey National
International Limited. In 2021, this subsidiary’s
contribution to Santander’s consolidated profit was
insubstantial.
ii. Offshore branches
Grupo Santander also has three offshore branches. One
is found in the Cayman Islands, one is on the Isle of Man
and another is in Jersey. They report to, and consolidate
balance sheets and income statements with, their
foreign headquarters. They are taxed either with their
headquarters (the Cayman Islands branch in Brazil) or in
the territories they are located in (Jersey and Isle of Man,
pertain to the UK).
The entities mentioned in Sections I and II had 147
employees as of December 2021.
iii. Subsidiaries in non-cooperative jurisdictions that are
tax resident in the United Kingdom
Grupo Santander also has three subsidiaries (one in
liquidation) that were incorporated in offshore
jurisdictions but are not deemed offshore entities. They
only operate from, and are tax resident in, the UK and,
thus, are subject to British tax law.
iv. Other offshore holdings
From Brazil, Grupo Santander manages Santander Brazil
Global Investment Fund SPC, a segregated portfolio
company located in the Cayman Islands. It also has two
small financial investments in entities located in the
Cayman Islands. In 2021, Guaranteed Investment
Products 1 PCC Limited, a protected cell company found
in Guernsey managed from the UK, was liquidated.
72
Organization for Economic Cooperation and
Development (OECD)
Grupo Santander is not in any of the non-cooperative
jurisdictions the OECD released in November 2021.
Furthermore, Jersey, the Isle of Man and the Cayman
Islands satisfy OECD standards on transparency and
exchange of information for tax purposes.
The European Union (EU)
As of October 2021, the EU’s blacklist comprises 9
jurisdictions where Santander is not present.
Additionally, the EU’s grey list comprises 15 jurisdictions
which have sufficiently committed to adapt legislation to
international standards, subject to monitoring by the EU.
Within these jurisdictions, Santander is only present in
Uruguay and Hong Kong mainly through Banco
Santander S.A. in Uruguay and a branch in Hong Kong.
The Group's presence in offshore territories at the end of
2021 is as follows:
Presence of
the Group in
non-
cooperative
jurisdictions
Spanish
legislation
OECD
European
Commission
Blacklist
Sub.
Branch
Sub.
Branch
Sub.
Branch
Jersey
1
1
Isle of Man
1
Guernsey*
Bermuda*
Cayman
Islands
1
2021
1
3
2020
2
3
*Additionally, there are 2 entities constituted in Guernsey (1 in
liquidation) and 1 in Bermuda, but resident for tax purposes in the
United Kingdom.
Changes to Spain's tax law
On 10 July 2021, Law 11/2021 on measures to prevent
and fight against tax fraud was published in the Official
Estate Gazette. The law expands the meaning of tax
havens, which it renames “non-cooperative
jurisdictions”. It also allows government to update the
non-cooperative jurisdictions list. Nonetheless, until that
list conforms to the new criteria, the former list set out
in Royal Decree 1080/1991 of 5 July will remain in
effect.
Grupo Santander has the right mechanisms (risk
management, supervision, verification and review plans,
and regular reporting) to prevent reputational, tax and
legal risk in entities resident in non-cooperative
jurisdictions. Grupo Santander also maintains its policy
of reducing the number of these entities.
PwC (PricewaterhouseCoopers) member firms audited
the financial statements of Grupo Santander’s offshore
entities in 2021 and 2020.
d) Consolidated balance sheet, income statement,
statement of recognized income and expenses,
statement of changes in total equity and cash-flow
statement
The Group's consolidated balance sheets at December
31, 2021 and 2020 and the consolidated income
statements, consolidated statements of recognized
income and expense, consolidated statements of
changes in total equity and consolidated statements of
cash flows for the years then ended are as follows:
73
CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2021 AND 2020
EUR million
CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEPOSITS ON DEMAND
210,689
153,839
FINANCIAL ASSETS HELD FOR TRADING
116,953
114,945
Derivatives
54,292
67,137
Equity instruments
15,077
9,615
Debt instruments
26,750
37,894
Loans and advances
20,834
299
Central banks
3,608
Credit institutions
10,397
3
Customers
6,829
296
NON-TRADING FINANCIAL ASSETS MANDATORILY AT
FAIR VALUE THROUGH PROFIT OR LOSS
5,536
4,486
Equity instruments
4,042
3,234
Debt instruments
957
700
Loans and advances
537
552
Central banks
Credit institutions
Customers
537
552
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
15,957
48,717
Debt instruments
2,516
2,979
Loans and advances
13,441
45,738
Central banks
9,481
Credit institutions
3,152
12,136
Customers
10,289
24,121
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
108,038
120,953
Equity instruments
2,453
2,783
Debt instruments
97,922
108,903
Loans and advances
7,663
9,267
Central banks
Credit institutions
Customers
7,663
9,267
FINANCIAL ASSETS AT AMORTIZED COST
1,037,898
958,378
Debt instruments
35,708
26,078
Loans and advances
1,002,190
932,300
Central banks
15,657
12,499
Credit institutions
39,169
37,838
Customers
947,364
881,963
HEDGING DERIVATIVES
4,761
8,325
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN
PORTFOLIO HEDGES OF INTEREST RATE RISK
410
1,980
INVESTMENTS
7,525
7,622
Joint venture entities
1,692
1,492
Associated entities
5,833
6,130
ASSETS UNDER INSURANCE OR REINSURANCE CONTRACTS
283
261
ASSETS
2021
2020*
74
TANGIBLE ASSETS
33,321
32,735
Property, plant and equipment
32,342
31,772
For own-use
13,259
13,213
Leased out under an operating lease
19,083
18,559
Investment properties
979
963
Of which leased out under an operating lease
839
793
INTANGIBLE ASSETS
16,584
15,908
Goodwill
12,713
12,471
Other intangible assets
3,871
3,437
TAX ASSETS
25,196
24,586
Current tax assets
5,756
5,340
Deferred tax assets
19,440
19,246
OTHER ASSETS
8,595
11,070
Insurance contracts linked to pensions
149
174
Inventories
6
5
Other
8,440
10,891
NON-CURRENT ASSETS HELD FOR SALE
4,089
4,445
TOTAL ASSETS
1,595,835
1,508,250
ASSETS
2021
2020*
* Presented for comparison purposes only.
75
CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2021 AND 2020
EUR million
LIABILITIES
2021
2020*
FINANCIAL LIABILITIES HELD FOR TRADING
79,469
81,167
Derivatives
53,566
64,469
Short positions
12,236
16,698
Deposits
13,667
Central banks
1,038
Credit institutions
6,488
Customers
6,141
Marketable debt securities
Other financial liabilities
FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
32,733
48,038
Deposits
27,279
43,598
Central banks
607
2,490
Credit institutions
1,064
6,765
Customers
25,608
34,343
Marketable debt securities
5,454
4,440
Other financial liabilities
Memorandum items: subordinated liabilities
FINANCIAL LIABILITIES AT AMORTIZED COST
1,349,169
1,248,188
Deposits
1,078,587
990,391
Central banks
139,757
112,804
Credit institutions
52,235
62,620
Customers
886,595
814,967
Marketable debt securities
240,709
230,829
Other financial liabilities
29,873
26,968
Memorandum items: subordinated liabilities
26,196
21,880
HEDGING DERIVATIVES
5,463
6,869
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN
PORTFOLIO HEDGES OF INTEREST RATE RISK
248
286
LIABILITIES UNDER INSURANCE OR REINSURANCE CONTRACTS
770
910
PROVISIONS
9,583
10,852
Pensions and other post-retirement obligations
3,185
3,976
Other long term employee benefits
1,242
1,751
Taxes and other legal contingencies
1,996
2,200
Contingent liabilities and commitments
733
700
Other provisions
2,427
2,225
TAX LIABILITIES
8,649
8,282
Current tax liabilities
2,187
2,349
Deferred tax liabilities
6,462
5,933
OTHER LIABILITIES
12,698
12,336
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
TOTAL LIABILITIES
1,498,782
1,416,928
* Presented for comparison purposes only.
76
CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2021 AND 2020
EUR million
EQUITY
2021
2020*
SHAREHOLDERS´ EQUITY
119,649
114,620
CAPITAL
8,670
8,670
Called up paid capital
8,670
8,670
Unpaid capital which has been called up
SHARE PREMIUM
47,979
52,013
EQUITY INSTRUMENTS ISSUED OTHER THAN CAPITAL
658
627
Equity component of the compound financial instrument
Other equity instruments issued
658
627
OTHER EQUITY
152
163
ACCUMULATED RETAINED EARNINGS
60,273
65,583
REVALUATION RESERVES
OTHER RESERVES
(4,477)
(3,596)
Reserves or accumulated losses in joint venture investments
1,572
1,504
Others
(6,049)
(5,100)
(-) OWN SHARES
(894)
(69)
PROFIT OR LOSS ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
8,124
(8,771)
(-) INTERIM DIVIDENDS
(836)
OTHER COMPREHENSIVE INCOME OR LOSS
(32,719)
(33,144)
Items that will not be reclassified to profit or loss
(4,241)
(5,328)
Items that may be reclassified to profit or loss
(28,478)
(27,816)
NON-CONTROLLING INTEREST
10,123
9,846
Other comprehensive income or loss
(2,104)
(1,800)
Other items
12,227
11,646
TOTAL EQUITY
97,053
91,322
TOTAL LIABILITIES AND EQUITY
1,595,835
1,508,250
MEMORANDUM ITEMS: OFF BALANCE SHEET AMOUNTS
Loan commitments granted
262,737
241,230
Financial guarantees granted
10,758
12,377
Other commitments granted
75,733
64,538
*Presented for comparison purposes only (note 1.d).
77
CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER  2021 AND 2020
EUR million
Interest income
46,463
45,741
Financial assets at fair value through other comprehensive income
2,582
2,840
Financial assets at amortized cost
40,471
40,365
Other interest income
3,410
2,536
Interest expense
(13,093)
(13,747)
Interest income/(charges)
33,370
31,994
Dividend income
513
391
Income from companies accounted for using the equity method
432
(96)
Commission income
13,812
13,024
Commission expense
(3,310)
(3,009)
Gain or losses on financial assets and liabilities not measured
at fair value through profit or loss, net
628
1,107
Financial assets at amortized cost
89
(31)
Other financial assets and liabilities
539
1,138
Gain or losses on financial assets and liabilities held for trading, net
1,141
3,211
Reclassification of financial assets at fair value through other comprehensive income
Reclassification of financial assets at amortized cost
Other gains (losses)
1,141
3,211
Gains or losses on non-trading financial assets and liabilities mandatorily
at fair value through profit or loss
132
82
Reclassification of financial assets at fair value through other comprehensive income
Reclassification of financial assets at amortized cost
Other gains (losses)
132
82
Gain or losses on financial assets and liabilities measured
at fair value through profit or loss, net
270
(171)
Gain or losses from hedge accounting, net
(46)
51
Exchange differences, net
(562)
(2,093)
Other operating income
2,255
1,920
Other operating expenses
(2,442)
(2,342)
Income from assets under insurance and reinsurance contracts
1,516
1,452
Expenses from liabilities under insurance and reinsurance contracts
(1,305)
(1,242)
Total income
46,404
44,279
Administrative expenses
(18,659)
(18,320)
Staff costs
(11,216)
(10,783)
Other general administrative expenses
(7,443)
(7,537)
Depreciation and amortisation cost
(2,756)
(2,810)
Provisions or reversal of provisions, net
(2,814)
(2,378)
Impairment or reversal of impairment at financial assets not measured
at fair value through  profit or loss and net gains and losses from changes
(7,407)
(12,382)
Financial assets at fair value through other comprehensive income
(19)
(19)
Financial assets at amortized cost
(7,388)
(12,363)
Impairment or reversal of impairment of investments in
subsidiaries, joint ventures and associates, net
Impairment or reversal of impairment on non-financial assets, net
(231)
(10,416)
Tangible assets
(150)
(174)
Intangible assets
(71)
(10,242)
Others
(10)
Gain or losses on non-financial assets and investments, net
53
114
Negative goodwill recognized in results
8
(Debit) Credit
2021
2020*
78
Gains or losses on non-current assets held for sale
not classified as discontinued operations
(43)
(171)
Operating profit/(loss) before tax
14,547
(2,076)
Tax expense or income from continuing operations
(4,894)
(5,632)
Profit/(loss) from continuing operations
9,653
(7,708)
Profit/(loss) after tax from discontinued operations
Profit/(loss) for the year
9,653
(7,708)
Profit/(loss) attributable to non-controlling interests
1,529
1,063
Profit/(loss) attributable to the parent
8,124
(8,771)
Earnings/(losses) per share
Basic
0.438
(0.538)
Diluted
0.436
(0.538)
(Debit) Credit
2021
2020*
* Presented for comparison purposes only (note 1.d).
79
CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE FOR THE YEARS ENDED 31 DECEMBER 2021 AND
2020
EUR million
2021
2020*
CONSOLIDATED PROFIT/(LOSS) FOR THE YEAR
9,653
(7,708)
OTHER RECOGNISED INCOME AND EXPENSE
(220)
(9,794)
Items that will not be reclassified to profit or loss
754
(1,018)
Actuarial gains and losses on defined benefit pension plans
1,567
(25)
Non-current assets held for sale
Other recognised income and expense of investments in
subsidiaries, joint ventures and associates
(1)
(4)
Changes in the fair value of equity instruments measured at fair value through other comprehensive
income
(171)
(917)
Gains or losses resulting from the accounting for hedges of equity instruments measured at fair value
through other comprehensive income, net
Changes in the fair value of equity instruments measured at fair value through other comprehensive
income (hedged item)
117
4
Changes in the fair value of equity instruments measured at fair value through other comprehensive
income (hedging instrument)
(117)
(4)
Changes in the fair value of financial liabilities at fair value through profit or loss attributable to changes in
credit risk
(99)
31
Income tax relating to items that will not be reclassified
(542)
(103)
Items that may be reclassified to profit or loss
(974)
(8,776)
Hedges of net investments in foreign operations (effective portion)
(1,159)
2,340
Revaluation gains (losses)
(1,159)
2,340
Amounts transferred to income statement
Other reclassifications
Exchanges differences
3,082
(11,040)
Revaluation gains (losses)
3,082
(11,040)
Amounts transferred to income statement
Other reclassifications
Cash flow hedges (effective portion)
(938)
(53)
Revaluation gains (losses)
(1,739)
799
Amounts transferred to income statement
801
(852)
Transferred to initial carrying amount of hedged items
Other reclassifications
Hedging instruments (items not designated)
Revaluation gains (losses)
Amounts transferred to income statement
Other reclassifications
Debt instruments at fair value with changes in other comprehensive income
(3,250)
(100)
Revaluation gains (losses)
(3,063)
692
Amounts transferred to income statement
(545)
(1,165)
Other reclassifications
358
373
Non-current assets held for sale
Revaluation gains (losses)
Amounts transferred to income statement
Other reclassifications
Share of other recognised income and expense of investments
19
(151)
Income tax relating to items that may be reclassified to profit or loss
1,272
228
Total recognised income and expenses for the year
9,433
(17,502)
Attributable to non-controlling interests
1,255
245
Attributable to the parent
8,178
(17,747)
*Presented for comparison purposes only (note 1.d).
80
CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2021 AND 2020
EUR million
Non-controlling interest
Capital
Share
premium
Equity
instruments
issued (not
capital)
Other equity
instruments
Accumulated
retained
earnings
Revaluation
reserves
Other
reserves
(-) Own
shares
Profit
attributable to
shareholders
of the parent
(-) Interim
dividends
Other
comprehensive
income
Other
comprehensive
income
Other
items
Total
Balance at 31 December 2020*
8,670
52,013
627
163
65,583
(3,596)
(69)
(8,771)
(33,144)
(1,800)
11,646
91,322
Adjustments due to errors
Adjustments due to changes in
accounting policies
Opening balance at 1 January
2021*
8,670
52,013
627
163
65,583
(3,596)
(69)
(8,771)
(33,144)
(1,800)
11,646
91,322
Total recognised income and
expense
8,124
54
(274)
1,529
9,433
Other changes in equity
(4,034)
31
(11)
(5,310)
(881)
(825)
8,771
(836)
371
(30)
(948)
(3,702)
Issuance of ordinary shares
17
17
Issuance of preferred shares
Issuance of other financial
instruments
Maturity of other financial
instruments
Conversion of financial liabilities
into equity
Capital reduction
Dividends
(477)
(836)
(648)
(1,961)
Purchase of equity instruments
(1,645)
(1,645)
Disposal of equity instruments
23
820
843
Transfer from equity to liabilities
Transfer from liabilities to equity
Transfers between equity items
(3,557)
(5,310)
(275)
8,771
371
(30)
30
Increases (decreases) due to
business combinations
(5)
(5)
Share-based payment
(62)
(62)
Others increases or (-) decreases
in equity
31
51
(629)
(342)
(889)
Balance at 31 December 2021
8,670
47,979
658
152
60,273
(4,477)
(894)
8,124
(836)
(32,719)
(2,104)
12,227
97,053
* Presented for comparison purpose only (note 1.d).
81
CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2020 AND 2019
EUR million
Non-controlling interest
Capital
Share
premium
Equity
instruments
issued (not
capital)
Other equity
instruments
Accumulated
retained
earnings
Revaluation
reserves
Other
reserves
(-) Own
shares
Profit
attributable 
to
shareholders
of the parent
(-) Interim
dividends
Other
comprehensive
income
Other
comprehensive
income
Other
items
Total
Balance at 31 December 2019*
8,309
52,446
598
146
61,028
(3,110)
(31)
6,515
(1,662)
(24,168)
(982)
11,570
110,659
Adjustments due to errors
Adjustments due to changes in
accounting policies
Opening balance at 1 January
2020*
8,309
52,446
598
146
61,028
(3,110)
(31)
6,515
(1,662)
(24,168)
(982)
11,570
110,659
Total recognised income and
expense
(8,771)
(8,976)
(818)
1,063
(17,502)
Other changes in equity
361
(433)
29
17
4,555
(486)
(38)
(6,515)
1,662
(987)
(1,835)
Issuance of ordinary shares
361
(72)
70
5
364
Issuance of preferred shares
Issuance of other financial
instruments
Maturity of other financial
instruments
Conversion of financial liabilities
into equity
Capital reduction
Dividends
(361)
(465)
(826)
Purchase of equity instruments
(758)
(758)
Disposal of equity instruments
1
720
721
Transfer from equity to liabilities
Transfer from liabilities to equity
Transfers between equity items
4,555
298
(6,515)
1,662
Increases (decreases) due to
business combinations
(54)
(54)
Share-based payment
(53)
(53)
Others increases or (-) decreases
in equity
29
70
(855)
(473)
(1,229)
Balance at 31 December 2020*
8,670
52,013
627
163
65,583
(3,596)
(69)
(8,771)
(33,144)
(1,800)
11,646
91,322
* Presented for comparison purposes only (note 1.d).
82
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 2021 AND 2020
EUR million
A. CASH FLOWS FROM OPERATING ACTIVITIES
56,691
66,153
Profit or loss for the year
9,653
(7,708)
Adjustments made to obtain the cash flows from operating activities
21,363
37,836
Depreciation and amortisation cost
2,756
2,810
Other adjustments
18,607
35,026
Net increase/(decrease) in operating assets
27,258
51,385
Financial assets held-for-trading
2,064
12,390
Non-trading financial assets mandatorily at fair value through profit or loss
969
(275)
Financial assets at fair value through profit or loss
(32,746)
(10,314)
Financial assets at fair value through other comprehensive income
(9,152)
6,549
Financial assets at amortized cost
73,181
43,541
Other operating assets
(7,058)
(506)
Net increase/(decrease) in operating liabilities
56,945
90,356
Financial liabilities held-for-trading
(1,386)
7,880
Financial liabilities designated at fair value through profit or loss
(14,316)
(10,907)
Financial liabilities at amortized cost
79,114
96,561
Other operating liabilities
(6,467)
(3,178)
Income tax recovered/(paid)
(4,012)
(2,946)
B. CASH FLOWS FROM INVESTING ACTIVITIES
(3,715)
(7,220)
Payments
11,669
11,976
Tangible assets
10,015
7,386
Intangible assets
1,388
1,134
Investments
126
525
Subsidiaries and other business units
140
2,931
Non-current assets held for sale and associated liabilities
Other payments related to investing activities
Proceeds
7,954
4,756
Tangible assets
6,382
2,014
Intangible assets
Investments
672
182
Subsidiaries and other business units
6
1,775
Non-current assets held for sale and associated liabilities
894
785
Other proceeds related to investing activities
C. CASH FLOW FROM FINANCING ACTIVITIES
(1,322)
(1,909)
Payments
7,741
6,978
Dividends
1,313
Subordinated liabilities
2,684
3,780
Redemption of own equity instruments
Acquisition of own equity instruments
1,645
758
Other payments related to financing activities
2,099
2,440
Proceeds
6,419
5,069
Subordinated liabilities
5,340
4,095
Issuance of own equity instruments
Disposal of own equity instruments
854
721
Other proceeds related to financing activities
225
253
D. EFFECT OF FOREIGN EXCHANGE RATE DIFFERENCES
5,196
(4,252)
2021
2020*
83
E. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
56,850
52,772
F. CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR
153,839
101,067
G. CASH AND CASH EQUIVALENTS AT END OF THE YEAR
210,689
153,839
COMPONENTS OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR
Cash
8,142
7,817
Cash equivalents at central banks
193,102
137,047
Other financial assets
9,445
8,975
Less, bank overdrafts refundable on demand
TOTAL CASH AND CASH EQUIVALENTS AT END OF THE YEAR
210,689
153,839
In which, restricted cash
2021
2020*
* Presented for comparison purposes only (note 1.d).
84
4. Distribution of Banco
Santander's profit, shareholder
remuneration scheme and
earnings per share
a) Distribution of Banco Santander’s profit and
shareholder remuneration scheme
The distribution of the Bank's net profit against the
results for 2021, that the board of directors will propose
for approval by the shareholders at the annual general
meeting is as follows:
EUR million
To dividends
1,701
Dividend paid prior to the meeting date*
836
Complementary dividend**
865
To voluntary reserves***
2,231
Net profit for the year
3,932
*Total amount paid as interim dividend, at the rate of EUR 4.85 fixed
cents per eligible share (recorded in 'Shareholders' equity - Interim
dividends').
**Fixed dividend of EUR 5.15 gross cents per eligible share, payable in
cash as from 2 May 2022. The total amount has been estimated on
the assumption that, after the implementation of the second buy-
back programme announced on 24 February 2022, the number of the
Bank's outstanding shares eligible for the dividend will be
16,804,353,202.
***Estimated amount corresponding to a final dividend of EUR
865 million. To be increased or reduced by the same amount by
which the final dividend is lower or higher, respectively, than that
amount.
The transcribed proposal comprises the part of the 2021
shareholder remuneration policy that is implemented
through cash dividends (the interim dividend paid in
November 2021 of  EUR 4.85 cents per share with
dividend entitlement and the final dividend expected to
be paid as of 2 May 2022, subject to approval by the
general meeting of shareholders, of EUR 5.15 cents per
share with dividend entitlement).
In addition, the 2021 remuneration policy also provided
for shareholder remuneration through the
implementation of share buyback programs, which are
not reflected in the above-transcribed proposal for the
appropriation of earnings. The first of these programs,
amounting to approximately EUR 841 million, was
completed between October and November 2021.
Subject to obtaining the appropriate regulatory
approvals, a second repurchase program for
approximately EUR 865 million is planned to be
launched. Capital reduction resolutions are also
submitted to the general shareholders' meeting to
redeem the treasury shares acquired in each of the two
repurchase programs, also subject to the relevant
regulatory authorizations.
Finally, and although it is not part of the remuneration
charged to the 2021 financial year, it should be noted
that in May 2021 Banco Santander paid a dividend of
EUR 2.75 cents in cash per share corresponding to the
2020 financial year against share premium, for an
amount of EUR 477 million, this being the maximum
amount allowed in accordance with the limit established
by the recommendation of the European Central Bank of
15 December 2020. This payment was made in
execution of the premium distribution resolution
approved at the General Shareholders' Meeting of Banco
Santander held on 27 October 2020.
b) Earnings/loss per share from continuing and
discontinued operations
i.  Basic earnings / loss per share
Basic earnings/loss per share are calculated by dividing
the net profit attributable to the Group, adjusted by the
after-tax amount of the remuneration of contingently
convertible preference shares recognised in equity (see
note 21) and the capital perpetual preference shares, if
applicable, by the weighted average number of ordinary
shares outstanding during that period, excluding the
average number of own shares held through that period.
Accordingly:
2021
2020
Profit (Loss) attributable to the
Parent (EUR million)
8,124
(8,771)
Remuneration of contingently
convertible preference shares
(CCP) (EUR million) (note 21)
(566)
(552)
7,558
(9,323)
Of which:
Profit (Loss) from
discontinued operations
(non controlling interest
net) (EUR million)
Profit (Loss) from
continuing operations (PPC
net)
(EUR million)
7,558
(9,323)
Weighted average number of
shares outstanding
17,272,055,430
17,316,288,908
Impact factor correction
Not applicable
Not applicable
Adjusted number of shares
17,272,055,430
17,316,288,908
Basic earnings (Loss) per
share (euros)
0.438
(0.538)
Of which, from discounted
operations (euros)
Basic earnings (Loss) per
share from continuing
operations (euros)
0.438
(0.538)
85
ii. Diluted earnings / loss per share
Diluted earnings/loss per share are calculated by
dividing the net profit attributable to the Group, adjusted
by the after-tax amount of the remuneration of
contingently convertible preference shares recognised in
equity (see note 21) and the capital perpetual preference
shares, if applicable, by the weighted average number of
ordinary shares outstanding during the year, excluding
the average number of treasury shares and adjusted for
all the dilutive effects inherent to potential ordinary
shares (share options, and convertible debt
instruments).
Accordingly, diluted earnings/loss per share were
determined as follows:
2021
2020
Profit (Loss) attributable to the
Parent (EUR million)
8,124
(8,771)
Remuneration of contingently
convertible preference shares
(CCP) (EUR million) (note 21)
(566)
(552)
Dilutive effect of changes in
profit for the period arising
from potential conversion of
ordinary shares
7,558
(9,323)
Of which:
Profit (Loss) from
discontinued operations
(net of non-controlling
interests) (EUR million)
Profit (Loss) from
continuing operations (net
of non-controlling interests
and CCP) (EUR million)
7,558
(9,323)
Weighted average number of
shares outstanding
17,272,055,430
17,316,288,908
Dilutive effect of options/
rights on shares
48,972,459
Not applicable
Impact factor correction
Not applicable
Not applicable
Adjusted number of shares
17,321,027,889
17,316,288,908
Diluted earnings (Loss) per
share (euros)
0.436
(0.538)
Of which, from discounted
operations (euros)
Diluted earnings (Loss) per
share from continuing
operations (euros)
0.436
(0.538)
5. Remuneration and other
benefits paid to the bank's
directors and senior managers
The following section contains qualitative and
quantitative disclosures on the remuneration paid to the
members of the board of directors —both executive and
non-executive directors— and senior managers for 2021
and 2020.
a) Remuneration of Directors
i. Bylaw-stipulated emoluments
The annual General Meeting held on 22 March 2013
approved an amendment to the Bylaws, whereby the
remuneration of directors in their capacity as board
members became an annual fixed amount determined
by the annual General Meeting. This amount shall
remain in effect unless the shareholders resolve to
change it at a general meeting. However, the board of
directors may elect to reduce the amount in any years in
which it deems such action justified.
The remuneration established by the Annual General
Meeting was EUR 6 million in 2021 (same amount as in
2020), with two components: (a) an annual emolument
and (b) attendance fees.
In regard to 2020, as a gesture of responsibility in view
of the situation created by the health emergency the
board of directors agreed on 5 May 2020 to reduce their
allotments by 20% for the balance of 2020, with effect
from 1 April 2020, and propose that amounts saved
thereby be used to finance the initiatives of the Bank to
fight against the covid-19 pandemic.
The specific amount payable for the above-mentioned
items to each of the directors is determined by the Board
of Directors. For such purpose, it takes into consideration
the positions held by each director on the Board, their
membership of the Board and the board committees and
their attendance to the meetings thereof, and any other
objective circumstances considered by the Board.
The total bylaw-stipulated emoluments earned by the
Directors in 2021 amounted to EUR 4.8 million
(4.1 million in 2020).
86
Annual emolument
In 2021,  the board voted not to change the fees amount
set out in the 2020 policy ahead of the aforementioned
exceptional decision and, per the remuneration policy
approved at the 2021 AGM. Additionally,  the innovation
and technology committee also began to be
remunerated, and its members received EUR 25,000 and
its Chair, an additional EUR 70,000. The annual amounts
received individually by the directors in 2021 and 2020
based on the positions held by them on the board and
their membership of the board committees were as
follows:
2021
2020
Amount per director in euros
1 Jan to
31 Mar
1 Apr to
31 Dec
Members of the board of
directors
90,000
22,500
49,500
Members of the executive
committee
170,000
42,500
93,500
Members of the audit
committee
40,000
10,000
22,000
Members of the appointments
committee
25,000
6,250
13,750
Members of the remuneration
committee
25,000
6,250
13,750
Members of the risk
supervision, regulation and
compliance committee
40,000
10,000
22,000
Members of the responsible
banking, sustainability and
culture committee
15,000
3,750
8,250
Members of the innovation
and technology committee
25,000
Chairman of the audit
committee
70,000
17,500
38,500
Chairman of the
appointments committee
50,000
12,500
27,500
Chairman of the remuneration
committee
50,000
12,500
27,500
Chairman of the risk
supervision, regulation and
compliance committee
70,000
17,500
38,500
Chairman of the responsible
banking, sustainability and
culture committee
50,000
12,500
27,500
Chairman of the innovation
and technology committee
70,000
Lead director*
110,000
27,500
60,500
Non-executive vice chairmen
30,000
7,500
16,500
*Mr. Bruce Carnegie-Brown, in view of the positions held on the board and
its committees, in particular as chairman of the appointments and
remuneration committees and as coordinating director, and the time and
dedication required to properly perform such positions, has been assigned
a minimum total annual remuneration of EUR 700,000 since 2015,
including the annual allowance for the items corresponding to him of
those indicated above and attendance fees. However, in line with the
decision taken by the board of directors to reduce his fees by 20% with
effect from April 1, 2020 to 31 December, which is shared by Mr. Bruce
Carnegie-Brown, the same reduction was applied to this amount.
Accordingly, the amount assigned for 2020 was EUR 595,000.
Attendance fees
The directors receive fees for attending board and
committee meetings, excluding executive committee
meetings, since no attendance fees are received for this
committee.
Like the annual allotment, the board voted not to change
the fees amount set out in the 2020 policy ahead of the
aforementioned exceptional decision and, per the
remuneration policy approved at the 2021 AGM, added
attendance fees for innovation and technology
committee members (which they did not receive before).
The fees for 2021 and 2020 are as follows:
Attendance fees per
director per meeting in
euros
2021
2020
1 Jan to
31 Mar
1 Apr to
31 Dec
Board of directors
2,600
2,600
2,080
Audit committee and risk
supervision, regulation
and compliance
committee
1,700
1,700
1,360
Other committees
(excluding executive
committee)
1,500
1,500
1,200
ii. Salaries
The executive directors receive salaries. In accordance
with the policy approved by the annual general meeting,
salaries are composed of a fixed annual remuneration
and a variable one, which consists in a unique incentive,
which is a deferred variable remuneration plan linked to
multi-year objectives, which establishes the following
payment scheme:
40% of the variable remuneration amount,
determined at year-end on the basis of the
achievement of the established objectives, is paid
immediately.
The remaining 60% is deferred over five years, to be
paid in five portions, provided that the conditions of
permanence in the Group and non-concurrence of
the malus clauses are met, and subject to long term
metrics, taking into account the following accrual
scheme:
The accrual of the first and second portion
(payment in 2023 and 2024will be conditional
on none of the malus clauses being triggered.
87
The accrual of the third, fourth, and fifth portion
(payment in 2025, 2026 and 2027), is linked to
objectives related to the period 20212023 and
the metrics and scales associated with these
objectives. The fulfilment of the objectives
determines the percentage to be paid of the
deferred amount in these three annuities, which,
accordingly, might not be paid, where the
maximum amount is the amount determined at
closing of  2021, when the total variable
remuneration is approved.
In accordance with current remuneration policies, the
amounts already paid will be subject to a possible
recovery (clawback) by the Bank during the period
set out in the policy in force at each moment.
The immediate payment (or short-term), as well as each
deferred payment (linked to long term metrics and not
linked to long-term metrics) will be settled 50% in cash
and the remaining 50% in Santander shares.
In the case of Sergio Rial, he has been considered as an
executive director since his appointment as director
became effective on 30 May 2020 by virtue of Article
529 duodecies of the Spanish Companies Act in light of
his role as CEO and vice-chairman of Banco Santander
Brasil, S.A. In 2021 he received as fixed pay for his role as
Regional head for South America, the EUR 750,000 euros
that had been approved at the 2021 AGM as part of the
2021 remuneration policy. He has not received any other
remuneration for executive functions in Banco
Santander, S.A.
The same policy and principles above apply to Sergio
Rial's remuneration as CEO in Santander Brasil.
Comparative of Executive Remuneration (Chairman and
CEO)
The board resolved to maintain the same gross annual
salary for Ana Botín and José Antonio Álvarez for 2021 as
in 2020. It also maintained the fixed pension
contribution of 22% of gross annual salary it had
declared in 2020 for 2021.
Comparing with the previous year, it should be
mentioned that amid the covid-19 health crisis in 2020,
Ana Botín and José Antonio Álvarez proposed to reduce
their total 2020 compensation (salary and bonus) by
50%.
To achieve the 50% reduction compared to 2019, the
board of directors decided to apply an additional
adjustment to Ana Botín’s and José Antonio Alvarez’s
variable compensation, reducing the variable
compensation by 74% in the case of Ana Botín and 79%
in the case of José Antonio Álvarez.
And in 2021, the good business performance (which
enabled Banco Santander to reach a 12.73% underlying
RoTE, above the end of 2019), the excellent execution of
our strategy (with the highest underlying attributable
profit of the last 12 years), and the efficient capital
management, boosted the bonus pool and thus the
variable remuneration of corporate centre employees,
(including executive directors).
iii. Detail by director
The detail, by bank director, of the short-term
(immediate) and deferred (not subject to long-term
goals) remuneration for 2021 and 2020 is provided
below:
88
EUR thousand
2021
2020
Bylaw-stipulated emoluments
Annual emolument
Short-term and deferred (not subject to long-term
goals) salaries of executive directors
BoardM
Executive
committee
Audit
committee
Appointments
committee
Remuneration
committee
Risk
supervision,
regulation
and
compliance
oversight
committee
Responsible
banking,
sustainability
and culture
committee
Innovation
and
technology
committee
Attendance
fees and
commissions
Fixed
Variable-
immediate
payment
Deferred
variable
In cash
In
shares
In cash
In
shares
Total
Pension
contribution
Other
remuneration
Total
Total
Ana Botín
90
170
25
45
3,176
1,838
1,839
1,103
1,103
9,059
1,041
1,006
11,436
6,819
José Antonio Álvarez
90
170
25
45
2,541
1,241
1,240
744
745
6,511
783
1,536
9,160
6,019
Bruce Carnegie-Brown
276
170
75
75
25
80
700
595
Homaira Akbari
90
40
15
25
78
248
203
Javier BotínA
90
39
129
122
Álvaro CardosoB
90
28
15
50
183
243
R.Martín ChávezC
90
25
25
40
95
99
374
37
Sol Daurella
90
25
25
15
84
239
214
Henrique de CastroD
90
40
25
25
87
267
217
Gina DíezE
90
1
39
130
4
Luis IsasiF
90
170
25
40
81
1,000
1,406
943
Ramiro Mato
90
170
40
40
65
94
499
431
Sergio RialG
90
39
750
750
879
63
Belén Romana
90
170
40
93
15
25
100
533
418
Pamela WalkdenH
90
110
27
76
303
214
Rodrigo EcheniqueI
1,956
Ignacio BenjumeaJ
276
Guillermo de la
DehesaK
107
Esther Giménez-
SalinasL
192
Total 2021
1,536
1,020
270
126
175
268
125
245
1,035
6,467
3,079
3,079
1,847
1,848
16,320
1,824
3,542
26,486
Total 2020
1,303
915
208
133
138
252
135
1,066
5,717
514
515
308
309
7,363
2,019
5,537
19,073
A.All amounts received were reimbursed to Fundación Botín.
B.Director since 1 April 2018.
C.Director since 27 October 2020.
D.Director since 17 July 2019.
E.Director since 22 December 2020.
F. Director since 19 May 2020.
G. Executive director since 30 May 2020.
H.Director since 29 October 2019.
I.Stepped down as executive director on 30 April 2019. Non-executive director from 1 May 2019 to 22 December 2020.
J.Stepped down as director on 5 May 2020.
K.Stepped down as director on 3 April 2020.
L.Stepped down as director on 27 October 2020.
MAlso includes emoluments for other roles in the board.
89
Following is the detail, by executive director, of the
salaries linked to multi-year objectives at their fair value,
which will only be received if the conditions of
permanence in the group, non-applicability of malus
clauses and achievement of the established objectives
are met (or, as the case may be, of the minimum
thresholds thereof, with the consequent reduction of
amount agreed-upon at the end of the year) in the terms
described in Note 42.
EUR thousand
2021
2020
Variable subject to
Long-term objectives1
In cash
In shares
Total
Total
Ana Botín
1,158
1,158
2,316
420
José Antonio
Álvarez
782
782
1,563
228
Total
1,940
1,940
3,880
648
1.Corresponds with the fair value of the maximum amount they are
entitled to in a total of 3 years: 2025, 2026 and 2027, subject to conditions
of continued service, with the exceptions provided, and to the non-
applicability of malus clauses and achievement of the objectives
established.
The fair value has been determined at the grant date
based on the valuation report of an independent expert,
Willis Towers Watson. Based on the design of the plan
for 2021 and the levels of achievement of similar plans
in comparable entities, the expert concludes that the
reasonable range for estimating the initial achievement
ratio is around 60% - 80%. Accordingly, it has been
considered that the fair value is 70% of the maximum
(see note 42).
Note 5.e below includes disclosures on the shares
delivered from the deferred remuneration schemes in
place in previous years and for which delivery conditions
were met, as well as on the maximum number of shares
that may be received in future years in connection with
the aforementioned 2021 and 2020 variable
remuneration plans.
In addition to the EUR 750,000 Sergio Rial received as
Regional head for South America, he was paid the
following amounts as CEO of Santander Brasil
(additionally, in the following table, it is also disclosed
the variable subject to long-term objectives at 70% of
fair value):
2021
BRL thousand
EUR thousand
Base salary
12,645
1,985
Other fixed benefits
47
7
Pensions
7,350
1,153
Variable remuneration
immediately payable
and deferred (not
linked to long-term
objectives)
26,600
4,018
Total
46,642
7,163
EUR thousand
2021
2020
Variable subject to
Long-term
objectives
In cash
In shares
Total
Total
Sergio Rial
791
791
1,582
1,311
b) Remuneration of the Board members as
representatives of the Bank
By resolution of the executive committee, all the
remuneration received by the Bank’s directors who
represent the Bank on the Boards of Directors of listed
companies in which the Bank has a stake, paid by those
companies and relating to appointments made on or
after 18 March, 2002, accrues to the Group. In 2021 and
2020 the Bank’s directors did not receive any
remuneration in respect of these representative duties.
On the other hand, in their personal capacity, in 2021
Álvaro Cardoso was paid BRL 2,130 thousand (EUR
334 thousand) as non-executive chairman of Banco
Santander Brasil, S.A., Homaira Akbari was paid USD
190 thousand (EUR 161 thousand) as member of the
board of Santander Consumer USA (SCUSA) and EUR
52 thousand as member of the Board of PagoNxt, and
Henrique de Castro and R. Martín Chávez were each paid
the same EUR 52 thousand as members of the board of
PagoNxt. Likewise, Pamela Walkden was paid GBP 31
thousand (EUR 36 thousand) as member of Santander
UK plc y Santander UK Group Holdings.
Likewise, Luis Isasi was paid EUR 1,000 thousand  as
non-executive chairman of the board of Santander Spain
and for attending board and committee meetings
(amounts paid by Banco Santander, S.A.).
90
c) Post-employment and other long-term benefits
In 2012, the contracts of Ms. Ana Botín and Mr. José
Antonio Alvarez (and other members of the Bank's senior
management) with defined benefit pension
commitments were modified to transform these
commitments into a defined contribution system, which
covers the contingencies of retirement, disability and
death. From that moment on, the Bank makes annual
contributions to their pension system for their benefit.
This system gives them the right to receive benefits upon
retirement, regardless of whether or not they are active
at the Bank at such time, based on contributions to the
system, and replaced their previous right to receive a
pension supplement in the event of retirement.
Upon revision in 2021, José Antonio Álvarez’s contract
precluded the right to early retirement if terminated.
Furthermore, Ana Botín is not entitled to early
retirement if she freely resigns; however, she will still be
entitled to it if Banco Santander terminates her contract
before 31 August 2022, at which time early retirement
will no longer be available. As long as she retains that
right, she is entitled to an annual allotment equal to her
total fixed remuneration, plus 30% of the average of up
to her last three variable pays.
The initial balance for each of them in the new defined
benefits system corresponded to the market value of the
assets from which the provisions corresponding to the
respective accrued obligations had materialised on the
date on which the old pension commitments were
transferred into the new benefits system.
Since 2013, the Bank has made annual contributions to
the benefits system for executive directors and senior
executives, in proportion to their respective pensionable
bases, until they leave Grupo Santander or until their
retirement within the Group, death, or disability.
The benefit plan system is outsourced to Santander
Seguros y Reaseguros, Compañía Aseguradora, S.A., and
the economic rights of the foregoing directors under this
plan belong to them regardless of whether or not they
are active at the Bank at the time of their retirement,
death or disability.
In accordance with the provisions of the remuneration
regulations, contributions made calculated on variable
remuneration are subject to the discretionary pension
benefits regime. Under this regime, contributions are
subject to malus clauses and clawback according to the
policy in force at any given time and during the same
period in which the variable remuneration is deferred.
Furthermore, they must be invested in bank shares for a
period of five years from the date when the executive
director leaves the Group, regardless of whether or not
they leave to retire. Once that period has elapsed, the
amount invested in shares will be reinvested, along with
the remainder of the cumulative balance corresponding
to the executive director, or it will be paid to the
executive director or to their beneficiaries in the event of
a contingency covered by the benefits system.
As per the director´s remuneration policy approved at the
23 March 2018 general shareholder´s meeting, the
system was changed with a focus on:
Aligning the annual contributions with practices of
comparable institutions.
Reducing future liabilities by eliminating the
supplementary benefits scheme in the event of death
(death of spouse or parent) and permanent disability
of serving directors.
Not increasing total costs for the Bank.
The changes to the system were the following:
Fixed and variable pension contributions were
reduced to 22% of the respective pensionable bases.
The gross annual salaries and the benchmark
variable remuneration were increased in the
corresponding amount with no increase in total costs
for the Bank. The pensionable base for the purposes
of the annual contributions for the executive
directors is the sum of fixed remuneration plus 30%
of the average of their last three variable
remuneration amounts.
The death and disability supplementary benefits
were eliminated since 1 April 2018. A fixed
remuneration supplement (included in other
remuneration in section a.iii in this note) was
implemented the same date.
The total amount insured for life and accident
insurance was increased.
The provisions recognised in 2021 and 2020 for
retirement pensions and supplementary benefits
(surviving spouse and child benefits, and permanent
disability) were as follows:
EUR thousand
2021
2020
Ana Botín
1,041
1,155
José Antonio Álvarez
783
864
Total
1,825
2,019
91
Following is a detail of the balances relating to each of
the executive directors under the welfare system as of 
31 December 2021 and 2020:
EUR thousand
2021
2020
Ana Botín
48,075
49,444
José Antonio Álvarez
18,821
18,082
Total
66,896
67,526
d) Insurance
The Group pays for life insurance policies for the Bank’s
directors, who will be entitled to receive benefits if they
are declared disabled; in the event of death, the benefits
will be payable to their heirs. The premiums paid by the
Group are included in the 'Other remuneration' column
of the table shown in Note 5.a.iii above. Also, the
following table provides information on the sums
insured for the Bank’s executive directors:
Insured capital
EUR thousand
2021
2020
Ana Botín
21,489
21,984
José Antonio Álvarez
18,028
18,703
Total
39,517
40,687
The insured capital has been modified in 2018 for Ms
Ana Botín and Mr José Antonio Alvarez as part of the
pension systems transformation set out in note 5.c)
above, which has encompassed the elimination of the
supplementary benefits systems (death of spouse and
death of parent) and the increase of the life insurance
annuities.
During 2021 and 2020, the Group has disbursed a total
amount of EUR  25.5 million and EUR 19.5 million ,
respectively, for the payment of civil-liability insurance
premiums. These premiums correspond to several civil-
liability insurance policies that hedge, among others,
directors, senior executives and other managers and
employees of the Group and the Bank itself, as well as
its subsidiaries, in light of certain types of potential
claims. For this reason, it is not possible to disaggregate
or individualize the amount that correspond to the
directors and executives.
As of 31 December 2021 and 2020, no life insurance
commitments exist for the Group in respect of any other
directors.
e) Deferred variable remuneration systems
The following information relates to the maximum
number of shares to which the executive directors are
entitled at the beginning and end of 2021 and 2020 due
to their participation in the deferred variable
remuneration systems, which instrumented a portion of
their variable remuneration relating to 2021 and prior
years, as well as on the deliveries, in shares or in cash,
made to them in 2021 and 2020 once the conditions for
the receipt thereof had been met (see note 42):
i. Deferred conditional variable remuneration plan
From 2011 to 2015, the bonuses of executive directors
and certain executives (including senior management)
and employees who assume risk, who perform control
functions or receive an overall remuneration that puts
them on the same remuneration level as senior
executives and employees who assume risk (all of whom
are referred to as identified staff) have been approved by
the Board of Directors and instrumented, respectively,
through various cycles of the deferred conditional
variable remuneration plan. Application of these cycles,
insofar as they entail the delivery of shares to the plan
beneficiaries, was authorized by the related Annual
General Meetings.
The purpose of these plans was to defer a portion of the
bonus of the plan beneficiaries (60% in the case of
executive directors) over a period of five years (three
years for the plans approved up to 2014) for it to be paid,
where appropriate, in cash and in Santander shares. The
remaining 40% portion of the bonus is paid in cash and
Santander shares (in equal parts), upon commencement
of this plan, in accordance with the rules set forth below.
In addition to the requirement that the beneficiary
remains in Santander Group’s employ, the accrual of the
deferred remuneration was conditional upon none of the
following circumstances existing in the opinion of the
Board of Directors -following a proposal of the
remuneration committee-, in relation to the
corresponding year, in the period prior to each of the
deliveries: (i) poor financial performance of the Group;
(ii) breach by the beneficiary of internal regulations,
including, in particular, those relating to risks; (iii)
material restatement of the Group’s consolidated
financial statements, except when it is required pursuant
to a change in accounting standards; or (iv) significant
changes in the Group’s economic capital or its risk
profile. All the foregoing shall be subject in each case to
the regulations of the relevant plan cycle.
92
Deferred amounts (whether or not contingent on multi-
year targets) is earned if the beneficiary continues to
work with the group14, and none of the circumstances
triggering the malus clause arise before each payment,
according to the section on malus and clawback clauses
in the remuneration policy.
Similarly, Banco Santander can clawback any paid
variable amounts in the scenarios and for the period
dictated by the terms and conditions in the said policy.
On each delivery, the beneficiaries are paid an amount in
cash equal to the dividends paid for the amount deferred
in shares and the interest on the amount deferred in
cash. If the Santander Dividendo Elección scrip dividend
scheme is applied, payment will be based on the price
offered by the Bank for the bonus share rights
corresponding to those shares.
The maximum number of shares to be delivered is
calculated taking into account the daily volume-
weighted average prices for the 15 trading sessions prior
to the date on which the board of directors approves the
bonus for the Bank’s Executive Directors for each year.
This plan and the Performance Shares (ILP) plan
described below have been integrated for the executive
directors and other senior managers in the deferred
variable compensation plan linked to multiannual
objectives, in the terms approved by the General
Meeting of Shareholders held on March 18, 2016.
In the case of Sergio Rial, who does not receive any
remuneration for executive duties in Banco Santander,
S.A., the same policy principles, deferrals, multi year
targets linked to the payment of deferred amounts and
malus and clawback principles described herein apply to
his variable remuneration in the subsidiary where he is
the CEO.
ii. Deferred variable compensation plan linked to
multiannual objectives
In the annual shareholders meeting of 18 March 2016,
with the aim of simplifying the remuneration structure,
improving the ex-ante risk adjustment and increasing
the incidence of long-term objectives, the bonus plan
(deferred and conditioned variable compensation plan)
and ILP were replaced by one single plan, the deferred
multiyear objectives variable remuneration plan.
The variable remuneration of executive directors and
certain executives (including senior management)
corresponding to 2021 has been approved by the Board
of Directors and implemented through the sixth cycle of
the deferred variable remuneration plan linked to multi-
year objectives. The application of the plan was
authorised by the annual general meeting of
shareholders, as it entails the delivery of shares to the
beneficiaries.
As indicated in section a.ii of this note, 60% of the
variable remuneration amount is deferred over five years
(three years for certain beneficiaries, not including
executive directors), to be paid, where appropriate, in
five portions, provided that the conditions of
permanence in the group and non-concurrence of malus
clauses are met, and subject to long term metrics,
according to the following accrual scheme:
The accrual of the first and second parts (instalments
in 2023 and 2024) is conditional on none of the
malus clauses being triggered.
The accrual of the third, fourth and fifth parts
(instalments in 2025, 2026 and 2027) is linked to the
fulfilment of certain objectives related to the
20212023 period and the metrics and scales
associated with those objectives, as well as to non-
concurrence of malus clauses. These objectives are:
The growth of consolidated earnings per share in
2023 compared to 2020;
The relative performance of the Bank’s total
shareholder return (RTA) in the 2021-2023
period in relation to the weighted RTAs of a
reference group of 9  credit institutions;
Compliance with the fully loaded ordinary level 1
capital objective for the year 2023.
The degree of compliance with the above objectives
determines the percentage to be applied to the deferred
amount in these three annuities, the maximum being the
amount determined at the end of the year 2021 when
the total variable remuneration is approved.
Both the immediate (short-term) and each of the
deferred (long-term and conditioned) portions are paid
50% in cash and the remaining 50% in Santander shares.
The accrual of deferred amounts (whether or not subject
to performance measures) is conditioned, in addition to
the permanence of the beneficiary in the Group, to non-
occurrence, during the period prior to each of the
deliveries, of any the circumstances giving rise to the
application of malus as set out in the Group’s
remuneration policy in its chapter related to malus and
clawback. Likewise, the amounts already paid of the
incentive will be subject to clawback by the Bank in the
cases and during the term foreseen in said policy,  and in
accordance with the terms and conditions foreseen in it.
93
Malus and clawback clauses are triggered by poor
financial performance of Banco Santander, a division or
area, or exposures from staff as a result of an
executive(s)’s management of, at least, one of these
factors:
(i)Significant failures in risk management committed
by the entity, or by a business unit or risk control.
(ii)The increase suffered by the entity or by a business
unit of its capital needs, not foreseen at the time of
generation of the exposures.
(iii)Regulatory sanctions or judicial sentences from
events that could be attributable to the unit or the
personnel responsible for those. Also, the breach of
internal codes of conduct of the entity.
(iv)Irregular conduct, whether individual or collective. In
this regard, the negative effects derived from the
marketing of inappropriate products and the
responsibilities of the people or bodies that made
those decisions will be specially considered.
The maximum number of shares to be delivered is
calculated by taking into account the  average weighted
daily volume of the average weighted listing prices
corresponding to the fifteen trading sessions prior to the
previous Friday (excluded) to the date on which the
bonus is agreed by the board of executive directors of
the Bank.
In the case of Mr. Sergio Rial, as explained above, he just
received a fixed pay for executive duties in Banco
Santander, S.A. (head for South America), and he is
included as CEO of Santander Brasil in the deferred
variable compensation plan linked to multiannual
objectives  and thus subject to the same conditions and
principles of deferral, multiannual objectives, deferrals
and malus and clawback herein in respect of the
remuneration he receives in his role as CEO of this
subsidiary.
iii. Shares assigned by deferred variable remuneration
plans
The following table shows the number of Santander
shares assigned to each executive director and pending
delivery as of 1 January 2020, 31 December 2020 and 31
December 2021, as well as the gross shares that were
delivered to them in 2020 and 2021, either in the form of
an immediate payment or a deferred payment. In this
case after having been appraised by the board, at the
proposal of the remuneration committee, that the
corresponding one-fifth of each plan had accrued. They
come from each of the plans through which the variable
remunerations of deferred conditional variable
remuneration plans in 2015 and of the deferred
conditional and linked to multi-year objectives in 2016,
2017, 2018, 2019, 2020 and 2021 were formalized.
94
2015 variable
remuneration
Ms Ana Botín-Sanz de
Sautuola y O’Shea
128,809
128,809
128,809
Mr José Antonio
Álvarez Álvarez
85,620
85,620
85,620
214,429
 
214,429
 
 
214,429
2016 variable
remuneration
Ms Ana Botín-Sanz de
Sautuola y O’Shea
216,308
(72,102)
144,206
(34,177)
(72,102)
37,927
Mr José Antonio
Álvarez Álvarez
145,998
(48,667)
97,331
(23,067)
(48,667)
25,597
362,306
 
(120,769)
241,537
(57,244)
 
(120,769)
63,524
2017 variable
remuneration
Ms Ana Botín-Sanz de
Sautuola y O’Shea
275,700
(68,925)
206,775
(112,692)
(68,925)
25,158
Mr José Antonio
Álvarez Álvarez
184,377
(46,094)
138,283
(75,364)
(46,094)
16,825
460,077
 
(115,019)
345,058
(188,057)
 
(115,019)
41,983
2018 variable
remuneration
Ms Ana Botín-Sanz de
Sautuola y O’Shea
516,519
(103,304)
413,215
(103,304)
309,911
Mr José Antonio
Álvarez Álvarez
345,161
(69,032)
276,129
(69,032)
207,097
861,680
(172,336)
689,344
 
(172,336)
517,008
2019 variable
remuneration
Ms Ana Botín-Sanz de
Sautuola y O’Shea
887,193
(354,877)
532,316
(106,463)
425,853
Mr José Antonio
Álvarez Álvarez
592,915
(237,166)
355,749
(71,150)
284,599
1,480,108
(592,043)
 
888,065
 
(177,613)
 
710,452
Share-based variable remuneration
Maximum
number of
shares to be
delivered at
January
1,2020
Shares
delivered in
2020
(immediate
payment
2019 variable
remuneration)
Shares
delivered in
2020
(deferred
payment
2018 variable
remuneration)
Shares
delivered in
2020
(deferred
payment
2017 variable
remuneration)
Shares
delivered in
2020
(deferred
payment
2016 variable
remuneration)
Variable
remuneration
2020
(Maximum
number of
shares to be
delivered)
Maximum
number of
shares to be
delivered at
December 31,
2020
Instruments
matured but
not
consolidated
at January 1,
2021
Shares
delivered in
2021
(immediate
payment
2020 variable
remuneration)
Shares
delivered in
2021
(deferred
payment
2019 variable
remuneration)
Shares
delivered in
2021
(deferred
payment
2018 variable
remuneration)
Shares
delivered in
2021
(deferred
payment
2017 variable
remuneration)
Shares
delivered in
2021 (deferred
payment 2016
variable
remuneration)
Variable
remuneration
2021
(Maximum
number of
shares to be
delivered)
Maximum
number of
shares to be
delivered at
December 31,
2021
95
2020 variable
remuneration
Ms Ana Botín-Sanz de
Sautuola y O’Shea
310,615
310,615
(124,246)
186,369
Mr José Antonio
Álvarez Álvarez
168,715
168,715
(67,486)
101,229
Mr Sergio Rial2
355,263
355,263
(142,105)
213,158
 
 
834,593
834,593
 
(333,837)
 
500,756
2021 variable
remuneration1
Ms Ana Botín-Sanz de
Sautuola y O’Shea
1,480,622
1,480,622
Mr José Antonio
Álvarez Álvarez
999,259
999,259
Mr Sergio Rial2
625,000
625,000
3,104,881
3,104,881
Share-based variable remuneration
Maximum
number of
shares to be
delivered at
January
1,2020
Shares
delivered in
2020
(immediate
payment
2019 variable
remuneration)
Shares
delivered in
2020
(deferred
payment
2018 variable
remuneration)
Shares
delivered in
2020
(deferred
payment
2017 variable
remuneration)
Shares
delivered in
2020
(deferred
payment
2016 variable
remuneration)
Variable
remuneration
2020
(Maximum
number of
shares to be
delivered)
Maximum
number of
shares to be
delivered at
December 31,
2020
Instruments
matured but
not
consolidated
at January 1,
2021
Shares
delivered in
2021
(immediate
payment
2020 variable
remuneration)
Shares
delivered in
2021
(deferred
payment
2019 variable
remuneration)
Shares
delivered in
2021
(deferred
payment
2018 variable
remuneration)
Shares
delivered in
2021
(deferred
payment
2017 variable
remuneration)
Shares
delivered in
2021 (deferred
payment 2016
variable
remuneration)
Variable
remuneration
2021
(Maximum
number of
shares to be
delivered)
Maximum
number of
shares to be
delivered at
December 31,
2021
1.For each director, 40% of the shares indicated correspond to the short-term variable (or immediate payment). The remaining 60% is deferred for delivery, where appropriate, by fifths in the next five years, the last three
being subject to the fulfilment of multiannual objectives.
2.Mr. Sergio Rial's share-based variable remuneration awarded in shares of Banco Santander (Brasil). He has the right to a maximum of 51,483 Santander shares and 269,148  options over Santander shares for his
participation in the 2019 Digital Transformation Award.
In addition, Mr. Rodrigo Echenique maintains the right to a maximum of 518,517 shares arising from his participation in the corresponding plans during his term as executive director.
96
In addition, the table below shows the cash delivered in
2021 and 2020, by way of either immediate payment or
deferred payment, in the latter case once the Board had
determined, at the proposal of the remuneration
committee, that one-fifth relating to each plan had
accrued:
EUR thousand
2021
2020
Cash paid (immediate
payment 2020 variable
remuneration)
Cash paid (deferred
payments from 2019,
2018, 2017 and 2016
variable remuneration)
Cash paid (immediate
payment 2019 variable
remuneration)
Cash paid (deferred
payments from 2018,
2017, 2016 and 2015
variable remuneration)
Ms. Ana Botín-Sanz de Sautuola
y O’Shea
334
1,550
1,302
1,383
Mr. José Antonio Álvarez Álvarez
181
1,037
870
925
Total
515
2,586
2,172
2,308
iv. Information on former members of the Board of
Directors
The chart below includes  information on the maximum
number of shares to which former members of the Board
of Directors who ceased in office prior to 1 January 2020
are entitled for their participation in the various deferred
variable remuneration systems, which instrumented a
portion of their variable remuneration relating to the
years in which they were Executive Directors. Also set
forth below is information on the deliveries, whether in
shares or in cash, made in 2021 and 2020 to former
board members, upon achievement of the conditions for
the receipt thereof (see note 42):
MAXIMUM NUMBER OF SHARES TO BE DELIVERED
2021
2020
Deferred conditional variable remuneration plan (2015)
60,847
Deferred conditional variable remuneration plan and linked to objectives (2016)
60,251
65,502
Deferred conditional variable remuneration plan and linked to objectives (2017)
64,659
47,956
Deferred conditional variable remuneration plan and linked to objectives (2018)
164,462
Deferred conditional variable remuneration plan and linked to objectives (2019)
130,790
NUMBER OF SHARES DELIVERED
2021
2020
Deferred conditional variable remuneration plan (2015)
92,557
60,847
Performance shares plan ILP (2015)
Deferred conditional variable remuneration plan and linked to objectives (2016)
60,254
32,751
Deferred conditional variable remuneration plan and linked to objectives (2017)
32,330
35,132
Deferred conditional variable remuneration plan and linked to objectives (2018)
54,821
Deferred conditional variable remuneration plan and linked to objectives (2019)
32,698
In addition, EUR 1,213 thousand and EUR 612 thousand
relating to the deferred portion payable in cash of the
aforementioned plans were paid each in 2021 and 2020.
97
f) Loans
Grupo Santander’s direct risk exposure to the bank’s
directors and the guarantees provided for them are
detailed below. These transactions were made on terms
equivalent to those that prevail in arm’s-length
transactions or the related compensation in kind was
recognized:
EUR thousand
2021
2020
Loans and
credits
Guarantees
Total
Loans and
credits
Guarantees
Total
Mrs Ana Botín-Sanz de Sautuola y O´Shea
25
25
14
14
Mr José Antonio Álvarez Álvarez
4
4
5
5
Mr Bruce Carnegie-Brown
Mr Javier Botín-Sanz de Sautuola y O´Shea
16
16
2
2
Mrs Sol Daurella Comadrán
69
69
22
22
Mrs Belén Romana García
Mr Ramiro Mato García-Ansorena
Mrs Homaira Akbari
Mr Álvaro Cardoso de Souza
Mr Henrique de Castro
Mrs Pamela Ann Walkden
Mr Luis Isasi Fernández de Bobadilla
Mr Sergio Agapito Lires Rial
1
1
Mr R. Martín Chávez Márquez
Mrs Gina Lorenza Díez Barroso
6
6
115
115
49
49
g) Senior managers
The table below includes the amounts relating to the
short-term remuneration of the members of senior
management at 31 December 2021 and those at 31
December 2020, excluding the remuneration of the
executive directors, which is detailed above:
EUR thousand
Short-term salaries and deferred remuneration
Variable remuneration
(bonus) - Immediate
payment
Deferred variable
remuneration
Year
Number of
persons
Fixed
In cash
In shares2
In cash
In shares3
Pensions
Other
remuneration1
Total
2021
15
19,183
8,402
8,402
3,648
3,648
5,542
5,055
53,880
2020
18
21,642
5,739
5,740
2,470
2,471
6,039
6,312
50,413
1.Includes other remuneration items such as life and medical insurance premiums and localization aids.
2.The amount of immediate payment in shares for 2021 is 2,706,819 shares (2,135,700 Santander shares in 2020).
3.The deferred amount in shares not linked to long-term objectives for 2021 is 1,175,191 shares (919,308 Santander shares in 2020).
98
At the annual general meeting on 26 March 2021,
shareholders approved the 2021 Digital Transformation
Incentive, a variable remuneration scheme that delivers
Santander shares and share options if the group hits
major milestones on its digital roadmap.
In 2021, no senior executives are included in this
programme. However, in 2020, three senior executives
were included within this plan (aimed at a group of up to
250 employees whose functions are deemed essential to
Santander Group’s growth and digital transformation)
and, thus, can receive a total of EUR 1,700 thousand to
be paid in thirds on the third, fourth and fifth anniversary
of the authorisation date (2024, 2025 and 2026). This
amount was implemented in 316,574 Santander shares
and 944,445 options over Santander shares, using for
these purposes the fair value of the options at the
moment of their grant (EUR 0.90).
See note 42 to the 2021, Bank’s financial statement for
further information on the Digital Transformation
Incentive.
In 2021, the ratio of variable to fixed pay components
was 125% of the total for senior managers, well within
the maximum limit of 200% set by 2021 AGM.
Also, the detail of the breakdown of the remuneration
linked to long-term objectives of the members of senior
management at 31 December 2021 and 31 December
2020 is provided below. These remuneration payments
shall be received, as the case may be, in the
corresponding deferral periods, upon achievement of the
conditions stipulated for each payment (see note 42):
EUR thousand
Variable remuneration
subject to long-term
objectives1
Year
Number of 
people
Cash 
payment
Share
payment
Total
2021
15
3,830
3,830
7,660
2020
18
2,594
2,594
5,188
1.Relates to the fair value of the maximum annual amounts for years
2025, 2026 and 2027 of the sixth cycle of the deferred conditional variable
remuneration plan (2024, 2025 and 2026 for the fifth cycle of the deferred
variable compensation plan linked to annual objectives for the year 2020).
Senior executive vice presidents who retired in 2021 and,
therefore, were not members of senior management at
year-end, received in 2021 salaries and other
remuneration amounting to EUR 5,294 thousand (EUR
5,984 thousand in 2020). Likewise, these same
individuals have generated as senior managers the right
to obtain variable remuneration linked to long-term
objectives for a total amount of EUR 55 thousand (this
right has been generated in 2020 for a total amount of
EUR 133 thousand).
The maximum number of Santander shares that the
members of senior management at each plan grant date
(excluding executive directors) were entitled to receive
as of 31 December 2021 and 31 December 2020 relating
to the deferred portion under the various plans then in
force is the following (see note 42):
Maximum number of shares to be delivered
2021
2020
Deferred conditional variable
remuneration plan (2015)
179,617
Deferred conditional variable
remuneration plan (2017)
2,786
Deferred conditional variable
remuneration plan (2018)
3,475
6,949
Deferred conditional variable
remuneration plan and linked to
objectives (2016)
150,445
417,818
Deferred conditional variable
remuneration plan and linked to
objectives (2017)
164,428
791,360
Deferred conditional variable
remuneration plan and linked to
objectives (2018)
803,056
1,512,992
Deferred conditional variable
remuneration plan and linked to
objectives (2019)
1,274,450
2,154,312
Deferred conditional variable
remuneration plan and linked to
objectives (2020)
1,829,720
Since the conditions established in the corresponding
deferred share-based remuneration schemes for prior
years had been met, the following number of Santander
shares was delivered in 2021 and 2020 to the senior
management, in addition to the payment of the related
cash amounts:
Number of shares delivered
2021
2020
Deferred conditional variable
remuneration plan (2015)
146,930
179,614
Deferred conditional variable
remuneration plan (2017)
2,786
2,786
Deferred conditional variable
remuneration plan (2018)
3,474
3,474
Deferred conditional variable
remuneration plan and linked to
objectives (2016)
131,938
170,185
Deferred conditional variable
remuneration plan and linked to
objectives (2017)
79,104
219,363
Deferred conditional variable
remuneration plan and linked to
objectives (2018)
267,686
342,884
Deferred conditional variable
remuneration plan and linked to
objectives (2019)
321,006
Deferred conditional variable
remuneration plan and linked to
objectives (2020)
1,742,419
99
As indicated in note 5.c above, senior management
participate in the benefit system created in 2012, which
covers the contingencies of retirement, disability and
death. Banco Santander makes annual contributions to
the benefit plans of its senior managers. In 2012, the
contracts of the senior managers with benefit pension
commitments were amended to transform them into a
contribution system. The system, which is outsourced to
Santander Seguros y Reaseguros, Compañía
Aseguradora, S.A., gives senior managers the right to
receive benefits upon retirement, regardless of whether
or not they are active at Banco Santander at such time,
based on contributions to the system. This new system
replaced their previous right to receive a pension
supplement in the event of retirement. In the event of
pre-retirement, and up to the retirement date, senior
managers appointed prior to September 2015 are
entitled to receive an annual allowance.
In addition, further to applicable remuneration
regulations, from 2016 (inclusive), a discretionary
pension benefit component of at least 15% of total
remuneration  in contributions to the pension system has
been included. Under the regime corresponding to these
discretionary benefits, the contributions that are
calculated on variable remunerations are subject to
malus and clawback clauses, subject to policies
applicable at each time, and during the same period in
which the variable remuneration is deferred.
Likewise, the annual contributions calculated on variable
remunerations must be invested in Bank shares for a
period of five years from the date that the senior
manager leaves the Group, regardless of whether or not
they leave to retire. Once that period has elapsed, the
amount invested in shares will be reinvested, along with
the remainder of the cumulative balance corresponding
to the senior manager, or it will be paid to the senior
manager or to their beneficiaries in the event of a
contingency covered by the benefits system.
The contracts of some senior executives were modified
at the beginning of 2018 with the same objective and
changes indicated in section c of this note for Ms Ana
Botín and Mr José Antonio Álvarez. The modifications,
which are aimed at aligning the annual contributions
with the practices of comparable institutions and
reducing the risk of future obligations by eliminating the
supplementary scheme for death (widowhood and
orphanhood) and permanent disability in service without
increasing the costs to the bank, are as follows:
Contributions to the pensionable bases were reduced.
Gross annual salaries were increased in the
corresponding amount.
The death and disability supplementary benefits were
eliminated since January 1, 2018. A fixed
remuneration supplement reflected in other
remuneration in the table above was implemented on
the same date.
The amounts insured for life and accident insurance
were increased.
All of the above was done without an increase in total
cost for the Bank.
The balance as of 31 December 2021 in the pension
system for those who were part of senior management
during the year amounted to EUR 64.3 million (EUR
59.4 million at 31 December 2020).
The net charge to income corresponding to pension and
supplementary benefits for widows, orphans and
permanent invalidity amounted to EUR 5.5 million in
2021 (EUR 6.4 million in 31 December 2020).
In 2021 and 2020 there have been no payments in the
form of a single payment of the annual voluntary pre-
retirement allowance.
Additionally, the capital insured by life and accident
insurance at 31 December 2020 of this group amounts
to EUR 100 million (EUR 135.1 million at 31 December
2020).
h) Post-employment benefits to former Directors
and  former executive vice presidents
The post-employment benefits and settlements paid in
2021 to former directors of the Bank, other than those
detailed in note 5.c amounted to EUR 5.6 million and
EUR 11.2 million in 2020, respectively. Also, the post-
employment benefits and settlements paid in 2021 to
former executive vice presidents amounted to EUR
51.6 million and EUR 10.26 million in 2020, respectively.
Contributions to insurance policies that hedge pensions
and complementary widowhood, orphanhood and
permanent disability benefits to previous members of
the Bank’s board of directors, amounted to EUR
0.17 million in 2021 (EUR 0.17 million in 2020).
Likewise, contributions to insurance policies that hedge
pensions and complementary widowhood, orphanhood
and permanent disability benefits for previous senior
managers amounted to EUR 4.4 million in 2021 (EUR
5.8 million in 2020).
During the 2021 financial year, no release or charge was
recorded in the consolidated income statement for
pension commitments and similar obligations held by
the Group with previous former members of the bank's
board of directors (in 2020, five million releases were
recorded), and no provisions/releases has been recorded
in respect of former senior managers in 2021 and 2020.
In addition, 'Provisions - Pension Fund and similar
obligations' in the consolidated balance sheet as at 31
December 2021 included EUR 50 million in respect of the
post-employment benefit obligations to former
Directors of the Bank (EUR 52 million at 31 December
2020) and EUR 114 million corresponding to former
senior managers (EUR 159 million at 31 December
2020).
100
i) Pre-retirement and retirement
The board of directors  approved an amendment to the
contracts of the executive directors whereby:
Ms Ana Botín ceases to have the right to pre-retire if
she leaves the Bank out of her own volition, keeping
this right in case of termination by the Bank until 1
September 2022. After this date, she does not have
the right to pre-retire. While she keeps this right she
will be entitled to an annual allotment equal to the
sum of her fixed remuneration and 30% of the
average amount of her last variable remuneration, to
a maximum of three. This allotment is subject to the
malus and clawback provisions in place for a period
of five years.
Mr. José Antonio Álvarez ceases to have the right to
pre-retire in case of termination of his contract.
j) Contract termination
The executive directors and senior managers have
indefinite-term employment contracts. Executive
directors or senior managers whose contracts are
terminated voluntarily or due to breach of duties are not
entitled to receive any economic compensation. If Banco
Santander terminates the contract for any other reason,
they will be entitled to the corresponding legally-
stipulated termination benefit, without prejudice to any
compensation that may  for non-competition
obligations, as detailed in the directors' remuneration
policy.
If Banco Santander were to terminate her contract,
Ms. Ana Botín-Sanz de Sautuola y O'Shea would have to
remain at Banco Santander’s disposal for a period of 4
months in order to ensure an adequate transition, and
would receive her fixed salary during that period.
k) Information on investments held by the directors
in other companies and conflicts  of interest
None of the members of the board of directors have
declared that they or persons related to them may have
a direct or indirect conflict of interest with the interests
of Banco Santander, S.A., as set forth in Article 229 of the
Corporate Enterprises Act.
101
6. Loans and advances to central
banks and credit institutions
Set forth below is the breakdown of ‘Loans and advances
to credit institutions’ according to their classification,
nature and currency of the transactions:
EUR million
2021
2020
CENTRAL BANKS
Classification
Financial assets held for trading
1,118
Financial assets designated at fair value through profit or loss
482
Financial assets designated at fair value through other comprehensive income
Financial assets at amortized cost
26
21
1,144
503
Breeakdown by product
Reverse repurchase agreements
1,118
482
Other term loans
25
20
Advances different from loans
1
1
Of which, impaired assets
Of which, valuation adjustments for impairment
1,144
503
Currency
Euro
1,143
502
US Dollars
1
1
1,144
503
CREDIT INSTITUTIONS
Classification
Financial assets held for trading
6,980
3
Financial assets designated at fair value through profit or loss
3,445
9,888
Financial assets designated at fair value through other comprehensive income
Financial assets at amortized cost
35,084
34,159
45,509
44,050
Breakdown by product
Reverse repurchase agreements
13,602
15,897
Other term loans
21,192
17,671
Non-loans advances
10,715
10,482
Of which, impaired assets
Of which, valuation adjustments for impairment
(4)
(6)
45,509
44,050
Currency
Euro
32,341
30,815
Pound sterling
1,493
1,555
US dollar
11,395
10,632
Chilean pesos
3
741
Brazilian real
Other currencies
277
307
45,509
44,050
TOTAL
46,653
44,553
102
The loans and advances classified in the 'Financial assets
held for trading' portfolio correspond to temporary
acquisitions of assets from Spanish and foreign
institutions.
Deposits in credit institutions classified as 'Financial
assets at amortized cost' are mainly term accounts and
guarantees given in cash to credit institutions.
The loans and advances to credit institutions classified
under 'Financial assets at amortized' are mainly time
accounts and deposits. In addition, at December 31,
2021, there were outstanding balances with central
banks and credit institutions of EUR 88,268 million and
EUR 2,284 million, respectively (2020: EUR 63,984
million and EUR 2,275 million, respectively). The
increase occurs due to the liquidity management carried
out by the Bank. These balances are included under
'Cash, cash balances at central banks and other deposits
on demand'.
Note 48 shows the details of the maturity terms of
'Financial assets at amortized cost' and 'Cash, cahs
balances at central banks and other deposits on
demand'.
The breakdown as of December 31, 2021 of the
exposure and the provision fund for fiancial assets at
amortized cost is EUR 35,114 million and EUR 4 million,
respectively, all in Phase 1 (EUR 34,187 million and EUR
6 million, also Phase 1, in 2020).
103
7. Debt instruments
The detail, by classification, type, listing status and
currency, of ‘Debt instruments’ in the accompanying
balance sheets is as follows:
EUR millon
 
2021
2020
Classification
Financial assets held for trading
14,320
18,243
Non-trading financial assets mandatorily at fair value through profit or loss
734
671
Financial assets designated at fair value through profit or loss
Financial assets designated at fair value through other comprehensive income
9,394
15,146
Financial assets at amortized cost
17,208
11,413
41,656
45,473
Type
Central banks
892
362
Public sector
13,358
23,681
Credit institutions
14,771
10,123
Other financial institutions
11,356
10,169
Non-financial institutions
1,279
1,138
  Of which, impaired assets
144
134
  Of which, value adjustments for impairment
(148)
(74)
41,656
45,473
Currency
Euro
27,246
32,431
US dollar
7,764
6,105
Pound sterling
4,161
3,903
Brazilian real
1,245
1,491
Other currencies
1,240
1,543
 
41,656
45,473
As of December 31, 2021, the nominal amount of the
debt securities subject to own obligations, mostly as
collateral for financing lines received by the Bank,
amounts to EUR  14,877 million  (EUR 9,495 million as of
December 31 2020), of which EUR 8,067 million
correspond to Spanish Public Debt (EUR 5,512 million as
of December 31, 2020).
The breakdown as of December 31, 2021 of the
exposure, by phase of impairment, of the assets subject
to impairment is EUR 26,606 million in phase 1 and EUR
144 million in phase 3. In 2020 it was EUR 26,500
million in phase 1 and EUR 134 million in phase 3.
The breakdown as of December 31, 2021 of the
provision fund by phase of impairment of assets subject
to impairment is EUR 33 million in phase 1 and EUR 115
million in phase 3. In 2020 it was EUR 9 million in phase
1 and EUR 65 million in phase 3.
Note 25.e) shows the details of ‘Other comprehensive
income‘ accumulated in Equity for the  ‘Financial Assets
designated at fair value through other comprehensive
income‘.
Note 48 contains details of the maturity periods of
‘Loans and Advances and Financial Assets designated at
fair value through other comprehensive income’.
104
8. Equity instruments
a) Breakdown
The detail, by classification and type, of Equity
instruments in the accompanying balance sheets is as
follows:
EUR million
2021
2020
Classification
Financial assets held for trading
14,619
9,758
Non-trading financial assets
mandatorily at fair value through
profit or loss
908
305
Financial assets designated at fair
value through other comprehensive
income
1,705
1,942
 
17,232
12,005
Type
Shares of Spanish companies
3,818
3,276
Shares of foreign companies
12,843
8,396
Investment fund units and shares
571
333
 
17,232
12,005
Note 25.c contains a detail of the ‘Other comprehensive
income’, recognized in equity, on ‘Financial assets
designated at fair value through other comprehensive
income’.
b) Changes
The changes in ‘Non-trading financial assets mandatorily
at fair value through profit or loss’ and ‘Financial assets
at fair value through other comprehensive income’
during 2021 and 2020 were as follows:
  Of which
Project Quasar Investments
2017, S.L.
956
Disposals and capital reductions
(4)
(372)
  Of which
    Saudi British Bank
(326)
Valuation adjustment and other
items*
(235)
(975)
Balance at end of the year
1,705
1,942
EUR million
2021
2020*
Balance at December 31 of the
previous year
1,942
1,856
Purchases and capital increases
2
1,433
* Changes in value occurred during the year 2020, due to the fall in prices
of listed companies covered under this heading.
During the 2021 financial year, there has been a
reduction in the fair value of the stake in Project Quasar
Investments 2017, S.L. derived from the updating of the
valuation of the assets of said company, for an import of
EUR 250 million.
In September 2020, as a result of the loss control over
Project Quasar Investments 2017, S.L., Banco
Santander's holding in the portfolio, until then registered
under the heading 'Associated Entities' (see note 13 a.ii)
and amounting to EUR 956 million, was reclassified to
this portfolio.
Also, on September 7, 2020  and on December 1, 2020,
Banco Santander proceeded to sell its shares owned by
Saudi British Bank, which resulted in a reduction of its
share valued at that time EUR 326 million.
c) Notifications of acquisitions of investments
The notifications of the acquisitions and disposals of
holdings in investees made by the Bank in 2021, in
compliance with Article 155 of the Spanish Limited
Liability Companies Law and Article 125 of Spanish
Securities Market Law 24/1998, are listed in appendix IV.
9. Derivatives (assets and
liabilities) and Short positions
a) Trading derivatives
The detail, by type of inherent risk, of the fair value of
the trading derivatives arranged by Banco Santander at
31 December 2021 and 2020 is as follows:
EUR million
 
2021
2020
 
Debit
balance
Credit
balance
Debit
balance
Credit
Interest rate
26,763
23,483
35,280
31,484
Equity
instruments
1,393
955
1,873
918
Currency and
Gold
13,739
15,911
16,062
17,986
Credit
104
252
77
223
Commodities
Others
24
71
70
65
Total
42,023
40,672
53,262
50,676
105
b) Short positions
The following is a breakdown of  short positions:
EUR million
 
2021
2020
Securities lending
Equity instruments
318
289
Uncovered on
assignments
Debt instruments
8,926
10,049
Total
9,244
10,338
10. Loans and advances to
customers
a) Detail
The detail, by classification, of ‘Loans and advances to
customers’ on the balance sheets is as follows:
EUR million
2021
2020
Financial assets held for
trading
7,025
71
Non-trading financial
assets mandatorily at fair
value through profit or
loss
713
1,249
Financial assets
designated at fair value
through profit or loss
9,958
23,529
Financial assets at fair
value through other
comprehensive income
3,936
5,535
Financial assets at
amortized cost
286,735
265,427
Loans and advances to
customers (carrying
amount)
308,367
295,811
  Of which
      Impairment losses
(6,899)
(6,981)
Loans and advances to
customers disregarding
impairment losses
315,266
302,792
Note 48 shows the details of the maturity periods of
financial assets at amortized cost.
At 31 December 2021 and 2020, there were no loans
and advances to customers for material amounts
without fixed maturity dates.
106
b) Breakdown
The following is a breakdown of the loans and advances
granted to Banco Santander´s clients, which include
exposure to the Bank´s credit risk in its main activity,
without considering the balance of impairment reserve
or the valuation adjustments depending on the modality
and situation of the operations, the geographical area of
the residence of the borrower and the modality of
interest rate of the operation:
EUR million
2021
2020
Loan type and status
On demand and with a short prior period
3,167
2,473
Credit cards receivables
1,269
1,264
Commercial credit
27,423
15,920
Finance leases
2,965
2,951
Reverse repurchase agreements
6,459
14,700
Other term loans
255,799
246,679
Non loans advances
11,285
11,824
Of which
  Impaired assets
12,882
13,524
  Impairment losses
(6,899)
(6,981)
Book value
35,084
295,811
Gross book value
315,266
302,792
Geographical area
Spain
211,525
213,407
European Union (excluding Spain)
28,469
27,949
United States of America and Puerto Rico
25,065
22,624
Other OECD countries
28,186
20,224
Latin America (non-OECD)
9,548
7,704
Rest of the world
12,473
10,884
315,266
302,792
Interest rate:
Fixed rate
143,101
137,397
Floating rate
172,165
165,395
315,266
302,792
At December 31, 2021 and 2020 the Bank had EUR
13,819 and 11,767 million, respectively, of loans and
advances granted to Spanish public administrations
whose rating at December 31, 2021 is A (rating at
December 31, 2020 was A ) and with  EUR 2,085 and
1,691 million, respectively, granted to the Public Sector
of other countries (as of December 31, 2021 this amount
was composed, based on the rating of the issuer as
follows: 1% AAA, 19% AA, 20% A, 12% BBB and 48%
lower than BBB).
The above-mentioned ratings were obtained by
converting the internal ratings awarded to customers by
Banco Santander (see note 49) into the external ratings
classification established by Standard & Poor's, in order
to make them more readily comparable.
Without considering the Public Administrations, the
amount of the loans and advances at 31 December 2021
and 2020 amounts to EUR 299,362 million and EUR
289,334 million, of which EUR 286,480 million and EUR
275,810 million are classified as performing,
respectively.
107
The following is a detail, by activity, of the loans to customers at 31 December 2021, net of impairment losses:
EUR million
Total*
Without
collateral
Secured loans
Net exposure
Loan-to-value ratio***
Of which,
property
collateral
Of which,
other
collateral
Less than or
equal to 40%
More than
40% and less
than or equal
to 60%
More than
60% and less
than or equal
to 80%
More than
80% and less
than or equal
to 100%
More than
100%
Public sector
14,030
13,280
163
587
56
79
25
590
Other financial institutions and individual traders
(business financial activity)
54,658
38,209
1,198
15,251
572
614
222
14,628
413
Non-financial companies and individual
entrepreneurs (non-financial business activity)
(broken down by purpose)
150,865
107,895
21,371
21,599
8,968
7,388
4,735
16,563
5,316
  Of which
    Construction and property development       
(including land)
2,418
11
2,388
19
1,011
763
500
24
109
    Civil engineering construction
1,690
943
33
714
16
76
10
603
42
    Large companies
96,636
74,601
5,847
16,188
2,773
2,318
1,443
12,014
3,487
    SMEs and individual traders
50,121
32,340
13,103
4,678
5,168
4,231
2,782
3,922
1,678
Other households (broken down by purpose)
77,529
9,035
66,938
1,556
18,584
21,058
21,118
5,069
2,665
  Of which
      Residential
61,961
746
61,023
192
16,680
19,288
19,345
4,166
1,736
      Consumer loans
8,607
7,782
412
413
193
154
239
160
79
      Other purposes
6,961
507
5,503
951
1,711
1,616
1,534
743
850
Total*
297,082
168,419
89,670
38,993
28,180
29,139
26,100
36,850
8,394
Memorandum item
Refinanced and restructured transactions**
15,301
7,542
6,472
1,287
1,517
1,466
1,144
1,514
2,118
* Not including loan advances.
**Includes the net balance of value adjustments associated with impaired assets.
***The ratio is the carrying amount of the transactions at 31 December 2021 calculated using  the latest available appraisal value of the collateral.
108
Note 49 contains information relating to the forborne
loan portfolio.
Below is a breakdown of the movement in gross
exposure by impairment stage of loans and advances
from customers recorded under the headings ‘Financial
assets at amortized cost’ and ‘Financial assets at fair
value through other comprehensive income’ under Bank
of Spain Circular 4/2017 to 31 December 2021 and
2020:
2021
EUR million
Stage 1
Stage 2
Stage 3
Total
Balance at beginning
of the year
252,388
12,031
13,524
277,943
Movements
Transfers
Transfer to Stage 2
from Stage 1
(8,873)
8,873
Transfer to Stage 3
from Stage 1
(1,368)
1,368
Transfer to Stage 3
from Stage 2
(1,116)
1,116
Transfer to Stage 1
from Stage 2
1,386
(1,386)
Transfer to Stage 2
from Stage 3
357
(357)
Transfer to Stage 1
from Stage 3
36
(36)
Net changes on
financial assets
24,411
(2,051)
(278)
22,082
Failed
(2,455)
(2,455)
Differences in
change and other
movements
Balance at end of
the year
267,980
16,708
12,882
297,570
2020
EUR million
Stage 1
Stage 2
Stage 3
Total
Balance at beginning
of the year
226,826
9,288
13,994
250,108
Movements
Transfers
Transfer to Stage 2
from Stage 1
(6,288)
6,288
Transfer to Stage 3
from Stage 1
(812)
812
Transfer to Stage 3
from Stage 2
(1,910)
1,910
Transfer to Stage 1
from Stage 2
1,818
(1,818)
Transfer to Stage 2
from Stage 3
301
(301)
Transfer to Stage 1
from Stage 3
259
(259)
Net changes on
financial assets
30,585
(118)
(702)
29,765
Failed
(1,930)
(1,930)
Differences in
change and other
movements
Balance at end of
the year
252,388
12,031
13,524
277,943
As of December 31, 2021, the total net exposure of loans
and advances to the Bank's customers is EUR 290,671
million, of which EUR 267,471 million correspond to
phase 1, EUR 16,002 million to phase 2 and EUR 7,198
millionto phase 3. This exposure includes EUR 233
million (EUR 284 million as of December 31, 2020) in
impaired assets purchased with impairment, classified in
phase 3, which correspond mainly to business
combinations carried out by the Bank.
109
c) Impairment losses on loans and advances to
customers at amortized cost and at fair value
through other comprehensive income
The changes in the impairment losses on the assets
making up the balances of financial assets at amortized
cost and at fair value through other comprehensive
income ‘Loans and advances to customers’:
EUR million
2021
2020
Balance at beginning of the
year
6,981
6,245
Net impairment losses
charged to income for the
year
2,304
2,577
Of which
Impairment losses charged
to profit or loss
3,535
4,075
Impairment losses reversed
with a credit to profit or
loss
(1,231)
(1,498)
Write-off of impaired
balances against recorded
impairment allowance
(2,455)
(1,930)
Exchange differences and
other changes
69
89
Balance at end of the year
6,899
6,981
Of which
By status of the asset
Impaired assets
5,684
5,782
Of which, due to country
risk
7
Other assets
1,208
1,199
Balance at end of the year
6,899
6,981
Of which
    Individually calculated
881
909
    Collective calculated
6,018
6,072
The net provision charged to results for the year includes
provisions for renegotiation or contractual modification
for EUR 75 million (EUR 38 million on December 31,
2020).
Taking into account the assets in suspense recovered,
which amount to EUR 89 million as of December 31,
2021 (EUR 82 million as of December 31, 2020) and
adding to the net provision of the previous table, the
impairment of 'Credit Entities  and Debt Securities' (see
notes 6 and 7), the amount recorded under the heading
'Impairment or reversal of impairment of financial assets
not measured at fair value through profit or loss and net
gains or losses' , due to changes in 'Financial assets at
fair value with changes in other comprehensive income'
and 'Financial assets at amortized cost', amounts to EUR
2,287 million as of December 31, 2021 (EUR 2,559
million as of December 31, 2020) .
The following is the movement of loan loss provisions
broken down by impairment stage of loans and advances
to customers, during 2021 and 2020:
2021
EUR million
Stage 1
Stage 2
Stage 3
Total
Balance at beginning
of the year
485
714
5,782
6,981
Transfers
Transfer to Stage 2
from Stage 1
(19)
248
229
Transfer to Stage 3
from Stage 1
(52)
240
188
Transfer to Stage 3
from Stage 2
(119)
384
265
Transfer to Stage 1
from Stage 2
4
(76)
(72)
Transfer to Stage 2
from Stage 3
23
(77)
(54)
Transfer to Stage 1
from Stage 3
1
(13)
(12)
Net changes of the
exposure and
modifications in the
credit risk
71
(84)
1,773
1,760
Changes due to update
in the methodology of
estimates of the entity
Write-offs
(2,455)
(2,455)
FX and other
movements
19
50
69
Gross carrying amount
end of the year
509
706
5,684
6,899
110
2020
EUR million
Stage 1
Stage 2
Stage 3
Total
Balance at beginning
of the year
335
513
5,397
6,245
Transfers
Transfer to Stage 2
from Stage 1
(138)
242
104
Transfer to Stage 3
from Stage 1
(94)
382
288
Transfer to Stage 3
from Stage 2
(122)
288
166
Transfer to Stage 1
from Stage 2
10
(82)
(72)
Transfer to Stage 2
from Stage 3
22
(65)
(43)
Transfer to Stage 1
from Stage 3
6
(19)
(13)
Net changes of the
exposure and
modifications in the
credit risk
359
131
1,657
2,147
Changes due to update
in the methodology of
estimates of the entity
Write-offs
(1,930)
(1,930)
FX and other
movements
7
10
72
89
Gross carrying amount
end of the year
485
714
5,782
6,981
d) Impaired assets
The detail of the movement in the balance of financial
assets classified as ‘Loans and advances to customers’
and considered to be impaired by reason of their credit
risk:
EUR million
2021
2020
Balance at beginning of
the year
13,524
13,994
Net additions
1,813
1,460
Written-off assets
(2,455)
(1,930)
Other changes
Balance at end of the
year
12,882
13,524
This amount, once the corresponding provisions have
been deducted, is Banco Santander´s best estimate of
the discounted value of the  cashflows that are expected
to be recovered from impaired assets.
At 31 December 2021, the balance of the assets written-
off amounted to EUR 8,198 million. (December 2020:
EUR 8,660 million).
The following are the credit impaired financial assets
and related guarantees maintained to mitigate potential
losses as of 31 December 2021:
EUR million
Gross
amount
Allowance
recognized
Estimated
collateral
value*
Without
associated real
collateral
4,881
2,973
With associated
real collateral
7,093
2,275
4,508
With other
collateral
908
436
255
Total
12,882
5,684
4,763
* Collects the estimated value of the collateral associated with each loan.
Consequently, it does not include any other cash flow that could be
obtained, such as those from the personal guarantees of the accredited.
When classifying assets in the previous table, the main
factors considered by Banco Santander to determine
whether an asset has become impaired are the existence
of amounts past due -assets impaired due to arrears- or
other circumstances may be arise which will not result in
all contractual cash flow being recovered, such as a
deterioration of the borrower's financial situation, the
worsening of its capacity to generate funds or difficulties
experienced by it in accessing credit.
e) Transferred credits
The heading 'Loans and advances to customers' includes,
among others, those loans transferred to third parties by
securitisation on which risks and profits are maintained,
albeit partially, which is why and in accordance with the
accounting regulations that apply, they cannot be
removed from the balance sheet. This is mainly due to
mortgage loans, loans to companies and consumer
loans. The breakdown of securitised loans held on the
balance sheet, taking into account the nature of the
financial instrument from which they originate, is shown
below.
EUR million
2021
2020
Retained on the balance
sheet
15,347
20,113
Of which, mortgage
assets are securitized
through:
Mortgage transfer
certificates (nota 20.c)*
11,133
17,610
Total
15,347
20,113
*Note 19 reports the liabilities associated with securitization operations,
discounting the bonds of the securitization funds repurchased by the
Bank.
111
The evolution of this activity responds to its use as a
regulatory capital management tool and as a resource
for the diversification of Banco Santander's liquidity
sources. During 2021 and 2020 the Bank didn't
derecognized any of the securitizations carried out in
years mentioned before, and the balance derecognized
at those dates corresponds to securitizations carried out
in previous years.
On the other hand, as of December 31, 2021, Banco
Santander has credits derecognized from the balance
sheet and on which the administration maintains for an
amount of EUR 2,397 million (EUR 2,783 million as of
December 31, 2020). Within the total loans written off
the balance sheet, as of December 31, 2021, there are
EUR 845 million (EUR 1,005 million in 2020) of
securitized assets.
f) Guarantee
Below is the breakdown of the liabilities issued
guaranteed by assets, discounting own values as of 31
December 2021 and 2020:
EUR million
2021
2020
Liabilities secured
by assets:
  Mortgage-backed
bonds
22,274
23,589
  Asset-backed
securities
2,290
381
  Territorial bonds
625
872
Total
25,189
24,842
The mortgage-backed bonds (‘cédulas hipotecarias’) are
secured by mortgage loans with average maturities of
more than ten years. In order to calculate the amount of
the qualifying assets, the following transactions are
excluded from the total base of the unsecuritized
mortgage portfolio:
Transactions classified as at pre-action stage and
procedural stage.
Transactions without appraisal by a specialist
valuer.
Transactions exceeding 80% of the appraized
value in residential financing and 60% in the case
of other assets.
Second mortgages or mortgages with insufficient
collateral.
Transactions without insurance or with
insufficient insurance.
The asset-backed securities, including asset-backed
securities and notes issued by special-purpose vehicles
(SPVs), are secured by:
Mortgage loans to individuals to finance the
acquisition and refurbishment of homes with an
average maturity of more than ten years.
Personal consumer finance loans with no specific
guarantee and unsecured loans with an average
maturity of five years.
Loans to SMEs (non-financial small and medium-
sized enterprises) secured by State guarantees,
and loans to companies (SMEs -self-employed,
microbusinesses, small and medium-sized
enterprises- and large companies) secured by
property mortgages, the borrower's personal
guarantee, guarantees and other collateral other
than property mortgages, with an average
maturity of seven years.
Mortgage and non-mortgage loans to finance
municipalities, autonomous communities and
subsidiaries with an average maturity of more
than ten years.
Asset-backed securities issued by various
European special-purpose vehicles backed by
German and Italian loans for the purchase of
vehicles and Italian personal loans, with an
average maturity of eight years.
Commercial credit of Banco Santander (ordinary
and occasional invoice discounting and advances
to customers on legitimate receivables) with an
average maturity of 45 days.
The fair value of the guarantees received by Banco
Santander (financial and non-financial assets) which the
Bank is authorized to sell or pledge even if the owner of
the guarantee has not defaulted is scantly material
taking into account the Bank's financial statements as a
whole.
112
11. Trading derivatives
The detail of the notional and/or contractual amounts
and the market values of the trading derivatives held by
the Bank in 2021 and 2020 is as follows:
EUR million
2021
2020
Notional value
Market value
Notional value
Market value
Held for trading:
Interest rate
4,163,388
3,280
4,423,110
3,795
  Options
203,013
(304)
247,858
(441)
  Other
3,960,375
3,584
4,175,252
4,236
Equity instruments
55,548
439
50,733
955
  Options
36,920
(231)
39,270
4
  Other
18,628
670
11,463
951
Currency
687,473
(2,172)
618,977
(1,925)
  Options
43,666
48
39,842
41
  Other
643,807
(2,220)
579,135
(1,966)
Credit
12,856
(147)
11,652
(146)
Hedging default derivative and total through out
12,856
(147)
11,652
(146)
Securities and commodities derivatives and other
5,518
(49)
6,067
7
4,924,783
1,351
5,110,539
2,686
113
12. Non-current assets held for
sale
The balance detail under this heading of the attached
balance sheets is shown below:
EUR million
2021
2020
Foreclosed assets
966
1,001
Other assets leased out under an
operating lease
27
231
Investment property
55
Total
993
1,287
As of December 31, 2021, reducing the balance of this
heading, there were EUR 644 million corresponding to
value adjustments due to impairment of said assets,
which entails a coverage of 39.3% of them (EUR 626
million, with a coverage of 32.7%, in the 2021 financial
year) of which EUR 70 million have been recorded during
the 2020 financial year (EUR 68 million in the 2020
financial year) under the heading 'Gains or losses from
non-current assets and groups disposal of items
classified as held for sale not eligible as discontinued
operations' (see Note 46)
At December 31, 2021 there are no liabilities associated
in disposable groups of items that have been classified
as held for sale associated with other non-current assets
and alienable groups of items that have been classified
as held for sale.
13. Investments
a) Associated entities
‘Investments - Associates’ in the accompanying balance
sheets includes Banco Santander`s ownership interests
in associates (see note 2.b).
Appendix II contains a detail of these companies,
indicating the percentages of direct or indirect ownership
and other relevant information.
At 31 December 2021 there were no capital increases in
progress at any associated company.
i. Breakdown
The detail of the balance of this heading of the attached
balances, based on the contracting currency and the
admission or non-listing of the securities, is as follows:
EUR million
2021
2020
Currency:
Euro
3,020
3,082
Foreign Currency
3,020
3,082
Listing status:
Listed
1,917
1,978
Unlisted
1,103
1,104
3,020
3,082
ii. Changes
The changes in 2021 and 2020 in ‘Investments -
Associates’’, disregarding impairment losses, were as
follows, (see note 13.a.iii):
EUR million
2021
2020
Balance at the beginning of the
year
3,363
5,432
Purchases, capital increases and
mergers
20
512
  Of which
Popular Spain Holding de
Inversiones, S.L.U. (before
Allianz Popular, S.L.)
414
Merlín Properties, SOCIMI,
S.A.
6
87
Redsys Servicios de
Procesamiento, S.L.
10
Promontoria Manzana, S.A.
3
Disposals, reductions and
mergers:
(78)
(9)
Of which
Merlin Properties, SOCIMI,
S.A.
(25)
Metrovacesa, S.A.
(52)
Promontoria Manzana, S.A.
(4)
Transfers
(2,535)
  Of which
Popular Spain Holding de
Inversiones, S.L.U. (before
Allianz Popular, S.L.)
(834)
Project Quasar Investment
2017, S.L.
(1,701)
Other changes (net)
7
(37)
Balance at end of the year
3,312
3,363
114
In April 2021, the company Merlín Properties, SOCIMI,
S.A. has made a distribution of dividends charged to the
issue premium, with Banco Santander receiving an
amount of EUR 27 million, which has led to the recording
of a reduction in the cost of the participation of EUR 25
million and the recording of an income of EUR 2 million.
Additionally, during the 2021 financial year, Banco
Santander has acquired, through various purchases in
the stock market, shares of the entity Merlín Properties,
SOCIMI, S.A. for a net total of EUR 6 million.
In May and December 2021, Metrovacesa, S.A. made
two distributions of dividends charged to the
unrestricted reserve (issue premium), with Banco
Santander receiving two payments of EUR 19 million.
These operations have entailed a reduction in the cost of
the participation of EUR 52 million and an impairment
application of EUR 14 million.
In July 2021 and September 2021, as a result of changes
in the composition of the Spanish banking sector, Banco
Santander has exercised its preferential acquisition right,
included in the partners' agreement dated June 29,
2021, of shares in Redsys Servicios of Procesamiento,
S.L. for imports of EUR 2 million and EUR 8 million,
respectively, until reaching the maximum established
share of 24.9%.
On January 31, 2020, Banco Santander proceeded to
repurchase 60% of the stake in Allianz Popular, S.L.,
reaching a 100% stake in this company. The total cost of
this participation after this acquisition has been fixed at
EUR 834 million, and then reclassify it to the heading of
'Group Entities' (see note 13.b.ii).
In addition, during the year 2020, Banco Santander
acquired shares of Merlín Properties, SOCIMI, S.A.
through various purchases on the stock market for a net
total of EUR 87 million.
Also, in September 2020, on the occasion of the loss of
control over the entity Project Quasar Investments 2017,
S.L., Banco Santander's share in the same, amounting to
EUR 1,701 million  (EUR 956 million  net impairment
fund), was reclassified to the portfolio of Equity
Instruments (see note 8.b.ii).
iii. Impairment losses
The changes in the balance of this item were as follows:
EUR million
2021
2020
Balance at the beginning of the
year
281
572
Net impairment losses
(reversals) (note 44)
24
460
Other changes
(13)
(751)
Balance at end of the year
292
281
b) Group entities
‘Investments - Group entities’ includes the equity
instruments owned by Banco Santander and issued by
subsidiaries belonging to Grupo Santander.
Relevant information on these companies is provided in
Appendix I.
i. Breakdown
The detail, by currency and listing status, of ‘Investments
- Subsidiaries’ on the balance sheets as at 31 December
2021 and 2020 is as follows:
EUR million
2021
2020
Currency:
Euro
45,780
44,346
Pound Sterling
13,303
12,163
Other currencies
26,189
25,051
85,272
81,560
Listing status:
Listed
6,338
5,968
Unlisted
78,934
75,592
85,272
81,560
115
ii. Changes
The changes in 2021 and 2020 in ‘Investments -
Subsidiaries’, disregarding impairment losses, were as
follows:
EUR million
2021
2020
Balance at beginning of the year
93,918
89,318
Acquisitions, contributions, capital increase payments and mergers
6,593
7,108
Of which
Contingently convertible debt (AT1)
996
PagoNXT, S.L. (before Santander Digital Businesses, S.L.)
917
1,030
Ablasa Participaciones, S.L.
616
Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero
Santander México
343
PagoNXT Merchant Solutions, S.L. (before Santander Merchant Platform
Solutions, S.L.)
296
Tresmares Santander Direct Lending, SICC, S.A.
274
Retail Company 2021, S.L.U.
262
Banco Santander de Negocios Colombia S.A.
178
Openbank, S.A.
170
Open Digital Services, S.L.
161
Deva Capital Holding Company, S.L.
96
Santander Fintech Holding, S.L.
62
Landcompany 2020, S.L. (before Landmark Ibérica, S.L.)
21
33
Santander Totta, SGPS, S.A.
4,949
SAM Investment Holdings, S.L.
292
Uro Property Holdings, SOCIMI, S.A. (OCI portfolio transfer)
179
Disposals, capital reductions and mergers
(4,841)
(3,725)
Of which
Contingently convertible debt (AT1)
(1,157)
Popular Spain Holding de Inversiones, S.L.U. (before  Allianz Popular, S.L.)
(542)
(292)
PagoNXT Merchant Solutions, S.L. (before Santander Merchant Platform
Solutions, S.L.)
(296)
(150)
Sterrebeck B.V.
(264)
Getnet Europe, Entidad de Pago, S.L. (before Santander España Merchant
Services, Entidad de Pago, S.L.)
(185)
Grupo Empresarial Santander, S.L.
(141)
Banco Santander (Brasil) S.A.
(2,478)
Santander Global Property, S.L.U.
(255)
Inmobiliaria Viagracia, S.A.U.
(109)
Inversiones Capital Global, S.A. Unipersonal
(67)
BPE Financiaciones, S.A.U.
(1)
Transfers
1,013
Of which
Popular Spain Holding de Inversiones, S.L.U. (before Allianz Popular, S.L.)
834
FX and other movements*
1,054
204
Balance at end of the year
96,724
93,918
*  In 2020 it includes EUR 2,507 million  corresponding to the contingently convertible debt instruments (AT1) transferred under this heading.
116
On May 14, 2021, Banco Santander has subscribed a
capital increase in the company Landcompany 2020, S.L.
(formerly Landmark Iberia, S.L.) through a non-monetary
contribution of land for a total amount of EUR 21 million,
reaching a participation percentage of 17.66%.
In June 2021, the companies PagoNxt Merchant
Solutions, S.L. (formerly Santander Merchant Platform
Solutions, S.L.), Grupo Empresarial Santander, S.L. and
Sterrebeck B.V. drafted two partial spin-off projects
pursuant to which the spun-off companies (Grupo
Empresarial Santander, S.L. and Sterrebeck B.V.) transfer
en bloc and by universal succession a part of their assets
consisting of all the shares representing the share capital
of Getnet Adquirência e Serviços para Meios de
Pagamento S.A. (Getnet Brasil) of its ownership to the
beneficiary company (PagoNxt Mechant Solutions, S.L.).
This has led to a capital increase in PagoNxt Merchant
Solutions, S.L. and a decrease in Grupo Empresarial
Santander, S.L. and Sterrebeck B.V. for amounts of EUR
141 million and EUR 264 million, respectively. The Bank,
as shareholder of the spun-off companies, has received
shares of PagoNxt Merchant Solutions, S.L.
On the other hand, throughout the 2021 financial year,
Banco Santander has made various monetary
contributions to the equity of the company PagoNxt, S.L.
(formerly Santander Digital Businesses, S.L.) amounting
EUR 407 million. Likewise, during the 2021 financial year
it has also subscribed non-monetary contributions to this
company for a total of EUR 510 million, through the
contribution of its participation in the following
companies: EUR 215 million by Getnet Europe, Entidad
de Pago, S.L. (formerly Santander España Merchant
Services, Entidad de Pago, S.L.) and EUR 295 million for
PagoNxt Merchant Solutions, S.L. (formerly Santander
Merchant Platform Solutions, S.L.).
In July 2021, the Bank proceeded to purchase the
remaining 8% of its stake in Parque Solar Páramo, S.L.
for an amount of EUR 6 million, transferring it from the
portfolio of investments in joint ventures to the portfolio
of investments in subsidiaries (see note 13.c.).
Subsequently, this interest was transferred to the
heading 'Non-current assets held for sale', due to
Management's intention to sell them during the year
(see note 12).
On July 5, 2021, the merger by absorption of Santander
Global Operations, S.A. was signed (absorbed company)
by Santander Global Tecnhnology, S.L. (absorbing
company), with dissolution without liquidation of the
absorbed company and en bloc transfer of its assets to
the absorbing company. The new company resulting
from the merger is renamed Santander Global
Technology and Operations, S.L.
On October 21, 2021, within the process of rationalizing
and optimizing the corporate structure of Grupo
Santander, a segregation project was signed by virtue of
which Banco Santander has segregated the autonomous
economic unit that integrates the branch management
business empty bank offices, with closure project or
leased to third parties not linked to the banking activity
of Banco Santander (split company), including the
contracts linked to them and the employees currently in
charge of their management, in favor of a newly creation
called Retail Company 2021, S.L.U (beneficiary
company). The amount of the segregation has risen to
EUR 262 million.
On December 7, 2021, within the framework of the
Public Offer for the Acquisition of shares of Banco
Santander México, S.A., Institución de Banca Múltiple,
Grupo Financiero Santander México, for up to all of the
Series B shares representing the capital stock, Banco
Santander has acquired 4.51% of the shares of said
company, both in Mexico and in the United States. This
has meant a disbursement of EUR 343 million, including
the expenses of the operation.
On December 16, 2021, the deed of merger by
absorption by the Bank of the companies Popular Spain
Holding de Inversiones, S.L.U. (formerly Allianz Popular,
S.L.), Santander Investment I, S.A.U. and Administration
of Bancos Latinoamericanos Santander, S.L.,
incorporating, among other assets, the companies
Ablasa Participaciones, S.L. and Banco Santander de
Negocios Colombia. The net amount registered under
this heading for this operation was EUR 223 million, with
a credit in reserves of  EUR 1,039 million.
Also, throughout the 2021 financial year Banco
Santander has subscribed capital increases and made
partner contributions, the most relevant being: EUR 274
million euros to Tresmares Santander Direct Lending,
SICC, S.A., EUR 170 million to Open Bank, S.A., EUR 161
million to Open Digital Services, S.L., EUR 96 million to
Deva Capital Holding Company, S.L. and EUR 62 million
to Santander Fintech Holdings, S.L.
On January 31, 2020, Banco Santander proceeded to
transfer to this heading 100% of its stake in Popular
Spain Holding de Inversiones, S.L.U. (formerly Allianz
Popular, S.L.) amounting  EUR 834 million  (see note
13.a.ii). Next, on 28 April 2020, Popular Spain Holding de
Inversiones, S.L.U. approved a refund of the issuance
premium of EUR 292 million to Banco Santander by
transferring a credit right derived from the deferred price
of two contracts for the sale of shares.
Banco Santander also made a contribution to their own
funds of SAM Investment Holdings, S.L. for the same
amount, by the assignment of the said right.
On May 8, 2020, Banco Santander signed two successive
capital increases by Landcompany 2020, S.L. (before
Landmark Iberia, S.L.) through non-cash contributions of
land totaling EUR 33 million, reaching a share rate of
17.22%.
On  June 30, 2020, the sole partner of Investments
Capital Global, S.A.U. approved a partial distribution of
the shared premium, which has meant a decrease Banco
Santander´s share in the company of EUR 67 million.
117
In September 2020, Banco Santander acquired 85.03%
of the shares of Uro Property Holdings, SOCIMI, S.A.
reaching a total share of 99.99%. As a result of this
acquisition, this stake was enforced under this heading
at a total cost of EUR 179 million.
On December 22, 2020, in the context of the
reorganization of the shareholder of Banco Santander
(Brasil) S.A. within the Group, Banco Santander sold
13.89% of its stake in that entity to Grupo Empresarial
Santander, S.L. for EUR 3,605 million. As a result of this
sale, the Bank recorded a profit of EUR 1,127 million (see
note 45).
Also, on December 23, 2020, the deeds of merger by
absorption by Banco Santander of the entities Santander
Global Property, S.L.U., Inmobiliaria Viagracia, S.A.U. and
BPE Financiaciones, S.A.U. raised to the public. The
amount discharged under this heading for this operation
was EUR 365 million.
In addition, on December 28, 2020, Banco Santander
acquired 99.85% of Santander Totta, SGPS, S.A. shares
from Santusa Holding, S.A. for an amount of EUR 4,949
million.
In addition, during the year 2020, Banco Santander made
various monetary contributions to the own funds of the
company PagoNxt, S.L. (formerly Santander Digital
Businesses, S.L.) totaling EUR 754 million. In addition, it
signed capital increases during 2020 and made non-cash
contributions to this company totaling EUR 276 million,
by contributing its participation in the following
companies: EUR 45 million by Ebury Partners Limited,
EUR 31 million by Moneybit, S.L. (currently PagoNxt
Trade Services, S.L.) EUR 150 million for Santander
Merchant Solutions, S.L. (before PagoNxt Merchant
Solutions, S.L.) and EUR 50 million for PagoNxt
Solutions, S.L.
iii. Impairment losses
The changes in the balance of this item were as follows:
EUR million
2021
2020
Balance at beginning of the year
12,358
7,095
Net impairment losses
(reversals) (note 44)
(851)
5,466
Other changes
(55)
(203)
Balance at end of the year
11,452
12,358
The Management carries out an analysis of the potential
loss of value of the investments in subsidiaries, joint
ventures and associates that it has registered with
respect to their book value. Said analysis is carried out
using different parameters, such as equity value, listed
value and recoverable value, which is obtained from
estimates of expected cash flows or net worth corrected
by tacit capital gains existing on the date of the
valuation.
In accordance with the foregoing, Banco Santander has
carried out in December 2021 the evaluation of its
investees. The provisions for impairment made by the
Bank during the 2021 financial year include EUR 144
million corresponding to the impairment of the stake
held in Open Digital Services, S.L. Additionally, during
the year impairment releases have been made that
include EUR 887 million corresponding to the stake in
Santander UK Group Holdings plc, derived from the
results obtained by the group of entities of which it is the
parent and the positive evolution of the interest rate of
exchange affected.
During the 2020 financial year, considering the expected
evolution of the macroeconomic variables included in
the valuation of its investees and the impact of the
covid-19 crisis, the Bank made provisions for impairment
that included EUR 4,313 million corresponding to the
impairment of the investment held in Santander UK
Group Holdings plc.
c) Joint venture entities
The cost of the investee entities registered under this
heading as of 31 of December 2021 amounts to EUR 451
million, while impairment provisions recorded at that
date are EUR 194 million ( EUR 420 millon and EUR 172
million in 2020).
In July 2021, Banco Santander proceeded to purchase
the remaining 8% of its stake in Parque Solar Páramo,
S.L. for an amount of EUR 6 million, transferring it to the
Group's portfolio of investments in subsidiaries (see note
13.b.ii).
Likewise, in December 2021, UCI, S.A. approved a capital
increase, corresponding to Banco Santander an amount
of EUR 30 million.
During the 2021 financial year, Banco Santander has
provided impairment for a net amount of EUR 27 million
for the entities registered under this heading, mainly by
the company UCI, S.A., while in the 2020 financial year it
released provisions of EUR 5 million for the same
company.
14. Insurance contracts linked to
pensions
The detail of Insurance contracts linked to pensions in
the accompanying balance sheets are as follows:
EUR million
 
2021
2020
Assets relating to insurance contracts
covering post-employment benefit plan
obligations (notes 17 and 23)
381
423
Total
381
423
118
15. Tangible assets
a) Changes
The movement under this heading of the balance sheet
during the financial year 2021 and 2020 was as follows:
EUR million
Tangible assets
Of which, right-of-use for operating lease
For own
use
Leased out
under
an
operating
lease
Investment
property
Total
For own
use
Leased out
under
an
operating
lease
Investment
property
Total
Cost
Opening balance at 1 January
2020
8,597
850
337
9,784
2,946
2,946
Additions/disposals (net)
174
126
300
8
8
Transfers and other
(455)
(10)
(465)
Balance at 31 December 2020
8,316
976
327
9,619
2,954
2,954
Additions/disposals (net)
110
147
(2)
255
(51)
(51)
Transfers and others
(627)
55
(572)
(8)
(8)
Balance at 31 December 2021
7,799
1,123
380
9,302
2,895
2,895
Accumulated depreciation
Opening balance at 1 January
2020
(2,298)
(199)
(21)
(2,518)
(268)
(268)
Charge for the year
(453)
(99)
(2)
(554)
(262)
(262)
Disposals
43
69
112
28
28
Transfers and others
195
7
202
Balance at 31 December 2020
(2,513)
(229)
(16)
(2,758)
(502)
(502)
Charge for the year
(455)
(114)
(4)
(573)
(276)
(276)
Disposals
93
72
165
84
84
Transfers and others
606
(2)
604
133
133
Balance at 31 December 2021
(2,269)
(271)
(22)
(2,562)
(561)
(561)
Impairment losses
Opening balance at 1 January
2020
(46)
(89)
(135)
Charge for the year
(62)
(62)
Disposals
Transfers and others
20
(4)
16
Balance at 31 December 2020
(88)
(93)
(181)
Charge for the year
(85)
(85)
Disposals
Transfers and others
35
6
41
Balance at 31 December 2021
(138)
(87)
(225)
Tangible assets, net
Balance at 31 December 2020
5,715
747
218
6,680
2,452
2,452
Balance at 31 December 2021
5,392
852
271
6,515
2,334
2,334
119
b) Property, plant and equipment for own use
The detail, by class of asset, of ‘Property, plant and
equipment - For own use’ on the balance 2021 and 2020
sheets is as follows:
EUR million
Cost
Accumulated
depreciation
Impairment
losses
Carrying amount
Of which, right-of-
use for operating
lease
Land and buildings
5,514
(644)
(88)
4,782
2,452
Furniture, fixtures and vehicles
2,130
(1,322)
808
Computer hardware
634
(547)
87
Other
38
38
Balance at 31 December 2020
8,316
(2,513)
(88)
5,715
2,452
Land and buildings
5,389
(740)
(138)
4,511
2,334
Furniture, fixtures and vehicles
2,037
(1,278)
759
Computer hardware
326
(251)
75
Other
47
47
Balance at 31 December 2021
7,799
(2,269)
(138)
5,392
2,334
The carrying amount at 31 December 2021 in the table
above includes the following approximate amounts:
EUR 3 million (31 December 2020: EUR 2 million)
relating to property, plant and equipment owned by
Banco Santander's branches located abroad.
EUR 484 million (31 December 2020: EUR 549
million) relating to property, plant and equipment
held under finance leases by Banco Santander, of
which EUR 360 million related to leases in effect as
of 31 December 2021 (31 December 2020: EUR 427
million).
c) Tangible assets - Leased out under an operating
lease
Banco Santander has assets assigned under operating
lease where the company is the lessor and they do not
meet the accounting requirements to be classified as
financial leases. The net cost of these leases is recorded
as an asset and is depreciated on a straight-line basis
over the contractual term of the lease up to the expected
residual value.
The expected residual value and, consequently, the
monthly depreciation expense may change during the
term of the lease. The Bank estimates expected residual
values using independent data sources and internal
statistical models. Likewise, it evaluates the estimate of
the residual value of said leases and adjusts the
depreciation rate based on the change in the expected
value of the asset at the end of the lease.
Banco Santander periodically evaluates its investment in
operating leases and whenever there are indications of
impairment, such as a systemic and material decrease in
the values of the assigned assets. If assets leased under
operating leases are considered to be impaired,
impairment is measured as the amount by which the
assets' carrying amount exceeds fair value as estimated
by discounted cash flows. During the years 2021 and
2020, the Bank has not recorded any material
impairment for this concept.
During the 2021 financial year, no significant variable
payments have been made not included in the valuation
of lease assets.
120
16. Intangible assets
a) Goodwill
The detail of the 'Goodwill', on the balance sheets is as
follows:
EUR million
2021
2020
Santander España
623
623
Amortization charge
(227)
(165)
Balance at end of year
396
458
The movement during the years 2021 and 2020 has
been as follows:
EUR million
 
2021
2020
Balance at beginning of the
year
458
521
Additions (note 3)
Amortization charge
(62)
(63)
Impairment losses
Disposals or changes in
scope
Balance at end of year
396
458
Neither in 2021, nor in 2020 has goodwill been
generated.
All of the goodwill recorded at the end of the 2021 and
2020 financial years comes from the following corporate
operations that were carried out in the 2018 financial
year:
Merger by absorption of Banco Popular Español,
S.A.U. On June 7, 2017, Banco Santander acquired
100% of the share capital of Banco Popular Español,
S.A.U. Subsequently, on September 28, 2018, the
deed of merger by absorption of Banco Popular
Español, S.A.U. was registered in the Mercantile
Registry of Cantabria by Banco Santander, S.A. with
accounting effects January 1, 2018, transferring to
the books of Banco Santander a gross goodwill of
EUR 248 million.
Repurchase of the credit and debit card business
marketed by Grupo Banco Popular in Spain and
Portugal generating the business combination a
goodwill of EUR 375 million.
In accordance with Bank of Spain Circular 4/2017, the
goodwill is amortized within a period of ten years. In
addition, the Bank periodically reviews the term and
method of amortization and, if deemed inappropriate,
the impact will be treated as a change in accounting
estimates.
As of 31 December 2021 and 31 December 2020, the
amount of goodwill recorded by Banco Santander, net of
accumulated depreciation, amounted to EUR 396 million
and EUR 458 million, respectively.
Banco Santander, at least annually and whenever there
are indicators of impairment, conducts an analysis of the
potential loss of value of the trade funds it has recorded
in respect of their recoverable value.
The first step in carrying out this analysis requires the
identification of the cash-generating units, which are the
smallest identifiable groups of assets in Banco
Santander  that generate cash inflows and are largely
independent of the cash flows of other assets or asset
groups.
For the purposes of those mentioned in the preceding
paragraph, the Bank's administrators have identified the
commercialbanking business in Spain as the cash-
generating unit to which to allocate goodwill arising
both by the acquisition and subsequent merger by
absorption of Banco Popular Español, S.A.U. and by the
repurchase of the credit and debit cards from Grupo
Banco Popular.
Its carrying value is determined taking into account the
book value of all the assets and liabilities that make up
the commercial banking business in Spain, together with
the corresponding goodwill.
The recoverable amount of Santander España cash-
generating unit has been determined as the fair value of
such cash-generating unit obtained using quotes, market
references (multiples) or internal estimates.
Based on previous data, and in accordance with the
estimates of the Bank's administrators, during the years
2021 and 2020 the Bank has not recorded any amount
under the heading 'Impairment in value or reversal of
impairment in value of non-financial assets - intangible
assets' in concept of impairment of goodwill.
b) Other intangible assets
i. Breakdown
The detail of Intangible assets  ‘Other intangible assets’
on the balance sheets is as follows:
EUR million
2021
2020
With finite useful life
IT Developments
1,106
996
Accumulated amortization
(606)
(506)
Balance at end of year
500
490
121
ii. Changes
The changes in Intangible assets ‘Other intangible
assets’ on the balance sheets were as follows:
EUR million
2021
2020
Balance at end of prior year
490
164
Net additions and disposals
110
447
Amortization charge
(100)
(120)
Impairments losses
(1)
Balance at end of year
500
490
17. Other assets and Other
liabilities
The detail of ‘Other assets and Other liabilities’ on the
accompanying balance sheets is as follows:
EUR million
Assets
Liabilities
2021
2020
2021
2020
Transactions in transit
11
20
Insurance contracts linked to pensions (note 14)
381
423
Inventory
Prepayments and accrued income
504
447
2,133
1,789
Other*
1,044
3,304
1,138
1,758
Total
1,940
4,174
3,271
3,567
* Includes, mainly, unsettled transactions.
122
18. Deposits from central banks
and credit institutions
The detail by classification, type and currency of
‘Deposits from central banks’ and ‘Deposits from credit
institutions’ on the accompanying balance sheets is as
follows:
EUR million
 
2021
2020
CENTRAL BANKS
Classification
Financial liabilities held for trading
44
Financial liabilities designated at fair value through profit or loss
607
1,469
Financial liabilities at amortized cost
64,649
60,372
65,300
61,841
Type
Time deposits
63,161
60,932
Deposits available with prior notice
Repurchase agreements
2,139
909
65,300
61,841
Currency
Euro
60,343
56,306
US dollar
2,809
4,909
Pound Sterling
2,110
593
Other currencies
38
33
65,300
61,841
CREDIT INSTITUTIONS
Classification
Financial liabilities held for trading
5,718
Financial liabilities designated at fair value through profit or loss
1,067
4,496
Financial liabilities at amortized cost
35,262
40,725
42,047
45,221
Nature
Current accounts / Intraday deposits
15,989
14,280
Time deposits
15,698
23,869
Deposits available with prior notice
Repurchase agreements
10,360
7,072
42,047
45,221
Currency
Euro
31,067
32,063
US dollar
7,737
8,963
Pound Sterling
2,577
3,541
Other currencies
666
654
 
42,047
45,221
Total
107,347
107,062
Banco Santander, following the various long-term
financing programmes of the European Central Bank
(TLTRO), mantain deposits at amortized cost from the
TLTRO III programme amounting to EUR 61,183 million
as of 31 December 2020 (EUR 56,288 million as at 31
December 2021 from TLTRO III). As of December 2021,
the income recognized in the profit and loss account,
corresponding to TLTRO III, is EUR 608 million (EUR 299
millions as at 31 December 2020).
The deposits classified in the 'Liabilities held for trading'
portfolio correspond to temporary transfers of assets of
Spanish and foreign institutions.
123
Note 48 contains a detail of the residual maturity periods
of financial liabilities at amortized cost.
19. Customer deposits
The detail by classification, type, sector and geographical
area, of ‘Customer deposits’ is as follows:
EUR million
 
2021
2020
Classification
Financial liabilities held for trading
1,291
Financial liabilities designated at fair value through profit or loss
11,069
10,925
Financial liabilities at amortized cost
296,243
275,740
308,603
286,665
Type
Current accounts / Intraday deposits
269,721
247,394
Time deposits
36,644
36,660
Deposits available with prior notice
Repurchase agreements
2,238
2,611
Of which, subordinated deposits
Of which, issued securities
2,290
381
308,603
286,665
Sector
Public sector
23,231
21,754
Other financial companies
43,610
47,169
Non-financial companies
95,810
75,877
Households
145,952
141,865
308,603
286,665
Geographical area
Spain
262,261
249,522
European Union (excluding Spain)
25,002
21,801
United States and Puerto Rico
9,027
7,902
Other OECD countries
6,699
3,116
Latin America (non-OECD)
2,796
2,385
Rest of the world
2,818
1,939
308,603
286,665
Funds received under ‘Financial asset’ transfers in the
table above include the liabilities associated with
securitisation transactions (see note 10.e).
Note 48 contains a detail of the residual maturity periods
of financial liabilities at amortized cost.
124
20. Marketable debt securities
a) Breakdown
The detail by classification and type, of ‘Marketable debt
securities’ in the accompanying balance sheets is as
follows:
EUR million
2021
2020
Classification:
Financial liabilities at amortized cost
104,094
87,902
104,094
87,902
Type:
Certificates of deposit
4,444
3,921
Guaranteed bonds 
62,454
55,110
Mortgage bonds
49,764
44,343
Others mortgage bonds and guaranteed bonds
12,690
10,767
Other issued securities (note 21)
76,890
59,209
Of which, subordinated liabilities
20,399
17,124
Treasury shares*
(41,018)
(32,430)
Valuation adjustments
1,324
2,092
104,094
87,902
* At 31 December  2021 y 2020, the registered balance corresponds mainly to guaranteed bonds.
Note 48 contains a detail of the residual maturity periods
of financial liabilities at amortized cost.
b) Certificates of deposit
The detail of certificates of deposits by currency of
issuance is as follows:
2021
EUR million
Outstanding issue
amount in foreign
currency (million)
Annual interest rate*
Currency of issuance
2021
2020
US dollar
1,564
2,351
1,772
0.35%
Hong Kong Dollars
2,880
21
2,419
0.17%
Pound Sterling
1,549
%
Balance at end of the year
4,444
3,921
* Average interest rates for different issue based on their nominal values.
125
i. Changes
The movement that has occurred in the certificate of
deposit account during the years 2021 and 2020 is as
follows:
EUR million
2021
2020
Balance at end of the prior year
3,921
3,661
Issues
15,684
10,193
Redemptions
(15,386)
(9,530)
Exchange differences and other
changes
225
(403)
Balance at end of the year
4,444
3,921
As at 31 December 2021, the Bank  issued certificates of
deposit issues amounting to EUR 15,684 million (EUR
10,193 million as at 31 December 2020), with an
average maturity of 3 months (6 months during the
2020 financial year), of which EUR 15,386 million have
been amortized (EUR 9,530 million as at December
2020).
c) Mortgage bonds
The detail by currency of issuance, of ‘Marketable
mortgage-backed securities’ is as follows:
2021
EUR million
Annual
interest rate*
Currency of
issuance
2021
2020
Euros
49,764
44,343
0.82%
Balance at end
of the year
49,764
44,343
* Average interest rate of the various issues based on their nominal values.
i. Changes
The changes in 2021 and 2020 in ‘Marketable mortgage-
backed securities’ were as follows:
EUR million
 
2021
2020
Balance at the end of the prior
year
44,343
41,199
Reclassification of deposits
Issues
12,720
6,250
Of which
April 2020
2,750
May 2020
1,000
June 2020
2,000
October 2020
500
June 2021
6,000
July 2021
4,970
September 2021
1,000
December 2021
750
Transfers
1
(66)
Amortizations on maturity
(7,300)
(3,040)
Balance at end of the year
49,764
44,343
ii. Disclosures required pursuant to the Mortgage Market
Law 2/1981, of 25 March, of the Spanish Royal Decree
716/2009, of 24 April, implementing certain provisions
of this Law, and to Bank of Spain Circular 7/2010, of 30
November, and Bank of Spain Circular 5/2011, of 30
November
The members of the board of directors hereby state that
the Bank  and the companies of the Group that 
operating in the Spanish mortgage-market issues area
have established and implemented specific policies and
procedures to cover all activities carried on and
guarantee strict compliance with mortgage-market
regulations applicable to these activities as provided for
in Royal Decree 716/2009, of 24 April implementing
certain provisions of Mortgage Market Law 2/1981, of
25 March, and, by application thereof, in Bank of Spain
Circulars 7/2010 and 5/2011, and other financial and
mortgage system regulations. Also, financial
management defines the Grupo Santander's funding
strategy.
The risk policies applicable to mortgage market
transactions envisage maximum loan-to-value (LTV)
ratios, and specific policies are also in place adapted to
each mortgage product, which occasionally require the
application of stricter limits.
Grupo and Banco Santander’s general policies in this
respect require the repayment capacity of each potential
customer (the effort ratio in loan approval) to be
analysed using specific indicators that must be met. This
analysis must determine whether each customer’s
income is sufficient to meet the repayments of the loan
requested. In addition, the analysis of each customer
must include a conclusion on the stability over time of
the customer’s income considered with respect to the
life of the loan. The aforementioned indicator used to
measure the repayment capacity (effort ratio) of each
potential customer takes into account mainly the
relationship between the potential debt and the income
generated, considering on the one hand the monthly
repayments of the loan requested and other transactions
and, on the other, the monthly salary income and duly
supported income.
Grupo and Banco Santander have specialised document
comparison procedures and tools for verifying customer
information and solvency (see note 49).
Grupo and Banco Santander’s procedures envisage that
each mortgage originated in the mortgage market must
be individually valued by an appraisal company not
related to the  Group.
126
In accordance with Article 3 of Mortgage Market Law
41/2007, any appraisal company approved by the Bank
of Spain may issue valid appraisal reports. However, as
permitted by this same article, the Group and the Bank
perform several checks and select, from among these
companies, a small group with which they enter into
cooperation agreements with special conditions and
automated control mechanisms. The Group and the Bank
internal regulations specify, in detail, each of the
internally approved companies, as well as the approval
requirements and procedures and the controls
established to uphold them. In this connection, the
regulations establish the functions of an appraisal
company committee on which the various areas of the
Group and the Bank related to these companies are
represented. The aim of the committee is to regulate and
adapt the internal regulations and the activities of the
appraisal companies to the current market and business
situation (see note 2.i).
Basically, the companies wishing to cooperate with the
Group and the Bank must have a significant level of
activity in the mortgage market in the area in which they
operate, they must pass a preliminary screening process
based on criteria of independence, technical capacity and
solvency -in order to ascertain the continuity of their
business- and, lastly, they must pass a series of tests
prior to obtaining definitive approval.
In order to comply in full with the legislation, any
appraisal provided by the customer is reviewed,
irrespective of which appraisal company issues it, to
check that the requirements, procedures and methods
used to prepare it are formally adapted to the valued
asset pursuant to current legislation and that the values
reported are customary in the market.
Mortgage-backed bonds
The mortgage-backed bonds ('cédulas hipotecarias')
issued by the Bank are securities the principal and
interest of which are specifically secured by mortgages,
there being no need for registration in the property
register, by mortgage on all those that at any time are
recorded in favour of the issuer and are not affected by
the issuance of mortgage bonds and / or are subject to
mortgage participations, and / or mortgage transfer
certificates, and, if they exist, by substitution assets
eligible to be hedged and for the economic flows
generated by derivative financial instruments linked to
each issue, and without prejudice to the issuer’s
unlimited liability.
The mortgage bonds include the credit right of its holder
against the issuing entity, guaranteeing in the manner
provided for in the previous paragraph, and involve the
execution to claim from the issuer the payment after due
date. The holders of these securities are recognised as
preferred creditors, singularly privileged, with the
preference, included in number 3º of article 1,923 of the
Spanish Civil Code against any other creditor, in relation
with the entire group of loans and mortgage loans
registered in favour of the issuer, except those that act
as coverage for mortgage bonds and / or are subject to
mortgage participations and / or mortgage transfer
certificates.
In the event of insolvency, the holders of mortgage-
backed bonds, as long as they are not considered 'person
especially related' to the issuing entity in accordance
with Royal Legislative Decree 1/2020, of 5 May,
approving the revised text of the Bankruptcy Law , will
enjoy the special privilege established in Article 270.1.1
of the aforementioned Bankruptcy Law. Without
prejudice to the foregoing, in accordance with
Article 242.10 of the Bankruptcy Law, during the
insolvency proceedings, the payments relating to the
repayment of the principal and interest of the bonds
issued and outstanding at the date of the insolvency
filing will be settled up to the amount of the income
received by the insolvent party from the mortgage loans
and credits and, where appropriate, from the
replacement assets backing the bonds and from the cash
flows generated by the financial instruments associated
with the issues (Article 14 of Law 2/1981 of 25 March
1981 regulating the mortgage market).
If, due to a timing mismatch, the income received by the
insolvent party is insufficient to meet the payments
described in the preceding paragraph, the insolvency
managers must settle them by realising the replacement
assets set aside to cover the issue and, if this is not
sufficient, they must obtain financing to meet the
mandated payments to the holders of the mortgage-
backed bonds, and the finance provider must be
subrogated to the position of the bond-holders.
In the event that it would be necessary to proceed in
accordance with the terms of Article 212.1 and, in
accordance with the requirements of Article 413 of the
Insolvency Law, the payments to all holders of the
mortgage-backed bonds issued would be made on a pro-
rata basis, irrespective of the issue dates of the bonds. If
the same credit or loan is subject to the payment of
bonds and a mortgage bond issue, it will be paid first to
the holders of the bonds.
Mortgage-backed bond issuers have an early redemption
option for the purpose of complying with the limits on
the volume of outstanding mortgage-backed bonds
stipulated by mortgage market regulations. In addition,
the issuing entity may advance the mortgage-backed
bonds, if this has been expressly established in the final
conditions of the issue in question and under the
conditions set out therein.
None of the mortgage-backed bonds issued by the Group
and Bank had replacement assets assigned to them.
The following is a detail, by their main features and
nominal amounts, of the marketable mortgage-backed
bonds outstanding at 31 December 2021 and 2020:
127
Issues
Euros
Issue February 2006
ES0413900129
1,500
1,500
1,500
3.87%
Issue May 2007
ES0413900160
1,500
1,500
1,500
4.63%
Issue January  2010
ES0413900194
100
100
100
%
Issue November  2014
ES0413900368
1,750
1,750
1,750
1.13%
Issue November 2014
ES0413900376
1,250
1,250
1,250
2.00%
Issue September 2015
ES0413900384
1,000
1,000
1,000
0.75%
Issue January  2016
ES0413900392
1,000
1,000
1,000
1.50%
Issue February 2016
ES0413900400
907
907
907
2.04%
Issue March 2016
ES0413900418
100
100
100
1.52%
Issue June 2016
ES0413900434
4,000
Issue December 2016
ES0413900467
250
Issue June 2017
ES0413900475
350
350
350
0.13%
Issue June 2017
ES0413900483
2,000
Issue June 2017
ES0413900491
2,000
2,000
2,000
0.16%
Issue November  2017
ES0413900509
12
12
12
%
Bonds Pitch
300
300
300
5.13%
Issue April 2013
ES0413790256
200
Issue July 2013
ES0413790264
15
15
15
5.28%
Issue July 2013
ES0413790280
400
400
1,250
1.19%
Issue July 2013
ES0413790298
500
500
1,500
1.44%
Issue July 2013
ES0413790306
1,500
1,500
1,500
1.69%
Issue December 2013
ES0413790322
100
Issue February  2014
ES0413790330
1,000
1,000
1,500
1.95%
Issue March 2014
ES0413790348
200
200
200
1.08%
Issue March 2014
ES0413790389
250
250
250
0.23%
Issue April 2015
ES0413790397
1,000
1,000
1,000
1.00%
Issue June 2015
ES0413790405
575
575
575
%
Issue October  2015
ES0413790421
750
Issue March 2016
ES0413790439
1,500
1,500
1,500
1.00%
Issue December 2016
ES0413790462
250
250
250
1.13%
Issue March 2017
ES0413790470
1,000
1,000
1,000
0.25%
Issue April 2017
ES0413790488
1,600
1,600
1,600
0.51%
Issue July 2014 (Banco Pastor)
ES0405035009
1,000
1,000
1,000
2.72%
Issue June 2018
ES0413900517
350
350
350
%
Issue October 2018
ES0413900533
1,000
1,000
1,000
1.12%
Issue October 2018
ES0413900525
2,000
2,000
2,000
0.29%
Issue November 2018
ES0413900541
200
200
200
0.40%
Issue May 2019
ES0413900558
1,500
1,500
1,500
0.88%
Issue July 2019
ES0413900566
1,500
1,500
1,500
0.25%
Issue December 2019
ES0413900574
1,750
1,750
1,750
0.13%
Issue February 2020
ES0413900590
1,250
1,250
1,250
0.01%
Issue February 2020
ES0413900608
1,250
1,250
1,250
0.10%
Issue February 2020
ES0413900582
250
250
250
0.05%
Issue March 2020
ES0413900616
1,000
1,000
1,000
0.01%
Issue April 2020
ES0413900624
2,000
2,000
2,000
0.27%
Issue October 2020
ES0413900699
500
500
500
0.01%
Issue June 2021
ES0413900723
4,000
4,000
0.18%
Issue June 2021
ES0413900731
2,000
2,000
0.19%
Issue July 2021
ES0413900749
4,000
4,000
0.18%
Code ISIN
EUR million
Annual interest
rate (%)
 
2021
2020
Nominal amount
128
Issue July 2021
ES0413900756
220
220
0.18%
Issue July 2021
ES0413900764
750
750
0.02%
Issue September 2021
ES0413900772
1,000
1,000
0.11%
Issue December 2021
ES0413900780
750
750
%
Balance at end of the year
49,829
44,409
52,179
Code ISIN
EUR million
Annual interest
rate (%)
 
2021
2020
Nominal amount
The detail of the principal amount of Banco Santander
mortgage securities outstanding at 31 December 2021
and 2020 is as follows:
EUR million
Principal amount
2021
2020
1. Mortgage bonds outstanding
2. Mortgage-backed bonds issued (note 10.f)
49,829
44,409
          Of which, recognized in liabilities
22,274
23,589
2.1. Debt instruments. Issued through a public offering
49,829
44,409
      - Term to maturity of up to one year
7,700
7,300
      -Term to maturity of one to two years
1,125
7,700
      -Term to maturity of two to three years
3,000
1,125
        -Term to maturity of three to five years
7,150
6,250
        -Term to maturity of five to ten years
26,947
16,627
        -Term to maturity of more than ten years
3,907
5,407
2.2. Debt instruments. Other issues
2.3 Deposits
3. Mortgage transfer certificates issued (1)
4. Mortgage transfer certificates issued (1) (2)
11,133
17,610
4.1.  Issued through a public offering (note 10.e)
11,133
17,610
(1) Relating solely to mortgage loans and credits not derecognized.
(2) The average term to maturity weighted by amount, expressed in months, rounded up, was 496 months .
129
Asset transactions
According  to Bank of Spain Circulars 7/2010 and 5/2011,
of 30 November, on the implementation of certain
aspects of the mortgage market, the table below details:
the principal amount of all the mortgage loans and
credits, those that are eligible pursuant to Royal Degree
716/2009 on the regulation of the Spanish mortgage
market for the purposes of calculating the limit of
mortgage-backed bond issues, the mortgage loans and
credits covering mortgage bond issues, those that have
been transferred through mortgage participation
certificates or mortgage transfer certificates, and the
uncommitted transactions relating to Banco Santander.
The breakdown of the mortgage loans at 31 December
2021 and 2020 indicating their eligibility and
computability for mortgage market regulatory purposes,
is as follows:
EUR million
Principal amount
2021
2020
Total mortgage loans and credits (1)
94,975
95,114
Mortgage participation certificates issued
1,699
1,811
      Of which, loans recognized in assets
Mortgage transfer certificates issued
11,590
18,305
      Of which, loans recognized in assets (note 10.e)
11,133
17,610
Mortgage loans and credits backing mortgage and mortgage-backed bond issues (2)
81,686
74,998
      i) Non-eligible mortgage loans and credits (3)
17,744
18,652
-  Which comply with the eligibility requirements, except for the limit established  in
Article 5.1 of Royal Decree 716/2009
11,357
11,621
-  Other non-eligible loans
6,387
7,031
      ii) Eligible mortgage loans and credits (4)
63,942
56,346
-  Un-measurable amounts (5)
-  Measurable amounts
63,942
56,346
a)   Mortgage loans and credits covering mortgage bond issues
b)   Mortgage loans and credits eligible to cover mortgage-backed bond issues
63,942
56,346
(1) Including mortgage loans and credits acquired through mortgage participation certificates and mortgage transfer certificates, irrespective of whether they
have been derecognized.
(2) Total loans less mortgage participation certificates issued, mortgage transfer certificates issued and mortgage loan securing borrowings.
(3) Due to non-compliance with the requirements of Art. 3 of Royal Decree 716/2009.
(4) Pursuant to Art. 3 of Royal Decree 716/2009, without taking into account the measurement limits established in Art. 12 of Royal Decree 716/2009.
(5) Pursuant to Art. 12 of Royal Decree 716/2009.
130
The following is a detail of the principal amount of the
outstanding mortgage loans and credits and of the
principal amount of the loans and credits that are
eligible pursuant to Royal Decree 716/2009, without
considering the measurement limits established under
Article 12 of Royal Decree 716/2009, by origin, currency,
payment status, average term to maturity, interest rate,
borrower and type of guarantee:
EUR million
Principal amount
2021
2020
Mortgage loans and
credits backing
mortgage and
mortgage-backed
bond issues
Of which, eligible
loans*
Mortgage loans and
credits backing
mortgage and
mortgage-backed
bond issues
Of which, eligible
loans*
By origin of transactions
    Originated by the entity
80,951
63,246
74,238
55,621
    From subrogations
735
696
760
725
81,686
63,942
74,998
56,346
By currency
    Euro
80,984
63,942
74,299
56,346
    Other currencies
702
699
81,686
63,942
74,998
56,346
By payment status
    Current
73,299
62,148
66,215
54,967
    Past due
8,387
1,794
8,783
1,379
81,686
63,942
74,998
56,346
By term to maturity
  Less than 10 years
25,460
15,418
26,072
15,185
  10 to 20 years
30,185
26,059
27,436
23,249
  20 to 30 years
25,125
22,125
20,301
17,445
  More than 30 years
916
340
1,189
467
81,686
63,942
74,998
56,346
By interest rate
  Fixed-rate loans
20,601
17,944
13,623
10,921
  Floating-rate loans
61,085
45,998
61,375
45,425
81,686
63,942
74,998
56,346
By borrower
  Legal entities and individual traders
23,554
12,877
25,492
13,290
Of which, property developments(including
land)
2,572
2,837
Other individuals and non-profit institutions
serving households
58,132
51,065
49,506
43,056
81,686
63,942
74,998
56,346
By type of guarantee
  Completed buildings – residential
63,465
53,989
55,297
46,001
Of which, officially sponsored housing
8,837
6,419
4,996
3,452
  Completed buildings – commercial
5,744
3,652
6,908
3,782
  Completed buildings – other
9,035
5,212
9,085
5,343
  Buildings under construction – residential
1,031
1,225
1
Of which, officially sponsored housing
33
99
  Buildings under construction – commercial
67
46
  Buildings under construction – other
46
5
57
1
  Land – developed consolidated land
1,110
382
801
434
  Land – other
1,188
702
1,579
784
81,686
63,942
74,998
56,346
* Pursuant to Art. 3 of Royal Decree 716/2009, without taking into account measurement limits established in Art. 12 of Royal Decree 716/2009.
131
The following is a detail, by loan-to-value ratio, of the
principal amount of the eligible mortgage loans and
credits pursuant to Royal Decree 716/2009, without
considering the measurement limits established in
Article 12 of Royal Decree 716/2009:
EUR million
31 December 2021
Principal amount by LTV range
<=40%
>40%, <= 60%
>60%, <= 80%
>80%
TOTAL
Mortgage loans and credits for mortgage and
mortgage-backed bond issues
24,614
23,674
15,654
63,942
Home property
18,771
19,564
15,654
53,989
Other property
5,843
4,110
9,953
* Pursuant to Art. 3 of Royal Decree 716/2009, without taking into account measurement limits established in Art. 12 of Royal Decree 716/2009.
The following is a detail of the changes in 2021 in the
principal amount of eligible and non-eligible mortgage
loans and credits pursuant to Royal Decree 716/2009:
EUR million
Eligible
mortgage
loans and
credits*
Non-eligible
mortgage
loans and
credits**
Balance at 31 December  2020
56,346
18,652
Period additions:
16,897
12,618
Originated by Banco Santander
10,256
3,595
Subrogations from other
entities
11
6
Other
6,630
9,017
Period disposals:
9,301
13,526
    Repayments on maturity
205
2,206
    Early repayments
3,558
2,260
    Other***
5,538
9,060
Balance at 31 December 2021
63,942
17,744
* Pursuant to Art. 3 of Royal Decree 716/2009, without taking into account
the measurement limits established in Art. 12 of Royal Decree 716/2009.
** That do not comply with the requirements of Art. 3 of Royal Decree
716/2009.
*** The Bank performs a reappraisal its mortgage portfolio on a regular
basis and, as a result, the measurable amount is updated.
Below is a breakdown of the available balances of the
mortgage loans and credits that back the issuance of
mortgage bonds and mortgage bonds:
EUR million
Principal amount*
2021
2020
Potentially eligible **
662
589
Non-eligible
1,608
1,387
* Amounts committed less amounts drawn down, including amounts
delivered to property developers only when the housing units are sold.
** Pursuant to Art. 3 of Royal Decree 716/2009.
d) Other mortgage bonds and guaranteed bonds
The balance of ‘Other mortgage bonds and guaranteed
bonds’ relates to the rest of covered bonds and
certificates. The breakdown, by issue currency and
interest rate, is as follows:
2021
Currency of
issuance
EUR million
Annual
interest rate*
2021
2020
Euro
8,452
7,671
0.18%
US dollar
4,238
3,096
0.58%
Balance at end of
the year
12,690
10,767
* Average interest rate of the various securities at 31 December 2021
based on their nominal amounts.
Internationalisation bonds were repaid early in February
2020, replaced by internationalisation bonds, issued in
April 2020.
132
i. Changes
The following movement in 2021 and 2020 in the ‘Other
non-convertible marketable securities’ account was as
follows:
2021
EUR million
Annual interest rate
(%)**
Maturity
date
2021
2020
Balance at end of the prior year
10,767
8,411
Issues
1,851
10,145
Of which
April, 2020
1,100
%
abr-25
April, 2020
1,200
%
abr-27
April, 2020
3,095
0.66%
abr-27
June, 2021
750
0.07%
jun-27
June, 2021
2,000
0.06%
jun-27
July, 2021
2,000
0.01%
jul-27
March, 2021
851
0.26%
mar-26
May, 2021
1,000
0.20%
may-31
Amortizations
(218)
(7,789)
Exchange differences
290
Balance at end of the year
12,690
10,767
In May 2021, Banco Santander has amortized the
outstanding territorial bonds as of December 2020 for an
amount of EUR 218 million.
In March 2021, Internalization Bonds were issued for an
amount of USD 1,000 million (EUR 851 million) and in
May, Territorial Bonds were issued for an amount of EUR
1,000 million.
In February 2020 Banco Santander has amortized the
live internationalization bonds to December 2019 in the
amount of EUR 2,639 million.
In addition, there have been other depreciations in
territorial ballot cards amounting to EUR 4,900 million.
Three new issues of territorial cards were made in the
financial year two of them amounting to 2 billion and a
third EUR 750 million.
In April 2020, 3 new issues of internalization cards
amounting EUR 5,396 million  were formalized.
ii. Territorial bonds
The members of the board of directors have stated that
in the territorial bond issuances Banco Santander has
established specific policies and procedures in relation to
the financing activities of public entities pursuant to
Bank of Spain Circular 4/2017, of 27 November.
The following is a detail of the total principal amount of
the loans used to secure the territorial bonds
outstanding at 31 December 2021:
EUR million
Principal amount*
Central governments
103
Autonomous or regional
governments
10,216
Local governments
769
Total
11,088
* Unrepaid portion of the loan nominal amounts.
The following is a detail of the territorial bonds issued
and outstanding at 31 December 2021:
EUR million
Principal amount
Issued through a public offering
Other emissions
6,154
Of which,treasury shares
5,529
Term to maturity of up to one year
309
Term to maturity of one to two years
95
Term to maturity of two to three years
250
Term to maturity of three to five years
Term to maturity of five to ten years
5,500
Term to maturity of more than ten years
The coverage ratio of the territorial bonds with respect to
the loans was 55.50% at 31 December 2021 (54.39% at
31 December 2020).
133
iii. Internationalization bonds
The following is a detail of the face value of all loans
that serve as collateral to live internationalization bonds
as of December 31, 2021:
Nominal value
(EUR million)
Eligible loans under Article 34.6 and 7 of
Law 14/2013
11,806
Less: loans that support the issuance of
internationalization bonds
Less: loans in arrears to be deducted in the
calculation of the emission limit, in
accordance with Article 13 of Royal Decree
579/2014
Total loans included in the base of the
emission limit
11,806
Below is a detail of the internationalization bonds issued
live on December 31, 2021:
Nominal value
(EUR million)
(1) Debt securities. Issued by public offer
Of which, own values
Residual maturity up to one year
Residual maturity greater than one year and
up to two years
Residual maturity greater than two and up
to three years
Residual maturity greater than three and up
to five years
Residual maturity greater than five and up
to ten years
(2) Debt securities. Other emissions
Of which, own values
6,538
Residual maturity up to one year
6,538
Residual maturity greater than one year and
up to two years
Residual maturity greater than two and up
to three years
Residual maturity greater than two and up
to three years
Residual maturity greater than three and up
to five years
1,983
Residual maturity greater than five and up
to ten years
4,555
Residual maturity greater than ten years
(3) Deposits
Residual maturity up to one year
Residual maturity greater than one year and
up to two years
Residual maturity greater than two and up
to three years
Residual maturity greater than three and up
to five years
Residual maturity greater than five and up
to ten years
Residual maturity greater than ten years
TOTAL
6,538
The coverage ratio of internationalization bonds on loans
is 55.38% as of December 31, 2021 (55.11% as of
December 31, 2020)
134
21. Other issuances
a) Breakdown
The following is a breakdown of the balance under this
heading on the attached balance sheets, taking into
account their nature and currency of the transactions:
EUR million*
 
2021
2020
Type
Other issuances
76,890
59,209
Of which, subordinated
liabilities
20,399
17,124
76,890
59,209
Currency
Euro
39,266
34,321
US dollar
27,628
18,848
Pound Sterling
5,240
2,692
Other currencies **
4,756
3,348
 
76,890
59,209
* This amount includes the principal, in other currencies.
** As of December 31, 2021, the most significant currencies are yen (EUR
1,283 million), Swiss Frankfurt (EUR 1,431 million) and Australian Dollar
(EUR 1,310 million).
b) Changes
The changes in ‘Subordinated marketable debt
securities’ in the foregoing table for the years 2021 and
2020 are as follows:
EUR million
2021
2020
Balance at the end of prior
year
59,209
59,273
Issues
43,474
28,255
Redemptions
(28,107)
(26,297)
Exchange differences
2,314
(2,022)
Balance at end of the year 
76,890
59,209
Within the sub-heading Other Non-convertible
Marketable Securities there are commercial paper issues
as well as other issuances made by Banco Santander.
Commercial paper
On April 15, 2021, Banco Santander has approved the
annual renewal of the 'European Commercial Paper
Issuance Program' for a maximum nominal global
amount of up to EUR 15,000 million. On November 22,
2021, the 'American Commercial Paper Issuance
Program' was renewed for a global nominal amount of
up to USD 25,000 million.
As of December 31, 2021, the interest rate is between
-0.88% and 0.33% per year, with the average nominal
interest rate being 0.125% per year. At the end of the
2020 financial year, the interest rate was between
-0.66% and 3.0% per year, with the average nominal
interest rate being 1.059% per year.
On 16 April 2020, Banco Santander  approved the annual
renewal of the 'European Commercial Paper Issue
Programme' for a maximum nominal global amount of
up to EUR 15,000 million. On November 2020, the
'American Commercial Paper Issue Program' was
renewed for a nominal global amount of up to USD
15,000 million.
Remaining emissions
During the 2021 fiscal year, Banco Santander, S.A. has
reported 37 issues for a nominal amount of EUR 11,846
million (without considering perpetual issues amounting
to EUR 2,568 million , see note 21.c), of which the Bank
has repurchased a balance of EUR 74 million. The
average remuneration of these issues has been set at
1.30% per year.
During the financial year 2020, Banco Santander
reported 17 issues at a nominal amount of EUR 8,088
million (excluding perpetual issues amounting to EUR
1,500 million, see note 21.c). The average remuneration
of these emissions has been set at 1.63% per annum.
135
c)  Other disclosures
This caption includes contingent convertible or
redeemable preferred participations, as well as other
subordinated financial instruments issued, which do not
qualify as equity (preferred shares).
Banco Santander's contingently convertible preferred
participations are subordinated debentures and rank
after common creditors and any other subordinated
credit that by law and/or by their terms, to the extent
permitted by Spanish law, ranks higher than the
contingently convertible preferred participations. Their
remuneration is conditioned to the obtainment of
sufficient distributable profits, and to the limitations
imposed by the regulations on shareholders' equity, and
they have no voting rights. The other issues of Banco
Santander, S.A. mentioned in this caption are also
subordinated debentures and, for credit ranking
purposes, they rank behind all the common creditors of
the issuing entities and ahead of any other subordinated
credit that ranks pari passu with the Bank's contingently
convertible preferred participations.
The main issues of subordinated debt securities issued,
broken down , are detailed below:
Issues by Banco Santander, S.A.
At  22  November 2021, Banco Santander, S.A. issued
subordinated debentures for a term of eleven years, with
a redemption option on the tenth anniversary of the
issue date, in the amount of USD 1,000 million (EUR
1,007 million at the exchange rate on the day of issue).
The issue bears interest at an annual rate of 3.225%,
payable semi-annually, for the first ten years (then
repricing at a margin of 160 points over the one-year
U.S. government bond).
At 4 October 2021, Banco Santander, S.A. issued
subordinated debentures for a term of eleven years, with
a redemption option on the sixth anniversary of the issue
date, amounting to GBP 850 million  (EUR 887 million at
the exchange rate on the day of issue). The issue bears
interest at an annual rate of 2.25%, payable annually for
the first six years (then repricing at a margin of 165
points over the 5-year UK government bond).
At 21 September 2021, Banco Santander, S.A. carried out
a placement of preferential shares contingently
convertible into newly issued ordinary shares of the
Bank ('PPCC') for a nominal amount of EUR 1,000 million
(issue placed on the market EUR 997 million.
The issuance has been carried out at par and the
remuneration of the PPCC, whose payment is subject to
certain conditions and is also discretionary, has been set
at 3.625% per year for the first eight years, being
reviewed every five years applying a margin of 376 basis
points over the 5-year Mid-Swap Rate.
At 11 September 2021, Banco Santander, S.A. proceeded
to redeem early and voluntarily the entire issue made on
11 September 2014 of tier 1 contingently convertible
preference shares (PPCC) with ISIN code XS110729154
which are traded in the Irish Stock Exchange Market
'Global Exchange Market', for a total nominal amount of
EUR  1,500 million.
At 12 May 2021, Banco Santander placed the issue of
preference shares contingently convertible into newly
issued ordinary shares of the Bank, previously
announced, for a total nominal amount of  EUR
1,578 million, issued in a Series in Dollars of  USD
1,000 million (EUR 828 million at the exchange rate on
the day of issue) and a Series in Euros for an amount of
EUR 750 million.
The issuance is carried out at par and the remuneration
of the PPCC, whose payment is subject to certain
conditions and is also discretionary, has been set (i) for
the Series in Dollars at 4.750% per annum for the first
six years, being revised every five years applying a
margin of 375.3 basis points over the 5-year UST rate
and (ii) for the Series in Euros by 4.125% per annum for
the first seven years, being revised every five years
applying a margin of 431.1 basis points over the
applicable 5-year euro mid-swap.
At 3 December 2020, Banco Santander, S.A. issued
subordinated debentures with a ten-year term of USD
1,500 million (EUR 1,222 million at the date of issue).
The issue bears interest at an annual rate of 2.749%,
payable semiannually.
At 22 October 2020, it carried out a ten-year
subordinated debenture issue for an amount of EUR
1,000 million. The issue bears interest at an annual rate
of 1.625%, payable annually.
At 12 March 2020, it proceeded to redeem early and
voluntarily the entire outstanding issue of Tier 1
Contingently Convertible Preferred Participations Series
I/2014, for a total nominal amount of EUR 1,500 million.
At 14 January 2020, it carried out a placement of
contingently convertible preferred participations into
newly issued ordinary shares of the Bank (the 'PPCCs'),
excluding the pre-emptive subscription rights of its
shareholders and for a nominal amount of  EUR 1,500
million (the 'Issue' and the 'PPCCs').
The Issue was made at par and the remuneration of the
PPCCs, the payment of which is subject to certain
conditions and is also discretionary, was set at 4.375%
per annum for the first six years, revised every five years
thereafter by applying a margin of 453.4 basis points
over the 5-year Mid-Swap Rate (5-year Mid-Swap Rate).
At 19 May 2019, the voluntary early redemption of the
preferred shares relating to the second issue made on 9
May 2014 (code ISIN XS1066553329) was
communicated for an amount of USD 1,500 million (EUR
1,345 million) at the redemption date.
136
At 8 February 2019, Banco Santander, S.A, carried out an
issue of PPCC for a nominal amount of USD 1,200 million
(EUR 1,056 million). The remuneration of the issues
whose payment is subject to certain conditions and is
also discretionary was set at 7.50% per annum, for the
first five years (revised thereafter by applying a margin
of 498.9 points over the mid-swap rate).
At 19 March 2018, a 'PPCC' issue was carried out, for a
nominal amount of EUR 1,500 million. The remuneration
of the issue, the payment of which is subject to certain
conditions and is also discretionary, was set at 4.75% per
annum, payable quarterly, for the first seven years
(revised thereafter by applying a margin of 410 basis
points over the Mid-swap rate).
At 8 February 2018, a 10-year subordinated debenture
issue of EUR 1,250 million was carried out. The issue
accrues annual interest of 2.125% payable annually.
At 25 April and 29 September 2017, Banco Santander,
S.A. carried out issues of 'PPCCs', for a nominal amount
of EUR 750 million, and EUR 1,000 million respectively.
The remuneration of the PPCCs, the payment of which is
subject to certain conditions and is also discretionary,
was set at 6.75% per annum for the first five years
(revised thereafter by applying a margin of 680.3 basis
points over the 5-year Mid-Swap Rate) for the issue
disbursed in April, at 5.25% per annum for the first six
years (revised thereafter by applying a margin of 499.9
basis points over the 5 years Mid-Swap Rate) for the
issue disbursed in September.)
22. Other financial liabilities
a) Breakdown
The following is a detail of ‘Other financial liabilities’ on
the accompanying balance sheets:
EUR million
2021
2020
Trade payables
888
721
Payment obligations
2,711
2,864
Public agency revenue
collection accounts
4,506
3,498
Unsettled financial transactions
617
797
Other accounts
1,302
2,000
Total
10,024
9,880
b) Average payment period to suppliers
Set forth below are the disclosures required by
Additional Provision Three of Law 15/2010, of 5 July
(amended by Final Provision Two of Law 31/2014, of 3
December), prepared in accordance with the Spanish
Accounting and Audit Institute (ICAC) Resolution of 29
January 2016 on the disclosures to be included in notes
to financial statements in relation to the average period
of payment to suppliers in commercial transactions.
2021
2020
Days
Average period of payment to
suppliers
10
11
Ratio of transactions paid
10
11
Ratio of transactions pending
payments
EUR million
Total payments made
2,848
2,966
Total payments outstanding
In accordance with the ICAC Resolution, the average
period of payment to suppliers was calculated by taking
into account commercial transactions relating to the
supply of goods or services for which payment has
accrued since the date of issuance of Law 31/2014, of
December, 3.
For the sole purpose of the disclosures provided for in
the Resolution, suppliers are considered to be the trade
creditors for the supply of goods or services.
“Average period of payment to suppliers” is taken to be
the period that elapses from the delivery of the goods or
the provision of the services by the supplier to the
effective payment of the transaction,
Note 48 contains a detail of the maturity periods of
‘Other financial liabilities’ at each year-end.
c) Lease liabilities
The total lease cash outflow in fiscal year 2021 was EUR
301 million (EUR 324 millon during 2020). The analysis
of maturities corresponding to lease liabilities, as of
December 31, 2021, is as follows:
EUR million
2021
2020
Maturity Analysis – Discounted
payments
Within 1 year
351
289
Between 1 and 3 years
445
485
Between 3 and 5 years
317
349
Later than 5 years
1,336
1,411
Total Discounted payments at
31 December 2021
2,449
2,534
During 2021, no significant variable payments have been
made not included in the measurement of lease
liabilities.
137
23. Provisions
a) Breakdown
The detail of ‘Provisions’ in the balance sheets at 31
December 2021 and 2020 is as follows:
EUR million
 
2021
2020
Provision for pensions and similar obligations
2,730
3,430
Of which
Pensions and similar defined benefit obligations post-employment
1,677
1,849
Other long-term remunerations to employees
1,053
1,581
Restructuring
439
484
Provisions for taxes and other legal contingencies
516
496
Provisions for commitments and guarantees given
190
157
Other provisions
474
440
Total
4,349
5,007
b) Changes
The changes in ‘Provisions’ in 2021 and 2020 were as
follows:
EUR million
2021
2020
Post-
employment
Long –
Term
Contingent
liabilities and
commitments
Other
provisions
Total
Post-
employment
Long -
Term
Contingent
liabilities and
commitments
Other
provisions
Total
Balance at end of prior
year
1,849
1,581
157
1,420
5,007
3,918
1,220
180
1,172
6,490
Changes in value
recognized in equity
(29)
(29)
77
77
Additions charged to
income
(9)
24
24
747
786
(340)
728
(20)
804
1,172
(Interest income)/
Interest expense
(notes 34 and 35)
12
11
23
20
8
28
Staff costs (note 42)
4
1
5
10
1
11
Provisions or reversal
of  provision
(25)
12
24
747
758
(370)
719
(20)
804
1,133
Payments to pensioners
and pre-retirees
(164)
(552)
(716)
(1,817)
(367)
(2,184)
Amounts used and other
changes
30
9
(738)
(699)
11
(3)
(556)
(541)
Balances at end of year
1,677
1,053
190
1,429
4,349
1,849
1,581
157
1,420
5,007
138
c) Provision for pensions and similar obligations
The detail of ‘Provision for pensions and similar
obligations’ at 31 December 2021 and 2020 is as
follows:
EUR million
2021
2020
Provisions for pensions and similar
defined benefit plan obligations
2,730
3,430
  Of which
    Provisions for pensions
1,677
1,849
    Provisions for similar obligations
1,053
1,581
    Of which, pre-retirements
1,041
1,567
Provisions for pensions and similar
defined contribution plan obligations
Total provisions for pensions and
similar obligations
2,730
3,430
i. Defined contribution plans
At the end of 2012, Banco Santander reached an
agreement with workers' representatives to transform
the defined benefit commitments derived from the
collective agreement into defined contribution plans.
Similarly, the contracts for senior management staff
with pension commitments in the defined benefit
modality were amended to transform them into a
defined contribution provision system.
Almost all of the pension commitments with active
personnel correspond to defined contribution plans. The
total contributions made to these plans during 2021
amounted to EUR 77 million (EUR 80 million during
2020) (see nota 42).
ii. Defined Benefit Plans
In addition to the previous defined contribution plans, as
of December 31, 2021, Banco Santander maintained
definite service commitments. Below is the present
value of the Bank`s commitments in post-employment
remuneration for defined benefit programs, as well as
the value of the reimbursement entitlements for
insurance contracts linked to those obligations as of 31
December 2021 and preceding years:
EUR million
2021
2020
2019
Present value of the obligations
To current employees
42
78
78
To retired employees
2,806
3,304
5,378
Other
2,848
3,382
5,456
Fair value of plan assets
(1,205)
(1,537)
(1,543)
Assets not recognized
5
4
5
Provisioned assets on the balance
sheet
29
Provisions - Provisions for
pensions
1,677
1,849
3,918
Of which
Internal provisions for pensions
1,296
1,426
3,407
Insurance contracts linked to
pensions (note 14)
381
423
511
Of which
  Group insurance entities
232
249
319
  Other insurers
149
174
192
On July 8, 2021, the Bank reached an agreement with
the employees' representatives for the transformation of
the defined benefit pension commitments into defined
contribution for certain retired personnel from Banco
Popular and Banco Pastor.
Through the previously mentioned Collective
Agreement, an aggrement has been to carry out an offer
to replace the annuities that the passive personnel
included in the scope of application of said Collective
Agreement had been receiving with a capitalization fund
in the Santander Employees pension plan.
The number of beneficiaries who exercised the voluntary
option to accept the substitution of the life annuity for a
capitalization fund in the Santander Employees pension
plan amounted to 1,468 people. The effect of the
reduction of the aforementioned commitments is shown
in the tables below under the headings 'Benefits paid by
settlement' amounting to EUR 166 million and 'Effect
reduction / settlement' amounting to EUR 36 million.
In December 2019 Banco Santander reached an
agreement with the workers' representatives to offer
during 2020 to part of its passive staff, the possibility of
collecting in the form of a single consideration or split in
a maximum of 5 equal annuities, the pensionable rights
derived from the collective agreement. The proposal was
also extended to personnel with pensionable rights
recognized under individual contracts or agreements.
The number of beneficiaries who exercised the voluntary
option of accepting the substitution of the life annuity
for the payment of a lump sum in the form of a capital
sum or in installments of a maximum of 5 annuities
amounted to 15,613 people. The effect of the reduction
of the aforementioned commitments is shown in the
following tables.
139
The amount of the defined benefit obligations was
determined on the basis of the work performed by
independent actuaries using the following actuarial
techniques:
1.Valuation method: projected unit credit method,
which sees each period of service as giving rise to an
additional unit of benefit entitlement and measures
each unit separately.
2.Actuarial assumptions used: unbiased and mutually
compatible. Specifically, the most significant
actuarial assumptions used in the calculations were
as follows:
EUR million
2021
2020
Annual discount rate
0.90%
0.60%
Expected return on plan assets
rate
0.90%
0.60%
Mortality tables
PE2020 M/F
Col. Orden 1
PE2020 M/F
Col. Orden 1
Cumulative annual CPI growth
1.00%
1.00%
Annual pension increase rate
1.00%
1.00%
3.The discount rate used for the flows was determined
referencing to high-quality corporate bonds.
4.The estimated retirement age of each employee is
the first at which the employee is entitled to retire or
the agreed-upon age, as appropriate.
5.The fair value of insurance contracts was determined
as the present value of the related payment
obligations, taking into account the following
assumptions:
EUR million
2021
2020
Expected rate of return on 
reimbursement rights
0.90%
0.60%
The amounts recognized in the accompanying income
statements in relation to the aforementioned defined
benefit obligations are as follows:
EUR million
2021
2020
Service cost:
Current service cost (note 42)
4
10
Past service cost (including
reductions)
13
2
Pre-retirement cost
Settlements
(38)
(372)
Net interest (note 35)
24
26
Expected return on insurance
contracts linked to pensions
(note 34)
(12)
(6)
Total
(9)
(340)
In addition, in 2021 ‘Other comprehensive income –
items not reclassified to profit or loss - Actuarial gains or
(-) losses on defined benefit pension plans’ has caused
an additional actuarial profits of EUR 30,7 million in
respect to defined benefit obligations (2020: EUR 78,7
million of actuarial loss).
The changes in 2021 and 2020 of the present value of
the accrued defined benefit obligations were as follows:
EUR million
2021
2020
Present value of the obligations
at beginning of the year
3,382
5,456
Current service cost
4
10
Interest cost
36
39
Pre-retirement cost
Settlements
(60)
(372)
Benefits paid for settlements
(166)
(1,551)
Other benefits paid
(245)
(356)
Past service cost
13
2
Actuarial (gains)/losses*
(122)
160
Exchanges rate differences and
others
6
(6)
Present value of the
obligations at end of the year
2,848
3,382
* Included  in 2021 are demographic actuarial losses of EUR 9 million and
financial actuarial profits of EUR 131 million (2020: demographic
actuarial losses of EUR 90  million and financial actuarial losses of EUR
70 million).
140
The changes in 2021 and 2020 in the fair value of the
plan assets are as follows:
EUR million
2021
2020
Fair value of plan assets at
beginning of year
1,537
1,543
Expected return on plan assets
12
13
Benefits paid
(262)
(94)
Contributions payable by the
employer
14
5
Settlements gains/(losses)
(22)
Exchange rate differences and
others
5
(6)
Actuarial gains/(losses)
(79)
76
Fair value of plan assets at end
of year
1,205
1,537
The changes in 2021 and 2020 in the fair value of the
insurance contracts linked to pensions are as follows:
EUR million
2021
2020
Fair value of insurance contracts
linked to pensions at beginning
of the year
423
511
Expected return on insurance
contracts (note 34)
12
6
Actuarial gains/(losses)
(12)
5
Premiums paid/(surrenders)
(7)
Benefits paid
(42)
(92)
Fair value of insurance
contracts linked to pensions at
end of the year (note 14)
381
423
Plan assets and pension insurance contracts linked to
pensions are mainly appear in insurance policies.
iii. Other long-term employee benefits
In various years, Banco Santander offered to some
certain of its employees the possibility of leaving its
employ prior to their retirement. Therefore, provisions
are recognized to cover the obligations to pre-retirees -in
terms of both salaries and other employee benefit costs-
from the date of their pre-retirement to the date of their
effective retirement.
The present value of the aforementioned obligations and
the fair value of the assets arising from insurance
contracts linked to these obligations at 31 December
2021 and for the preceding years are as follows:
EUR million
2021
2020
2019
Present value of the
obligations:
To pre-retirees
1,052
1,580
1,220
Long-service bonuses and
other benefits
11
13
14
1,063
1,593
1,234
Fair value of plan assets
(10)
(12)
(14)
Provisions - Provisions for
pensions
1,053
1,581
1,220
Insurance plans linked to
pensions
Group insurers
Other insurance entities
In December 2020, Banco Santander reached an
agreement with the workers' representatives to
implement an early retirement and incentivized
termination plan, which is expected to benefit 3,572
employees during 2021, with the provision set up to
cover these commitments amounting to EUR 674
million. In addition, the provision set up to cover the
dismissal of employees who have taken advantage of
early retirement offers and incentivized dismissals
during 2020 amounted to EUR 63 million. In 2021, to
complete the plan announced in 2020, EUR 82 million
have been allocated, increasing the number of early
retirements and incentivized dismissals to 3,643
employees in the total period.
The amount of the other long-term remuneration
commitments defined benefit has been determined on
the basis of work performed by independent actuaries,
applying the following criteria to quantify them:
1.Valuation method: projected unit credit method.
2.Actuarial assumptions used: unbiased and mutually
compatible. Specifically, the most significant
actuarial assumptions used in the calculations were
as follows:
EUR million
2021
2020
Annual discount rate
0.90%
0.60%
Expected return on plan
assets rate
0.90%
0.60%
Mortality tables
PE2020 M/F
Col. Orden 1
PE2020 M/F
Col. Orden 1
Cumulative annual CPI
growth
1.00%
1.00%
Annual benefit increase rate
Entre 0% y
1,5%
Entre 0% y
1,5%
141
3.The discount rate used for the flows was determined
by reference to high-quality corporate bonds.
4.The estimated retirement age of each employee is
the first at which the employee is entitled to retire or
the agreed-upon age, as appropriate.
5.The amounts recognised in the income statement in
relation to the aforementioned defined benefit
obligations are as follows:
EUR million
2021
2020
Service cost:
Current service cost
1
1
Interest cost (note 35)
11
8
Extraordinary charges
  Actuarial (gains)/losses
recognized in the year
(14)
(3)
Pre-retirement cost
81
737
Other
(55)
(15)
Total
24
728
The changes in 2021 and 2020 in the present value of
the accrued obligations for other long-term benefits
were as follows:
EUR million
2021
2020
Present value of the obligations
at beginning of the year
1,593
1,234
Current service cost
1
1
Cost per interest (note 35)
11
8
Past service cost
Pre-retirement cost
81
737
Effect of curtailment/settlement
(55)
(15)
Benefits paid
(554)
(369)
Actuarial (gains)/losses
(14)
(3)
Other
Present value of the
obligations at end of the year
1,063
1,593
The movement that has occurred, during the years 2021
and 2020, in the fair value of the assets of the plan, has
been as follows:
EUR million
2021
2020
Fair value of plan assets at the
beginning of the year
12
14
Expected return on plan assets
Benefits paid
(2)
(2)
Contributions by the employer
Contributions by the employee
and others
Actuarial gains / (losses)
Present value of the
obligations at end of the year
10
12
iv. Sensitivity analysis
Any changes in the main assumptions could affect the
calculation of the obligations, At 31 December 2021, if
the discount rate used had been decreased or increased
by 50 basis points, there would have been an increase or
decrease in the present value of the post-employment
obligations of 5.00% and -5.06%, respectively, and an
increase or decrease in the present value of the long-
term obligations of 1.18% and -1.18%, These changes
would be offset in part by increases or decreases in the
fair value of the assets and insurance contracts linked to
pensions.
The following table shows the estimate of benefits to be
paid as of December 31, 2021 for the next ten years:
EUR Million
2022
571
2023
436
2024
376
2025
311
2026
267
2027 to 2030
878
142
d) Provisions for taxes and other legal contingencies
and Other provisions
'Provisions - Provisions for taxes and other legal
contingencies' and 'Provisions - Other provisions', which
include, inter alia, provisions for restructuring costs and
tax-related and non-tax-related proceedings, were
estimated using prudent calculation procedures in
keeping with the uncertainty inherent to the obligations
covered. The definitive date of the outflow of resources
embodying economic benefits for the Bank depends on
each obligation. In certain cases, these obligations have
no fixed settlement period and, in other cases, depend
on the legal proceedings in progress.
‘Provisions for taxes and other legal contingencies’
include proceedings and other legal proceedings such as
judicial, arbitral or administrative proceedings initiated
against Banco Santander. Qualitative information on the
main disputes is provided in note 23.e. For their part, the
provisions for restructuring include only costs arising
from restructuring processes incurred at Banco
Santander.
The Bank's general policy is to record provisions for tax
and legal proceedings in which we assess the chances of
loss to be probable and we do not record provisions
when the chances of loss are possible or remote. We
determine the amounts to be provided for as our best
estimate of the expenditure required to settle the
corresponding claim based, among other factors, on a
case-by-case analysis of the facts and the legal opinion
of internal and external counsel or by considering the
historical average amount of the loss incurred in claims
of the same nature. The definitive date of the outflow of
resources embodying economic benefits for the Bank
depends on each obligation. In certain cases, the
obligations do not have a fixed settlement term and, in
others, they depend on legal proceedings in progress.
Regarding the provision for restructuring, in 2020 EUR
299 million were allocated in relation to the agreement
reached with the worker's' representatives in order to
implement an early retirement and incentivized
dismissal plan, in that said year. The amounts associated
with this plan were recorded according to their nature
under the heading 'Provisions for restructuring' and
under the heading 'Provisions for pensions and similar
obligations', explained in note 23.c above. The increase
in the provision for restructuring was offset by the
application of EUR 99 million in 2020.
As for the 'Other provisions' contains very atomized and
individually insignificant provisions, such as the
provisions corresponding to cover other operational risks
of the Bank.
e) Litigation and other matters
i. Tax-related litigation
At 31 December 2021 the main tax-related proceedings
concerning the Group and the Bank were as follows:
Legal actions filed by Banco Santander (Brasil) S.A.
and other Group entities to avoid the application of
Law 9.718/98, which modifies the basis to calculate
PIS and COFINS social contribution, extending it to all
the entities income, and not only to the income from
the provision of services. In relation of Banco
Santander (Brasil) S.A. process, in May 2015 the
Federal Supreme Court (FSC) admitted the
extraordinary appeal filed by the Federal Union
regarding PIS, and dismissed the extraordinary appeal
lodged by the Brazilian Public Prosecutor's Office
regarding COFINS contribution, confirming the
decision of Federal Regional Court favourable to Banco
Santander (Brasil) S.A. of August 2007. The appeals
filed by the other entities before the Federal Supreme
Court, both for PIS and COFINS, are still pending.
These claims are fully provisioned.
Banco Santander (Brasil) S.A. and other Group
companies in Brazil have appealed against the
assessments issued by the Brazilian tax authorities
questioning the deduction of loan losses in their
income tax returns (IRPJ and CSLL) in relation to
different administrative processes of various years on
the ground that the requirements under the applicable
legislation were not met. The appeals are pending
decision in CARF. No provision was recognised in
connection with the amount considered to be a
contingent liability.
Banco Santander (Brasil) S.A. and other Group
companies in Brazil are involved in administrative and
legal proceedings against several municipalities that
demand payment of the Service Tax on certain items
of income from transactions not classified as
provisions of services. There are several cases in
different judicial instances. A provision was recognised
in connection with the amount of the estimated loss.
Banco Santander (Brasil) S.A. and other Group
companies in Brazil are involved in administrative and
legal proceedings against the tax authorities in
connection with the taxation for social security
purposes of certain items which are not considered to
be employee remuneration. There are several cases in
different judicial instances. A provision was recognised
in connection with the amount of the estimated loss.
143
In May 2003 the Brazilian tax authorities issued
separate infringement notices against Santander
Distribuidora de Títulos e Valores Mobiliarios, Ltda.
(DTVM, actually Santander Brasil Tecnología S.A.) and
Banco Santander (Brasil) S.A. in relation to the
Provisional Tax on Financial Movements (CPMF) of the
years 2000 to 2002. The administrative discussion
ended unfavourably for both companies, and on July
3, 2015, filed a lawsuit requesting the cancellation of
both tax assessments. The lawsuit was judged
unfavourably in first instance. Therefore, both
plaintiffs appealed to the court of second instance. On
December 2020, the appeal was decided
unfavourably. Against the judgment, the bank filed a
motion for clarification which has not been accepted.
Currently it is  appealed to higher courts. There is a
provision recognized for the estimated loss.
In December 2010 the Brazilian tax authorities  issued
an infringement notice against Santander Seguros S.A.
(Brazil), currently Zurich Santander Brasil Seguros e
Previdência S.A., as the successor by merger to ABN
AMRO Brasil dois Participações S.A., in relation to
income tax (IRPJ and CSLL) for 2005, questioning the
tax treatment applied to a sale of shares of Real
Seguros, S.A. The administrative discussion ended
unfavourably, and the CARF decision has been
appealed at the Federal Justice. As the former parent
of Santander Seguros S.A. (Brasil), Banco Santander
(Brasil) S.A. is liable in the event of any adverse
outcome of this proceeding. No provision was
recognised in connection with this proceeding as it is
considered to be a contingent liability.
In November 2014 the Brazilian tax authorities issued
an infringement notice against Banco Santander
(Brasil) S.A. in relation to corporate income tax (IRPJ
and CSLL) for 2009 questioning the tax-deductibility of
the amortisation of the goodwill of Banco ABN AMRO
Real S.A. performed prior to the absorption of this
bank by Banco Santander (Brasil) S.A., but accepting
the amortisation performed after the merger. Actually
it is appealed before the Higher Chamber of CARF. No
provision was recognised in connection with this
proceeding as it was considered to be a contingent
liability.
Banco Santander (Brasil) S.A. has also appealed
against infringement notices issued by the tax
authorities questioning the tax deductibility of the
amortisation of the goodwill arising on the acquisition
of Banco Comercial e de Investimento Sudameris S.A
from years 2007 to 2012. No provision was recognised
in connection with this matter as it was considered to
be a contingent liability.
Banco Santander (Brasil) S.A. and other companies of
the Group in Brazil are undergoing administrative and
judicial procedures against Brazilian tax authorities for
not admitting tax compensation with credits derived
from other tax concepts, not having registered a
provision for the amount considered to be a
contingent liability.
Banco Santander (Brasil) S.A. is involved in appeals in
relation to infringement notices initiated by tax
authorities regarding the offsetting of tax losses in the
CSLL (‘Social Contribution on Net Income’) of year
2009. The appeal is pending decision in CARF. No
provision was recognised in connection with this
matter as it is considered to be a contingent liability.
Brazilian tax authorities have issued infringement
notices against Getnet Adquirência e Serviços para
Meios de Pagamento S.A and Banco Santander (Brasil)
S.A. as jointly liable in relation to corporate income tax
(IRPJ and CSLL) for 2014 to 2018 questioning the tax-
deductibility of the amortization of the goodwill from
the acquisition of Getnet Tecnologia  Proces S.A.,
considering that  the company would not have
complied with the legal requirements for such
amortization. A defense against the tax assessment
notices were submitted, and the appeal is pending
decision in CARF. No provision was recognized as it is
considered to be a contingent liability.
The total amount for the aforementioned Brazil
lawsuits that are fully provisioned is EUR 848 million,
and for lawsuits that qualify as contingent liabilities is
EUR 3,690 million.
Legal action brought by Sovereign Bancorp, Inc.
(currently Santander Holdings USA, Inc.) claiming its
right to take a foreign tax credit for taxes paid outside
the United States in fiscal years 2003 to 2005 as well
as the related issuance and financing costs. On 17 July
2018, the District Court finally ruled against Santander
Holdings USA, Inc. On September 5, 2019 the Federal
District Court in Massachusetts entered a judgement
resolving the Company’s tax liability for fiscal years
2003 to 2005, which had no effect on income. The
Company has agreed to resolve the treatment of the
same transactions for 2006 and 2007, consistent with
the September 5, 2019 judgment. The Congressional
Joint Committee on Taxation  has completed its review
of the proposed resolution of the 2006 and 2007 tax
years, with no objection. The IRS finalized its
administrative process to close-out the issue, which
resulted in no impact on net income.
144
Banco Santander appealed before European Courts
the Decisions 2011/5/CE of 28 October 2009 (First
Decision), and 2011/282/UE of 12 January 2011
(Second Decision) of the European Commission, ruling
that the deduction of the financial goodwill regulated
pursuant to Article 12.5 of the Corporate Income Tax
Law constituted illegal State aid. On October 2021 the
Court of Justice has definitively confirmed these
Decisions. The dismissal of the appeal, that only
affects these two decisions, has no effect on equity.
At the date of approval of these interim financial
statements certain other less significant tax-related
proceedings are also in progress.
ii. Non-tax-related proceedings
At 31 December 2021 the main non-tax-related
proceedings concerning the Group and the Bank were as
follows:
Payment Protection Insurance (PPI): In recent years
Santander UK plc has processed customer claims
associated with the sale of payment protection
insurance (PPI), derived from the Financial Conduct
Authority guidelines.  As of 31 December 2021 there is
no provision related to those claims as the deadline for
presenting them has already expired. However,
customers can still commence in-court litigation for
the mis-sale of PPI  and a provision for the best
estimate of any obligation to pay compensation in
respect of current and future claims is recognized for
this purpose.
In addition, there is a legal dispute regarding allocation
of liability for pre-2005 PPI policies underwritten by
two entities (Axa France) that Axa Group acquired from
Genworth Financial International Holdings, Inc. in
September 2015. The dispute involves Santander
Cards UK Limited (formerly known as GE Capital Bank
Limited which was acquired by Banco Santander, S.A.
from GE Capital group in 2008) which was the
distributor of the policies in dispute and Santander
Insurance Services UK Limited (the Santander Entities).
In July 2017, the Santander Entities notified Axa France
that they did not accept liability for losses on PPI
policies relating to the referred period.  Santander UK
plc entered in a Complaints Handling Agreement –that
included a standstill agreement- agreeing to handle
complaints on Axa France, whilst Axa France accepted
paying redress assessed to be due to relevant
policyholders on a without prejudice basis.
After the termination of the Complaints Handling
Agreement, on 30 December 2020 Axa France
provided written notice to the Santander Entities to
terminate the standstill agreement. On 5 March 2021,
the Santander Entities were served with a Claim Form
and Brief Details of Claim by Axa France, claiming that
the Santander Entities are liable to reimburse Axa
France for pre-2005 PPI mis-selling losses, currently
estimated at GBP 636 million (EUR 739 million). On 22
March 2021, the Santander Entities acknowledged
service of the claim and notified the court of their
intention to defend the claim in full and issued an
application for Axa Frances’s claim to be struck out/
summarily dismissed, which is being heard by the
Commercial Court on 22 and 23 February 2022.
Decision is not expected until second quarter 2022.
In the event the claim is not dismissed, there are still
ongoing factual issues to be resolved during the  trial,
which may have legal consequences including in
relation to liability. These issues create uncertainties
which mean that it is difficult to reliably predict the
outcome or the timing of the resolution of the matter.
The provision includes our best estimate of the
Santander Entities’ liability for this matter.
Delforca:  dispute arising from equity swaps entered
into by Gaesco (now Delforca 2008, S.A.) on shares of
Inmobiliaria Colonial, S.A. Banco Santander, S.A. is
claiming to Delforca before the Court of Barcelona in
charge of the bankruptcy proceedings, a total of EUR
66 million from the liquidation resulting from the early
termination of financial transactions due to Delforca's
non-payment of the equity swaps. In the same
bankruptcy proceedings, Delforca and Mobiliaria
Monesa have in turn claimed the Bank to repay EUR
57 million, which the Bank received for the
enforcement of the agreed guarantee, as a result of
the aforementioned liquidation.  On 16 September
2021 the Commercial Court Number 10 of Barcelona
has ordered Delforca to pay the Bank EUR 66 million
plus EUR 11 million in interest and has dismissed the
claims filed by Delforca. This decision has been
appealed by Delforca, Mobiliaria Monesa and the
bankruptcy administrator. The appeal which the Bank
has already opposed to will be resolved by the
Provincial Court of Barcelona.
Separately, Mobiliaria Monesa, S.A. (parent of
Delforca) filed in 2009 a civil procedure with the Courts
of Santander against the Bank claiming damages that
have not been specified to date. The procedure is
suspended.
145
Former employees of Banco do Estado de São Paulo
S.A., Santander Banespa, Cia. de Arrendamiento
Mercantil:  claim initiated in 1998 by the association of
retired Banespa employees (AFABESP) requesting the
payment of a half-yearly bonus contemplated in the
by-laws of Banespa in the event that Banespa obtained
a profit and that the distribution of this profit were
approved by the Board of Directors. The bonus was not
paid in 1994 and 1995 since Banespa had not made a
profit during those years. Partial payments were made
from 1996 to 2000, as approved by the Board of
Directors. The relevant clause was eliminated in 2001.
The Tribunal Regional do Trabalho (Regional Labour
Court) and the High Employment Court (TST) ordered
Santander Brazil, as successor to Banespa, to pay this
half-yearly bonus for the period from 1996 to the
present. On 20 March 2019, the Supreme Federal
Court (STF) rejected the extraordinary appeal filed by
Santander Brazil.
Santander Bank Brazil filed a rescissory action before
the TST to nullify the decisions of the main
proceedings and suspend the execution of the
judgment, which was deemed inadmissible, therefore
its execution was suspended.  The rescissory action
was dismissed and a motion for clarification was filed,
due to the absence of an explicit argument to deny the
rescissory action filed by Santander Brazil. After the
decision of the motion for clarification, Santander
Brazil filed an extraordinary appeal in the rescissory
action in February 2021, which was denied in an
interlocutory decision in June 2021 by the TST. As
Santander Brazil understands there is a conflict
between the TST decision and the doctrine set by the
STF, Santander Brazil has appealed this decision. This
appeal is pending.
In August 2021, a first instance court has ruled that the
enforcement of the TST decision shall be carried out
individually, at the jurisdiction pertaining to each
person. AFABESP appealed this decision.  In December
2021, the Regional Labor Court denied the appeal filed
by AFABESP.  This decision has  not been  appealed by
AFABESP, and therefore it has become firm.
Santander Brazil external advisers have classified the
risk as probable. The recorded provisions are
considered sufficient to cover the risks associated with
the legal claims that are being substantiated as of 31
December 2021.
'Planos Económicos': like the rest of the banking
system in Brasil, Santander Brazil has been the target
of customer complaints and collective civil suits
stemming mainly from legislative changes and its
application to bank deposits ('economic plans'). At the
end of 2017, an agreement between regulatory
entities and the Brazilian Federation of Banks
(Febraban) with the purpose of closing the lawsuits
was reached and was approved by the Supremo
Tribunal Federal. Discussions focused on specifying the
amount to be paid to each affected client according to
the balance in their notebook at the time of the Plan.
Finally, the total value of the payments will depend on
the number of adhesions there may be and the number
of savers who have demonstrated the existence of the
account and its balance on the date the indexes were
changed. In November 2018, the STF ordered the
suspension of all economic plan proceedings for two
years from May 2018. On 29 May 2020, the STF
approved the extension of the agreement for P5Y
additional years starting from 3 June 2020. Condition
for this extension was to include in the agreement
actions related to the “Collor I Plan”. On 31 December
2021, the provision recorded for the economic plan
proceedings amounts to EUR 277 million.
Floor clauses:  as a consequence of the acquisition of
Banco Popular Español, S.A.U. the Group has been
exposed to a material number of transactions with
floor clauses. The so-called "floor clauses" are those
under which the borrower accepts a minimum interest
rate to be paid to the lender, regardless of the
applicable reference interest rate. Banco Popular
Español, S.A.U. included "floor clauses" in certain
asset-side transactions with customers. In relation to
this type of clauses, and after several rulings made by
the Court of Justice of the European Union and the
Spanish Supreme Court, and the extrajudicial process
established by the Spanish Royal Decree-Law 1/2017,
of 20 January, Banco Popular Español, S.A.U. made
provisions that were updated in order to cover the
effect of the potential return of the excess interest
charged for the application of the floor clauses
between the contract date of the corresponding
mortgage loans and May 2013. At 31 December 2021,
after having processed most of the customer requests,
the potential residual loss associated with ongoing
court proceedings is estimated at EUR 46 million,
amount which is fully covered by provisions.
146
Banco Popular´s acquisition:  considering the
declaration setting out the resolution of Banco Popular
Español, S.A.U., the redemption and conversion of its
capital instruments and the subsequent transfer to
Banco Santander, S.A. of the shares resulting from this
conversion in exercise of the resolution instrument
involving the sale of the institution's business, in
application of the single resolution framework
regulation, some investors have filed claims against
the EU’s Single Resolution Board decision, the FROB's
resolution executed in accordance to the
aforementioned decision, and claims have been filed
and may be filed in the future against Banco
Santander, S.A. or other Santander Group companies
deriving from or related to the acquisition of Banco
Popular Español, S.A.U.
At this stage, it is not possible to foresee the total
number of claims that could be filed by the former
holders of shares and capital instruments (arising from
the acquisition by investors of such shares and capital
instruments of Banco Popular prior to resolution,
including in particular, without limitation, the shares
acquired in the context of the capital increase with pre-
emptive subscription rights carried out in 2016), and
their economic implications (especially considering
that the decision to resolve in application of the new
regulation has no precedent, and that it may be
possible that future claims do not specify a specific
amount, put forward new legal interpretations or
involve a large number of parties).
In this respect, on 2 September 2020, the Provincial
Court of La Coruña has referred a preliminary ruling to
the Court of Justice of the European Union (“CJEU”)
asking for the correct interpretation of Article 60(2) of
Directive 2014/59/EU of the European Parliament and
of the Council, dated 15 May 2014, which establishes a
framework for the restructuring and resolution of
credit institutions and investment firms. This article
establishes that, in cases of redemption of capital
instruments in a bank resolution, no liability shall
remain in relation to the amount of the instrument that
has been redeemed. On 2 December 2021, the CJEU
Advocate General issued his opinion, considering that
the Directive precludes former Banco Popular
shareholders from bringing claims for compensation 
against Banco Santander. The judgement of the CJEU in
this case is still pending and is likely to condition the
outcome on the judicial proceedings that are currently
ongoing.
Likewise, the Central Court of Instruction 4 is currently
conducting preliminary proceedings 42/2017, in which,
amongst other things, is being investigated the
following: (i) the accuracy of the prospectus for the
capital increase with subscription rights carried out by
Banco Popular in 2016; and (ii) the alleged
manipulation of the share price of Banco Popular until
the resolution of the bank, in June 2017. During the
course of the proceedings, on 30 April 2019, the
Spanish National Court, ruled in favour of Banco
Santander, S.A. declaring that Banco Santander, S.A.
cannot inherit Banco Popular’s potential criminal
liability. This ruling was appealed before the Supreme
Court, which rejected it. In this proceedings, Banco
Santander, S.A. could potentially be subsidiarily liable
for the civil consequences.
The estimated cost of any compensation to
shareholders and bondholders of Banco Popular
recognized in the 2017 accounts amounted to EUR
680 million, of which EUR 535 million were applied to
the commercial loyalty program. At 31 December
2021, the provisions recorded are considered sufficient
to cover the risks associated with the court claims that
can be estimated to date. However, if additional
amounts have to be paid for claims already raised with
an undetermined economic interest or for new claims
which cannot be reliably estimated because of their
specific circumstances, this could have a significant
adverse effect on the Santander Group's results and
financial situation. 
German shares investigation: the Cologne Public
Prosecution Office is conducting an investigation
against the Bank, and other group entities based in UK
- Santander UK plc, Santander Financial Services Plc
and Cater Allen International Limited -, in relation to a
particular type of tax dividend linked transactions
known as cum-ex transactions.
The Group is cooperating with the German authorities.
According to the state of the investigations, the result
and the effects for the Group, which may potentially
include the imposition of material financial penalties,
cannot be anticipated.  For this reason, the Bank has
not recognized any provisions in relation to the
potential imposition of financial penalties.
Banco Santander, S.A. has been sued in a legal
proceeding in which the plaintiff alleges that a contract
was concluded whereby he would be entrusted with
the functions of CEO of the Bank. In the complaint, the
claimant mainly requests a declaratory ruling that
affirms the validity and conclusion of such contract and
its enforcement together with the payment of certain
amounts. If the main request is not granted, the
claimant sought a compensation for a total amount of
approximately EUR 112 million or, an alternative relief
for other minor amounts. Banco Santander, S.A.
answered to the complaint stating that the conditions
to which the appointment was subject to were not met
and that the contract required by law was not
concluded. On 17 May 2021, the plaintiff reduced his
claims for compensation to EUR 61.9 million.
147
On 9 December 2021, the Court has rendered its
decision ordering the Bank to compensate the plaintiff
in the amount of EUR 67.8 million. On 13 January
2022, the Court has corrected and supplemented its
judgment, reducing the total amount to EUR
51.4 million and establishing that part of this amount
(EUR 18.6 million) would have to be paid in shares of
Banco Santander and subject to the application of the
same terms provided in the applicable Santander
executives’ remuneration program (on a deferred
basis, and in accordance with the applicable plan in the
offer). The Bank will file appeal against the judgment
before the Provincial Court of Madrid.  The provisions
recorded are considered to be sufficient to cover the
risks deriving from this claim.
Universalpay Entidad de Pago, S.L. has filed a lawsuit
against Banco Santander, S.A. for breach of the
marketing alliance agreement (MAA) and claim
payment (EUR 1,050 million). The claim is being
processed in the Court of First Instance no. 81 of
Madrid. The MAA was originally entered into by Banco
Popular Español, S.A.U. and its purpose is the
rendering of acquiring services (point of sale payment
terminals) for businesses in the Spanish market. The
lawsuit is mainly based on the potential breach of
clause 6 of the MAA, which establishes certain
obligations of exclusivity, non-competition and
customer referral. The claim is at a very early stage,
and there are factual issues pending resolution, which
may have legal consequences and affect any potential
liability. This uncertainty makes it impossible to
reliably predict the resolution of the issue, the timing
or the significance of the potential economic impact.
The Bank has answered the complaint. The pretrial
hearing could not take place on 16 December 2021
and has been rescheduled on 11 March 2022.
CHF Polish Mortgage Loans: On 3 October 2019, the
Court of Justice of the European Union (CJEU) rendered
its decision in relation to a judicial proceeding against
an unrelated bank in Poland considering that certain
contractual clauses in CHF-indexed loan agreements
were abusive. The CJEU has left to Polish courts the
decision on whether the whole contract can be
maintained once the abusive terms have been
removed, which should in turn decide whether the
effects of the annulment of the contract are prejudicial
to the consumer. In case of maintenance of the
contract, the court may only integrate the contract
with subsidiary provisions of national law and decide,
in accordance with those provisions, on the applicable
rate.
On 2 September 2021, the Supreme Court was
expected to take a position regarding the key issues in
disputes concerning loans based on foreign currency,
clarifying the discrepancies and unifying case law.  The
resolution was not adopted and instead, the Supreme
Court referred questions to the CJEU on constitutional
issues of the Polish judiciary system. No new date for
consideration of the issue has been set and no
comprehensive decision by the Supreme Court on CHF
of the issue is expected in the near future.  In the
absence of a comprehensive position of the Supreme
Court, it is difficult to expect a full unification of judicial
decisions, and decisions of the Supreme Court and
CJEU issued on particular issues may be important for
shaping further case law on CHF matters.
As of 31 December 2021, Santander Bank Polska S.A.
and Santander Consumer Bank S.A. maintain a
portfolio of mortgages denominated in or indexed to
CHF for an approximate amount of 9,265 million zlotys
(EUR 2,083 million). During the year, provisions
recorded amounted to 1,453 million zlotys (EUR
319 million), leaving the provision fund as of 31
December 2021 at 2,056 million zlotys (EUR
447 million). This provision represents the best
estimate at 31 December 2021 given the difficulty to
predict the financial impact, as it is for national courts
to decide the relevant issues and the process of
analyzing and deciding on the KNF proposal described
below has not yet been completed. Santander Bank
Polska and Santander Consumer Bank Poland will
continue to monitor and assess appropriateness of
those provisions.
In December 2020, the Chairman of the Polish
Financial Supervision Authority (KNF) presented a
proposal for voluntary settlements between banks and
borrowers under which CHF loans would be
retrospectively settled as PLN loans bearing an interest
rate based on WIBOR plus margin.  This proposal is
currently under analysis within Santander Bank Polska
S.A. and Santander Consumer Bank S.A., depending on
the results of this analysis, Santander Bank Polska and
Santander Consumer Bank Poland will decide whether
to adhere to this proposal and will proceed to include
additional scenarios in the models for calculating
provisions and reflect the estimated impact on their
level.
While the above referred events could lead to
significant changes in the level of expected provisions,
in the opinion of Santander Bank Polska S.A. and
Santander Consumer Bank S.A., it is not possible to
reliably estimate the value of their impact on their
financial position at 31 December 2021.
148
Banco Santander Mexico. Dispute regarding a
testamentary trust constituted in 1994 by Mr. Roberto
Garza Sada in Banca Serfin (currently Santander
Mexico) in favor of his four sons in which he affected
shares of Alfa, S.A.B. de C.V. (respectively, "Alfa" and
the "Trust"). During 1999, Mr. Roberto Garza Sada
instructed Santander México in its capacity as trustee
to transfer 36,700,000 shares from the Trust's assets
to his sons and daughters and himself. These
instructions were ratified in 2004 by Mr. Roberto Garza
Sada before a Notary Public.
Mr. Roberto Garza Sada, passed away on 14 August
2010 and subsequently, in 2012, his daughters filed a
complaint against Santander Mexico alleging it had
been negligent in its trustee role. The lawsuit was
dismissed at first instance in April 2017 and on appeal
in 2018. In May 2018, the plaintiffs filed an appeal
(recurso de amparo) before the First Collegiate Court
of the Fourth Circuit based in Nuevo León, which ruled
in favor of the plaintiffs on 7 May  2021, annulling the
2018 appeal judgment and condemning Santander
Mexico to the petitions claimed, consisting of the
recovery of the amount of 36,700,000 Alfa shares,
together with dividends, interest and damages. 
On 7 June 2021, Santander México filed an appeal for
constitutional review against the decision of the
Collegiate Court before the Supreme Court of Justice of
the Nation, considering that this court was not
empowered to resolve substantive issues that had not
been raised by the parties, lack of procedural standing,
and the absence of a decision imposing the plaintiffs to
pay costs. This appeal was rejected by the President of
the Supreme Court of Justice of the Nation on 1
October 2021 on the grounds that the matter,
although it refers to constitutional matters, is not of
exceptional interest.
On 6 October 2021, Santander México filed an appeal
against this decision before the Supreme Court itself,
which was rejected in limine by the President of the
Court by order dated 11 October 2021, considering
that against the dismissal of the appeal for
constitutional review, there is no possible appeal
pursuant to the Constitutional Reform of March 2021.
Against this decision, on 8 December 2021, a new
appeal was filed for this matter to be reviewed by the
First Chamber of the Supreme Court of Justice of the
Nation, considering that the failure to accept the
appeal constitutes a retroactive application of the law,
and that this violates the transitory fifth article of the
reform of the “Ley de Amparo” published on 7 June
2021.
In compliance with the aforementioned ruling of 7th
May 2021, the Seventh Civil Chamber of the Superior
Court of Justice of Nuevo León has issued a judgement
imposing Santander Mexico to pay the benefits
claimed by the plaintiffs. As a result of this judgement,
Santander Mexico has filed a new appeal (recurso de
amparo) and will request that it be resolved by the
Supreme Court of Justice of the Nation.
Santander México estimates that the actions taken
should prevail and reverse the decision against it.
However, given the procedural stage of the case,
Santander México has classified this risk as possible.
The impact of a potential unfavorable resolution for
Santander México will be determined in a subsequent
proceeding and will also depend on the additional
actions that Santander México may take in its defense,
so it is not possible to determine it at this time.
URO Property Holdings, SOCIMI SA: In December 2021,
BNP Paribas Trust Corporation UK Limited (“BNP”)
informed Uro Property Holdings SOCIMI, SA (“Uro”) –
subsidiary from Banco Santander, S.A.-, that it is
considering taking legal action against Uro. On 16
February 2022, BNP commenced legal proceedings
against Uro in the Commercial Court in London. On 31
December 2021, Uro lost its status as a SOCIMI
(Sociedad Anónima Cotizada de Inversión Inmobiliaria).
The potential litigation concerns certain terms of a
financing granted to Uro which was supported by a
bond issue in 2015. BNP, acting as trustee on behalf of
the bondholders, claims that based on those terms,
and in relation to the loss of SOCIMI status, Uro would
be obliged to pay an additional premium above the
nominal value of the financing repayment. Uro denies
being liable to pay that additional premium and
intends to defend the claim. It is estimated that the
maximum loss associated with this possible
contingency, amounts to approximately EUR
250 million. There is no date for trial hearing yet. 
Banco Santander and the other Group companies are
subject to claims and, therefore, are party to certain
legal proceedings incidental to the normal course of
their business including those in connection with lending
activities, relationships with employees and other
commercial or tax matters additional to those referred to
here.
149
With the information available to it, the Bank considers
that, at 31 December 2021, it had reliably estimated the
obligations associated with each proceeding and had
recognized, where necessary, sufficient provisions to
cover reasonably any liabilities that may arise as a result
of these tax and legal risks. Disputes in which provisions
have been registered but are not disclosed is justified on
the basis that it would be prejudicial to the proper
defense of the Bank. Subject to the qualifications made,
it also believes that any liability arising from such claims
and proceedings will not have, overall, a material
adverse effect on the Group’s business, financial
position, or results of operations.
24. Tax matters
a) Consolidated Tax Group
Pursuant to current legislation, the Consolidated Tax
Group includes Banco Santander, S.A. (as the parent) and
the Spanish subsidiaries that meet the requirements
provided for in Spanish legislation regulating the
taxation of the consolidated profits of corporate groups
(as the controlled entities).
b) Years open for review by the tax authorities
In June and November 2021 acts with agreement,
conformity and non-conformity relating to the corporate
income tax financial years 2012 to 2015 were
formalised. The adjustments signed in conformity and
with agreement  had not impact on results and, in
relation to the concepts signed in disconformity both in
this year and in previous years (corporate income tax
2003 to 2011), Banco Santander, S.A., as the Parent of
the Consolidated Tax Group, considers, in accordance
with the advice of its external lawyers, that the
adjustments made should not have a significant impact
on the financial statements, as there are sound
arguments as proof in the appeals filed against them
pending at the National Appellate Court (tax years 2003
to 2011) and at different administrative instances (tax
years 2012-2015). It should also be noted that, in those
cases where it has been considered appropriate, the
mechanisms available to avoid international double
taxation have been used. Consequently, no provision has
been recorded for this concept. At the date of approval of
these accounts, the Corporate Income Tax and other
taxes audit for periods 2017 to 2019 are ongoing, and
subsequent years up to and including 2021, are subject
to review.
Likewise, relating the Consolidated Tax Group of which
Banco Popular Español, S.A.U. was the parent, during
2019, a certificate of disconformity was drawn up for
2017 corporate income tax, with no impact on profit, and
the final assessment was  appealed. In relation to this
Consolidated Tax Group, the years 2016 and  2017
inclusive are subject to review.
Because of the possible different interpretations which
can be made of the tax regulations, the outcome of the
tax audits of the rest of years subject to review might
give rise to contingent tax liabilities which cannot be
objectively quantified. However, the Group and the
Bank’s tax advisers consider that it is unlikely that such
tax liabilities will materialize, and that in any event the
tax charge arising therefrom would not materially affect
the Bank’s financial statements.
c) Reconciliation
The reconciliation between the income tax expense at
the applicable tax rate (30%) and the income tax
expense recorded (in EUR millions) is shown below:
EUR million
2021
2020
Profit before taxes
3,864
(2,247)
Corporate tax at the applicable
rate of 30%
1,159
(674)
Dividends and capital gains not
subject
(1,454)
(1,885)
Impairment of non-deductible
shares
(240)
1,776
Deferred tax review effect
1,632
Remaining permanent differences
and others
467
461
Expense/(Incomes) taxes
recorded
(68)
1,310
d) Tax recognized in equity
Regardless of the income tax incurred in profit and loss
accounts, Banco Santander has passed on the net worth
the following amounts during 2021 and 2020:
EUR million
Amounts receivable/
(Amounts payable)
2021
2020
Fair value changes of debt instruments
measured at fair value with changes in
other comprehensive income
156
96
Equity instruments valued at fair value
with changes in other comprehensive
income
(4)
87
Cash flow hedges
(44)
62
Other valuation adjustments (note 25)
19
23
Total
127
268
150
e) Deferred taxes
The balance under the heading 'Deferred tax assets' of
the balance sheets includes the debtor balances against
the Public Treasury for Advance Tax; in turn, the balance
under the heading 'Deferred tax liabilities' includes the
liabilities corresponding to the different deferred taxes
of Banco Santander.
In Spain Royal Decree-Law 14/2013 of 29 November,
confirmed by Law 27/2014 of 27 November, established
a regime to allow certain deferred tax assets to continue
to count as prudential capital, within the ‘Global
regulatory framework to strengthen banks and banking
systems’ (called Agreements Basel III) and under the
implemented regulations of those Agreements, i.e.
Regulation (EU) No 575/2013 and Directive 2013/36/EU,
both of 26 June 2013 (hereinafter CRD IV).
Prudential legislation provides that deferred tax assets
that depend on their use of future profits must be
deducted from regulatory capital, although taking into
account whether they are credits for tax losses and
deductions or for temporary differences. It is for the
latter category of deferred tax assets and within it those
arising from insolvencies, awarded, commitments for
pensions and pre-retirements, for which it is established
that they do not depend on future profits, since in certain
circumstances they can be converted into credits against
the Public Treasury, and therefore not deducts from
regulatory capital (hereinafter referred to as
monetizable deferred tax assets).
During 2015, the regulation on monetizable deferred tax
assets was completed by the introduction of a capital
supply involving the payment of an amount of 1.5% per
annum, in order to maintain the right to monetization,
and will be applied to a part of the deferred tax assets
that meet the legal requirements to be considered
monetizables generated before 2016.
The following are the breakdown of tax assets and
liabilities as of December 31, 2021 and 2020:
EUR million
2021
2020
Tax assets:
9,622
9,282
Current
1,003
721
Deferred
8,619
8,561
Of which
Relating to pensions
3,540*
3,540*
Relating to allowances for
loan losses
3,023*
3,023*
Relating to deductions and
negative tax bases
632
380
Tax liabilities:
1,697
1,555
Of which, deferred tax
liabilities
1,521
1,510
* Banco Popular Español, S.A.U. considered that part of its monetizable
assets were converted into credit against the Tax Administration in 2017
Corporate Income Tax return, as the circumstances of the aforementioned
regulations were met at the end of that year (EUR 995 million). The
Spanish tax authorities have expressly confirmed the nature of these
assets as monetizable, but they consider that conditions for conversion are
not met at the end of 2017, without prejudice to the conversion in future
years. Likewise Consolidated Tax Group in Spain, due to losses incurred in
2020, converted EUR 642 million of monetizable tax assets into credit
against the Tax Administration in its Corporate Income Tax return. This tax
return is subject to review by the Tax Authorities.
At the end of the fiscal year, deferred taxes, both assets
and liabilities, are reviewed in order to verify whether
adjustments are necessary to be made in accordance
with the results of the analyses carried out.
These analyses take into account all the positive and
negative evidence of the recoverability of such assets,
including (i) the results generated in previous years, (ii)
the projections of results, (iii) the estimate of the
reversal of the various temporary differences depending
on their nature and (iv) the period and limits established
in current legislation for the recovery of the various
deferred tax assets, thus concluding on Banco
Santander’s ability to recover its deferred tax assets.
The results projections used in this analysis are based on
the financial budgets approved by both the local bureaux
of the respective units and by Banco Santander
managers. Grupo Santander budget estimation process
is common for all units, including the Bank. The Grupo
Santander management prepares its financial budgets
based on the following key assumptions.
a.Microeconomic variables of the entities that make up
the tax group at each location: consideration is taken
of the existing balance sheet structure, the mix of
products offered and the commercial strategy at any
time defined by the local authorities in this regard
based on the competition, regulatory and market
environment.
151
b.Macroeconomic variables: The estimated growth is
based on the evolution of the economic environment
considering the expected developments in the Gross
Domestic Product of each location and the forecasts
on behaviour of interest rates, inflation and exchange
rates. This data is provided by Grupo Santander's
Studies Service, and based on external sources of
information.
In addition, Grupo Santander performs retrospective
reviews (backtesting) on the variables projected in the
past. The differential performance of these variables
with respect to the actual market data is considered in
the estimated projections for each financial year. Thus, in
relation to Spain, the deviations identified by
Management in recent years are due to non-recurring
events that are not related to the business's operations,
such as the impacts for the first application of new
applicable regulations, the costs incurred for
accelerating restructuring plans and the changing effect
of the current macroeconomic environment.
Finally, and given the degree of uncertainty of the
assumptions regarding those variables, Grupo Santander
conducts a sensitivity analysis of the most significant
ones used in the analysis of the recoverability of
deferred tax assets, considering reasonable changes in
the key assumptions upon which the projections of
results of each tax entity or group and the estimate of
the reversal of the various temporary differences. In
relation to Spain, the sensitivity analysis consisted of
adjusting 50 basis points for growth (gross domestic
product) and adjusting 50 basis points for inflation.
Following this analysis, the maximum recovery period of
deferred tax assets recorded at 31 December 2020 is
maintained for 15 years.
During 2020, given the uncertainties about the economic
impacts derived from the covid-19 health crisis, the
Group reassessed the ability to generate future tax
profits in relation to the recoverability of deferred tax
assets recorded in the main companies that make up the
Group. In Spain, the changes in the key hypotheses on
which the projections of the results of its tax group were
based, derived from the aforementioned impact of
covid-19, meant in the case of Banco Santander the
recording of an impairment of EUR 1,632 million of
deferred tax assets with a balancing entry under the
heading 'Income tax' in the profit and loss account.
In addition, the Spanish Tax Group, of which Banco
Santander, S.A. is the dominant entity, has not
recognized deferred tax assets in respect of tax losses,
investment deductions and other incentives amounting
to approximately EUR 9,700 million, of which EUR 300
million are subject, among other requirements, to time
limits.
f) Regulatory changes
In 2018, for the purpose of regulating the tax effects of
the first application of the Bank of Spain's Circular
4/2017, Royal Decree-Law 27/2018 of 28 December
established a transitional regime, according to which
charges and credits to reserve accounts accounted for in
first application, which have tax effects, will be
integrated into the Tax base for corporation tax equally
in each of the first three tax periods starting from
January 1, 2018.
In application of the aforementioned Royal Decree-law,
it was included in the tax base of Banco Santander, S.A.
corresponding to 2020 a negative adjustment amounting
to EUR 99 million, EUR 30 million in installment.
On the other hand, in 2020 the General State Budget
Law for 2021 was approved, which, among other tax
measures, established the non-deductibility in the
Corporation Tax of the management expenses of capital
holdings whose dividends or capital gains are exempt. of
taxes, setting the amount of these non-deductible
expenses at 5% of the dividend or positive income
obtained. In 2021, the General State Budget Law for
2022 was approved, which establishes a minimum tax
rate of 15% (18% for financial entities) on the tax base in
Corporation Tax.
g ) Other information
In compliance with the reporting obligation set out in the
2005 Contributing Standards Instrument issued by the
Financial Conduct Authority of the United Kingdom, it is
stated that shareholders of Banco Santander who are
resident in the United Kingdom shall be entitled to apply
for a tax credit paid abroad in respect of withholdings to
be made by Banco Santander on dividends to be paid to
those shareholders if the total dividend income exceeds
the amount of exempt dividends of £2,000 for the
2021/2022 financial year. Banco Santander shareholders
who reside in the United Kingdom and maintain their
participation in Banco Santander through Santander
Nominee Service will be directly provided with
information on the amount withheld as well as any other
information they may need to complete their tax returns
in the UK. All other shareholders of Banco Santander
who reside in the United Kingdom should contact their
bank or securities agency.
Banco Santander, is part of the Large Business Forum
and has adhered to the Code of Good Tax Practices in
Spain since 2010, actively participating in the
cooperative compliance programmes being developed
by the tax administration.
152
25. Other comprehensive
income
The balances of 'Other comprehensive income' include
the amounts, net of the related tax effect, of the
adjustments to assets and liabilities recognised in equity
through the statement of recognised income and
expense. The amounts arising from subsidiaries are
presented, on a line by line basis, in the appropriate
items according to their nature.
Respect to items that may be reclassified to profit or
loss, the statement of recognised income and expense
includes changes in other comprehensive income as
follows:
Revaluation gains (losses): includes the amount of
the income, net of the expenses incurred in the year,
recognised directly in equity. The amounts
recognised in equity in the year remain under this
item, even if in the same year they are transferred to
the income statement or to the initial carrying
amount of the assets or liabilities or are reclassified
to another line item.
Amounts transferred to income statement: includes
the amount of the revaluation gains and losses
previously recognised in equity, even in the same
year, which are recognised in the income statement.
Amounts transferred to initial carrying amount of
hedged items: includes the amount of the
revaluation gains and losses previously recognised in
equity, even in the same year, which are recognised
in the initial carrying amount of assets or liabilities as
a result of cash flow hedges.
Other reclassifications: includes the amount of the
transfers made in the year between the various
valuation adjustment items.
The amounts of these items are recognized gross,
presenting the corresponding tax effect is presented
under a separate item.
153
a) Breakdown of Other accumulated comprehensive
income - Items that will not be reclassified in results
and Items that can be classified in results
EUR million
2021
2020
Other accumulated comprehensive income
(1,802)
(1,561)
Items that will not be reclassified in results
(1,858)
(1,882)
Actuarial gains and losses on defined benefit pension plans
(1,329)
(1,351)
Non-current assets held for sale
Other recognized income and expense of investments in subsidiaries, joint ventures and
associates
Rest of valuation adjustments
Changes in the fair value of equity instruments measured at fair value through other
comprehensive income
(468)
(537)
Ineffectiveness  of fair value hedges of equity instruments measured at fair value with
changes in other comprehensive income
Changes in the fair value of equity instruments measured at fair value through other
comprehensive income (hedged item)
271
154
Changes in the fair value of equity instruments measured at fair value through other
comprehensive income (hedging instrument)
(271)
(154)
Changes in the fair value of financial liabilities at fair value through profit or loss
attributable to changes in credit risk
(61)
6
Items that can be classified in results
56
321
Hedges of net investments in foreign operations (effective portion)
Exchange differences
Cash flow hedges (effective portion)
(87)
(189)
Changes in the fair value of debt instruments measured at fair value through changes in
other comprehensive income
143
510
Hedging instruments (items not designated)
Non-current assets held for sale
Share in other income and expenses recognized in investments in joint ventures and
associates
b) Other accumulated comprehensive income-
Items not reclassified to profit or loss – Actuarial
gains or (-) losses on defined benefit pension plans
‘Other comprehensive income – Items not reclassified to
profit or loss – Actuarial gains or (-) losses on defined
benefit pension plans’ include the actuarial gains and
losses and the return on plan assets, less the
administrative expenses and taxes inherent to the plan,
and any change in the effect of the asset ceiling,
excluding amounts included in net interest on the net
defined benefit liability (asset).
Its variation is shown in the statement of income and
expense.
c) Other accumulated comprehensive income -
Items that will not be reclassified in results -
Changes in the fair value of equity instruments
measured at fair value with changes in other
comprehensive income.
Includes the net amount of unrealized fair value changes
of equity instruments at fair value with changes in other
comprehensive income.
154
The following is a breakdown of the composition of the
balance as of 31 December 2021 and 2020 under ‘Other
accumulated comprehensive income - Items that will not
be reclassified to profit or loss - Changes in the fair value
of equity instruments measured at fair value with
changes in other global result‘ (see note 8):
EUR million
2021
2020
Capital gains
by valuation
Capital
losses by
valuation
Net gains/
losses by
valuation
Fair value
Capital gains
by valuation
Capital
losses by
valuation
Net gains/
losses by
valuation
Fair value
Equity instruments
178
(646)
(468)
1,705
275
(812)
(537)
1,942
d) Other accumulated comprehensive income -
Items that may be reclassified to profit or loss -
Hedging derivatives – Cash flow hedges (Effective
portion)
‘Other comprehensive income – Items that may be
reclassified to profit or loss - Cash flow hedges’ includes
the gains or losses attributable to hedging instruments
that qualify as effective hedges. These amounts will
remain under this heading until they are recognized in
the income statement in the periods in which the hedged
items affect it (see note 32).
e) Other accumulated comprehensive income -
Items that may be reclassified to profit or loss –
Changes in the fair value of debt instruments
measured at fair value with changes in other
comprehensive income
Includes the net amount of unrealized changes in the fair
value of assets classified as items than can be
reclassified in results ‘Changes in the fair value of debt
instruments measured at fair value with changes in
other comprehensive income‘ (see note 7).
Below is a breakdown of the balance composition as of
December 31, 2021 and 2020 of ‘Other accumulated
global income - Items that can be reclassified in results -
Changes in the fair value of the instruments of debt
valued at fair value with changes in other comprehensive
income’ depending on the type of instrument:
EUR million
 
2021
2020
 
Revaluation
gains
Revaluation
losses
Net
revaluation
gains/
(losses)
Fair value
Revaluation
gains
Revaluation
losses
Net
revaluation
gains/
(losses)
Fair value
Debt instruments
172
(29)
143
9,394
526
(16)
510
15,146
155
As of 31 December 2021, the handicaps recorded in the
‘Other cumulative comprehensive income - Elements
that can be reclassified into profit or loss - Changes in
the fair value of debt instruments measured at fair value
through other comprehensive income’ are not
significant.
As of December 31, 2021, Banco Santander has not
recorded in equity any impairment corresponding to debt
securities.
26. Shareholders’ equity
The changes in ‘Shareholders' equity’ are presented in
the statement of changes in total equity. Significant
information on certain items of ‘Shareholders' equity’
and the changes therein in 2021 are set forth below.
27. Issued capital
a) Changes
On 3 December 2020, a capital increase of EUR
361 million was made, with a charge to the share
premium, through the issue of 722,526,720 shares
(4.35% of the share capital).
Therefore, Banco Santander's share capital at 31
December 2020 consisted of EUR 8,670 million,
represented by 17,340,641,302 shares of EUR 0.50 of
nominal value each and all of them of a unique class and
series.
Equally, Banco Santander's share capital at 31 December
2021 consisted of EUR 8,670 million, represented by
17,340,641,302 shares of EUR 0.50 of nominal value
each and all of them of a unique class and series.
Includes 259,930,273 shares corresponding to the first
share repurchase program for which it has been agreed
(together with the shares that are finally to be acquired
under the second share repurchase program) to submit
their redemption to the general shareholders meeting
subject to the pertinent regulatory authorizations (see
notes 4 and 30).
Banco Santander’s shares are listed on the Spanish Stock
Market Interconnection System and on the New York,
London, Mexico and Warsaw Stock Exchanges, and all of
them have the same features and rights. Santander
shares are listed on the London Stock Exchange under
Crest Depository Interest (CDI), each CDI representing
one Bank’s share. They are also listed on the New York
Stock Exchange under American Depositary Receipts
(BDR), each BDR representing one share. During 2019
and 2018 the number of markets where the Bank is
listed was reduced; the Bank's shares was delisted from
Buenos Aires, Milan, Lisboa and São Paulo's markets.
At 31 December 2021, no shareholder held more than
3% of Banco Santander’s total share capital (which is the
threshold generally provided under Spanish regulations
for a significant holding in a listed company to be
disclosed). Even though at 31 December 2021, certain
custodians appeared in our shareholder registry as
holding more than 3% of our share capital, we
understand that those shares were held in custody on
behalf of other investors, none of whom exceeded that
threshold individually. These custodians were State
Street Bank (13.35%), Chase Nominees Limited (9.15%), 
The Bank of New York Mellon Corporation (5.21%),
Citibank New York (3.74%) and EC Nominees Limited
(3.34%).
At 31 December 2021, neither Banco Santander's
shareholder registry nor the CNMV's registry showed
any shareholder residing in a non-cooperative
jurisdiction with a shareholding equal to, or greater than,
1% of our share capital (which is the other threshold
applicable under Spanish regulations).
b) Other considerations 
At 31 December 2021 the number of Banco Santander
shares owned by third parties and managed by Group
management companies (mainly portfolio, collective
investment undertaking and pension fund managers) or
jointly managed was 45 million shares, which
represented 0.26% of Banco Santander’s share capital
(39 million shares, representing 0.22% of the share
capital in 2020). In addition, the number of Banco
Santander’s shares owned by third parties and received
as security was 231 million shares (equal to 1.33% of
the Bank’s share capital).
28. Share premium
Share premium includes the amount paid up by the
Bank’s shareholders in capital issues in excess of the par
value.
The Corporate Enterprises Act expressly permits the use
of the share premium account balance to increase capital
at the entities at which it is recognised and does not
establish any specific restrictions as to its use.
The change in the balance of share premium
corresponds to the capital increases detailed in note
27.a).
The decrease in 2020 was due to the reduction of EUR
361 million to cover the capital increase on 3 December
(see note 27.a).
The decreased produced in 2021 for an amount of EUR
4,034 million has been the consequence of applying the
result obtained by Banco Santander during the financial
year 2020, consisting of losses of EUR 3,557 million, as
reflected in the consolidated statements of changes in
total equity, and the charge of the dividend for the fiscal
year 2020 for an amount of EUR 477 million (see note
4.a and consolidated statements of changes in total
equity).
156
Also, in 2020 an amount of EUR 72 million was
transferred from the Share premium account to the
Legal reserve (see note 29.b).
29. Accumulated retained
earnings
a) Definitions
The balance of 'Equity - Accumulated gains and Other
reserves' includes the net amount of the accumulated
results (profits or losses) recognised in previous years
through the income statement which in the profit
distribution were allocated in equity, the expenses of
own equity instrument issues, the differences between
the amount for which the treasury shares are sold and
their acquisition price, as well as the net amount of the
results accumulated in previous years, generated by the
result of non-current assets held for sale, recognised
through the income statement.
b) Breakdown
The detail of ‘Shareholders' equity - reserves’ at 31
December 2021 and 2020 is as follows:
EUR million
 
2021
2020
Restricted reserves
2,543
2,460
Legal reserve
1,734
1,734
Own shares
755
672
Revaluation reserve Royal
Decree-Law 7/1996
43
43
Reserve for retired capital
11
11
Unrestricted reserves
Voluntary reserves
6,123
6,128
Total
8,666
8,588
i. Legal reserve
According to the Consolidated Text of the Corporate
Enterprise Act, Spanish entities that obtain profits in the
financial year must provide 10% of the net profit for the
financial year to the legal reserve. These allocations
must be made until the reserve reaches 20% of the share
capital. The legal reserve may be used to increase the
share capital in the share of its balance exceeding 10%
of the share capital already increased.
During the 2021 financial year, Banco Santander has not
allocated any amount to Legal Reserve. In 2020, EUR 72
million of Share Premium were allocated to the Legal
Reserve (see note 28).
The amount of the Legal Reserve reached 20% of the
share capital figure, and that Reserve was fully
established on 31 December 2021.
ii. Reserve for equity shares
According to the Consolidated Text of the Corporate
Enterprise Act, an unavailable reserve equivalent to the
amount for which Banco Santander's shares owned by
subsidiaries are recorded. This reservation shall be freely
available when the circumstances which have obliged its
constitution disappear. In addition, this reserve covers
the outstanding balance of loans granted by the Group
with Banco Santander's share guarantee and the amount
equivalent to the credits granted by the Group
companies to third parties for the acquisition of own
shares.
iii. Revaluation reserve Royal Decree Law 7/1996, of 7
June
The balance of Revaluation reserve Royal Decree-Law
7/1996 can be used, free of tax, to increase share capital.
From 1 January 2007, the balance of this account can be
taken to unrestricted reserves, provided that the
monetary surplus has been realised. The surplus will be
deemed to have been realised in respect of the portion
on which depreciation has been taken for accounting
purposes or when the revalued assets have been
transferred or derecognised.
If the balance of this reserve were used in a manner
other than that provided for in Royal Decree law 7/1996,
of 7 June, it would be subject to taxation
iv. Voluntary Reserve
During the 2021 fiscal year there has been a decrease in
voluntary reserves amounting to EUR 5 million; which
correspond to an increase in merger reserves of EUR 957
million, a decrease of EUR 83 million due to the
constitution of reserves for treasury shares, a decrease
of EUR 431 million due to interest on the PPCC (see note
21), a decrease of EUR 421 million for losses on the sale
of equity instruments valued at fair value with a charge
to other accumulated comprehensive income and a
decrease of EUR 27 million for transfer between equity
items and other items.
157
30. Other equity instruments
and own shares
a) Equity instruments issued not capital and other
equity instruments
It includes the amount corresponding to compound
financial instruments with a nature of net worth, the
increase in staff remuneration, and other items not
recorded in other items of own funds.
On July 13, 2017, Banco Santander and Banco Popular
Español, S.A.U. (hereinafter, Banco Popular)
communicated that they had decided to launch a
commercial action with the purpose of building loyalty
among retail customers of their networks affected by
the resolution of Banco Popular (the ‘Loyalty Action’).
Under the Loyalty Action, customers who met certain
conditions and have been affected by Banco Popular's
decision could receive, without disbursement by their
part, marketable securities issued by Banco Santander
for a nominal amount equivalent to the investment in
shares or in certain bonds subordinates of Banco Popular
(with certain limits) of which they held at the date of
Banco Popular's resolution. In order to avail itself of such
action, it was necessary for the client to waive legal
action against the Group.
The Loyalty Action would be carried out by providing the
customer with contingently amortizable perpetual
obligations ('Loyalty Bonds’) of Banco Santander, S.A.
Loyalty Bonds will accrue a cash coupon, discretionary,
non-cumulative, payable for completed quarters.
This issuance was made by Banco Santander, S.A. on 8
September 2017 for a nominal amount of EUR 981
million, fully subscribed by Banco Popular Español,
S.A.U. As at 31 December 2021, the cost recorded under
the heading 'Equity instruments' issued other than
capital on Banco Santander balance sheet amounts to
EUR 658 million (EUR 627 million as at 31 December
2020).
Loyalty Bonds are perpetual securities; however, they
may be fully amortized at the will of Banco Santander,
S.A., with prior authorization from the European Central
Bank, on any of the dates of payment of the coupon,
seven years after its issuance.
b) Own shares
‘Shareholders' equity - Own shares’ includes the amount
of equity instruments held by Banco Santander.
Transactions involving own ‘Equity instruments’,
including their issuance and cancellation, are recognized
directly in equity, and no profit or loss may be
recognized on these transactions. The costs of any
transaction involving own equity instruments are
deducted directly from equity, net of any related tax
effects.
The Bank’s shares owned by the consolidated companies
accounted for 1.60% of issued share capital at 31
December 2021 (December 31, 2020 0.164%)
In 2021, the average price per share of the Bank was EUR
3.16 per share and the average transfer price EUR 3.09
per share. Of the shares acquired in the period,
259,930,273 shares (1.499% of the issued share capital)
are from the First Share Repurchase Program at a
weighted average price of EUR 3.24 (see note 4).
As of year end of 2021, the purchase and sale of shares
issued by Banco Santander have not generated any
results (no results in 2020 as well).
158
31. Memorandum items
Memorandum items relate to balances representing
rights, obligations and other legal situations that in the
future may have an impact on net assets, as well as any
other balances needed to reflect all transactions even
though they may not impinge on its net assets.
a) Guarantees and contingent commitments
granted
Guarantees include transactions for which an entity
secures obligations of a third party arising from financial
guarantees granted by the entity or other types of
contracts. ‘Contingent liabilities’ include all transactions
under which an entity guarantees the obligations of a
third party and which result from financial guarantees
granted by the entity or from other types of contract. The
detail is as follows:
EUR million
2021
2020
Loans commitment granted 
111,410
96,959
Available in lines of credit 
111,246
96,870
Deposits in the future
164
89
Financial guarantees granted
10,489
10,135
Financial guarantees 
179
189
Credit derivatives sold 
10,310
9,946
Other commitments granted
59,421
50,686
Irrevocable documentary credits
3,330
1,947
Other guarantees and
guarantees granted
29,971
24,675
Other
26,120
24,064
Of which:
Subscribed securities pending
disbursement
1
1
Conventional asset
acquisition contracts
6,265
4,593
Other contingent
commitments
19,854
19,470
Total
181,320
157,780
The breakdown at December 31, 2021 of off-balance
sheet exposures and allowance fund (see note 23) by
impairment phase under Bank of Spain Circular 4/2017
are EUR 175,871 million and EUR 48 million in phase 1,
EUR 4,403 million and EUR 60 million in phase 2 and EUR
1,046 million and EUR 82 million in phase 3,
respectively. In addition the breakdown at December 31,
2020 of exposures and the allowance fund were EUR
155,706 million and EUR 69 million in phase 1, EUR
1,630 million and EUR 45 million in phase 2 and EUR 444
million and EUR 43 million in phase 3, respectively.
A significant part of these amounts will mature without
any payment obligation material for the Bank; therefore,
the aggregate balance of these commitments cannot be
considered as a real future need for financing or liquidity
to be granted to third parties by Banco Santander.
Income from guarantee instruments is recognized under
‘Fee and commission income’ in the income statements
and is calculated by applying the rate established in the
related contract to the nominal amount of the
guarantee.
i. Loan commitments granted
Firm commitments to provide credit under pre-
established conditions and terms, except for those that
meet the definition of derivatives because they may be
settled in cash or through the delivery or issuance of
another financial instrument. They include those
available in lines of credit and forward deposits.
ii. Financial guarantees granted
Include financial guarantee contracts such as financial
guarantees, credit derivatives sold, derivative risks
contracted on behalf of third parties and others.
iii. Other commitments granted
Other contingent liabilities include all commitments that
could give rise to the recognition of financial assets not
included in the above items, such as technical
guarantees and guarantees for the import and export of
goods and services.
b) Other information
i. Assets advanced as collateral
In addition to collateral assets, there are assets owned
by Banco Santander which guarantee both transactions
carried out by the Bank or by third parties and various
contingent liabilities and liabilities over which the
assignee has the right, by contract or custom, to re-
transfer and pledge them.
The carrying value of Banco Santander's financial assets
delivered as collateral for such contingent and
assimilated liabilities or liabilities is the following:
EUR million
 
2021
2020
Financial assets held for trading
22,440
8,540
    Of which
          Public debt Public Sector
Agencies
3,785
314
          Fix rent instruments
9,284
3,113
          Equity instruments
9,371
5,113
Non-trading financial assets
mandatorily at fair value through
profit or loss
154
329
Financial assets designated at fair
value through profit or loss
3,642
Financial assets at fair value through
other comprehensive income
2,348
2,293
Financial assets at amortized cost
1,513
2,607
Total
26,455
17,411
159
32. Hedging derivatives
Banco Santander, within its financial risk management
strategy, and in order to reduce asymmetries in the
accounting treatment of its operations, enters into
hedging derivatives on interest, exchange rate, credit risk
or variation of stock prices, depending on the nature of
the risk covered.
Based on its objective, Banco Santander classifies its
hedges in the following categories:
Cash flow hedges: cover the exposure to the
variation of the cash flows associated with an asset,
liability or a highly probable forecast transaction.
This cover the variable-rate issues in foreign
currencies, fixed-rate issues in non-local currency,
variable-rate interbank financing and variable-rate
assets (bonds, commercial loans, mortgages, etc.).
Fair value hedges: cover the exposure to the variation
in the fair value of assets or liabilities, attributable to
an identified and hedged risk. This covers the interest
risk of assets or liabilities (bonds, loans, bills, issues,
deposits, etc.) with coupons or fixed interest rates,
interests in entities, issues in foreign currencies and
deposits or other fixed rate liabilities.
Hedging of net investments abroad: cover the
exchange rate risk of the investments in subsidiaries
domiciled in a country with a different currency from
the functional one of the Bank.
Due to the replacement of the current rates by the
alternative rates defined in the note 1 of this report, in
the section Bank of Spain Circular 6/2021 on reference
interest rates (IBOR Reform Phase I and II)',the nominal
amount of hedging instruments corresponding to the
hedging relationships directly affected by the
uncertainties related to the IBOR reforms is shown
below. The percentage of the nominal amount of
derivatives affected with a maturity date after the
transition date of the reform represents 6.85% of the
total hedging derivatives:
EUR million
2021
USD LIBOR
Total hedging instruments affected
12,311
Fair value hedges
11,870
  Interest rate risk
11,870
Cash flow hedges
441
  Interest rate risk
441
Post-transition date agreement
8,909
Fair value hedges
8,909
  Interest rate risk
8,909
Cash flow hedges
  Interest rate risk
As for the hedged items directly affected by the
uncertainties related to the IBOR reforms, their nominal
amount is shown below, which represents 0.00% of the
total notional amount hedged:
EUR million
2021
USD LIBOR
Total hedging instruments affected
441
Fair value hedges
  Interest rate risk
Cash flow hedges
441
  Interest rate risk
441
Post-transition date agreement
Fair value hedges
  Interest rate risk
Cash flow hedges
  Interest rate risk
160
The details of the coverage derivatives of Banco
Santander, S.A. according to the type of coverage, the
risk they cover and the product, can be found in the
following table:
EUR million
31 December 2021
Notional Value
Carrying amount
Changes in fair
value used for
calculating
hedge
ineffectiveness
Balance sheet items
Assets
Liabilities
Fair Value Hedges
55,470
1,379
(1,141)
(618)
Interest rate risk
36,099
1,143
(581)
(610)
Of which:
Interest Rate Swap
35,745
1,136
(580)
(608)
Hedging derivatives
Exchange rate risk
13,073
1
(416)
22
Of which:
Fx forward
13,073
1
(416)
22
Hedging derivatives
Interest rate and exchange risk
6,125
235
(142)
(31)
Of which:
Interest Rate Swap
1,650
12
(9)
(7)
Hedging derivatives
Currency Swap
4,475
223
(133)
(24)
Hedging derivatives
Credit Risk
173
(2)
1
Of which:
CDS
173
(2)
1
Hedging derivatives
Cash flow Hedges
51,218
74
(328)
146
Interest rate risk
47,721
12
(111)
145
Of which:
Interest Rate Swap
45,441
12
(33)
(36)
Hedging derivatives
Exchange rate risk
85
Of which:
Fx forward
85
Hedging derivatives
Interest rate and exchange risk
3,412
62
(217)
1
Of which:
Currency exchange
3,348
61
(215)
3
Hedging derivatives
Net Investments hedges abroad
23,357
195
(607)
Exchange rate risk
23,357
195
(607)
Of which:
Fx forward
23,357
195
(607)
Hedging derivatives
Total
130,045
1,648
(2,076)
(472)
161
EUR million
31 December 2020
Notional Value
Carrying amount
Changes in fair
value used for
calculating
hedge
ineffectiveness
Balance sheet line items
Assets
Liabilities
Fair value hedges
49,371
2,357
(988)
366
Interest rate risk
36,371
1,875
(723)
336
Interes Rate Swap
35,983
1,855
(711)
336
Hedging derivatives
Call money Swap
7
Hedging derivatives
Swaption
51
11
(11)
Hedging derivatives
Floor
330
9
(1)
Hedging derivatives
Exchange rate risk
7,990
209
(34)
(1)
Fx forward
7,990
209
(34)
(1)
Hedging derivatives
Interest rate and exchange rate risk
4,803
273
(228)
27
Interest Rate Swap
426
9
(1)
1
Hedging derivatives
Currency Swap
4,377
264
(227)
26
Hedging derivatives
Credit risk
207
(3)
4
 
CDS
207
(3)
4
Hedging derivatives
Cash flow hedges
40,140
92
(405)
(206)
 
Interest rate risk
35,443
39
(271)
(204)
Interest rate swap
30,000
39
(12)
39
Hedging derivatives
Futures
5,443
(259)
(243)
Hedging derivatives
Interest rate and exchange rate risk
4,697
53
(134)
(2)
 
Currency swap
4,697
53
(134)
(2)
Hedging derivatives
Net investment hedges abroad
20,211
688
(387)
Exchange rate risk
20,211
688
(387)
 
Fx forward
20,211
688
(387)
Hedging derivatives
Total
109,722
3,137
(1,780)
160
 
Banco Santander covers the risks of its balance sheet in a
variety of ways. On the one hand, documented as fair
value hedges, it covers the risk of both interest rate,
exchange rate and credit of fixed-income portfolios
(REPOs are included in this typology) and are therefore
exposed to changes in fair value thereof due to changes
in market conditions in based on the various risks
covered, which has an impact on Banco Santander's
income statement. To mitigate these risks, the Bank
contracts hedging instruments (Derivatives), basically
Interest rate Swaps, Cross Currency Swaps, Cap&Floors,
Forex Forward and Credit Default Swaps.
On the other hand, the risk of both interest and exchange
of loans granted to corporate clients at a fixed rate is
generally covered. These hedges are made using Interest
Rate Swaps, Cross Currency Swaps and exchange rate
derivatives (Forex Swaps and Forex Forward).
In addition, the Bank manages the interest and exchange
risk of debt issues in its various categories (mortgage,
perpetual, subordinate and senior debt issuances) and in
different currencies, denominated at fixed rate, and
therefore subject to changes in fair value. These issues
are covered by Interest Rate Swaps and Cross Currency
Swaps or the combination of both through differentiated
fair value hedging strategies for interest rate risk, and
cash flows to cover exchange-rate risk.
The methodology used by Banco Santander, to measure
the effectiveness of fair value hedge is based on
comparing the market values of hedged items, based on
the objective risk of hedging, and hedging instruments in
order to analyse that changes in that fair value of
hedging the items covered by hedging are offset by the
market value of hedging instruments, mitigating hedged
risk and minimizing volatility in the income statement.
Prospectively, the same analysis is performed,
measuring theoretical market values in the face of
parallel variations of market curves at a positive base
point.
162
There is a structured loan macro-coverage covering the
interest rate risk of fixed-rate loans (mortgage, personal
or other collateral) granted to commercial or corporate
legal entities and medium/long-term Wealth clients.
This coverage is instrumented as a faire value macro
coverage being the main coverage instruments, Interest
Rate Swap and Cap&Floors. In the event of total or
partial early cancellation or amortization, the client is
obliged to pay/receive the cost/income of the
cancellation of the interest rate risk coverage that Banco
Santander manages.
With regard to cash flow hedges, the objective is to be
covered by the exposure of flows from changes in
interest rate and exchange rates.
For retrospective purposes, the 'Hypothetical Derivate'
methodology is used to measure efficacy. Through this
methodology, the hedged risk is modelled as a derivative
— not real — instrument created exclusively for the
purpose of measuring the effectiveness of the hedging,
and which must meet that its main characteristics match
the critical terms of the hedged item for the entire period
for which the ratio of coverage. This hypothetical
derivative does not incorporate characteristics that are
unique to the hedging instrument. In addition, it should
be mentioned that, for the purpose of the effectiveness
calculation, any risk component not associated with the
target risk covered and actually documented at the
beginning of the risk is excluded. The market value of the
hypothetical derivative replicating the hedged item is
compared with the market value of the hedging
instrument, verifying that the hedged risk is effectively
mitigated and that the impact on the income statement
due to potential inefficiencies is residual.
Changes in the market values of the hedging instrument
and the hedged item (represented by the hypothetical
derivative) are prospectively measured for parallel
movements of a positive base point in the market curves
concerned.
There is also another macro-hedging, this time of cash
flows, which aims to actively manage the risk-free
interest rate risk (excluding credit risk) of a portion of the
variable rate assets of Banco Santander, through the
contracting of interest rate derivatives for which the
bank exchanges interest flows at variable rate with
others at a fixed rate agreed upon at the time of contract
of transactions. Items affected by Macrocoverage have
been designated as those in which their cash flows are
exposed to interest rate risk, in particular mortgages of
Banco Santander´s network at variable rate referenced to
Euribor 12 months or Euribor Mortgage, with annual rate
renewal, classified as healthy risk and which do not
present a contractual floor (or otherwise, the floor is not
activated). The hedged position affects the
Macrocoverage of Cash Flows at the present time is EUR
7.000 million.
Regarding net foreign investments hedges, basically,
they are allocated in Banco Santander and Santander
Consumer Finance Group. The Group assumes, as a
priority objective in risk management, to minimize – up
to a determined limit set up by the responsible for the
financial management of the Group- the impact on the
calculation of the capital ratio of their permanent
investments included within the consolidation perimeter
of the Group, and whose shares are legally named in a
different currency than the holding has. For this purpose,
financial instruments (generally derivatives) on
exchange rates are hired, that allow mitigating the
impact on the capital ratio of changes in the forward
exchange rate. The Group hedges the risk, mainly, for
the following currencies: BRL, CLP, MXN, CAD, COP, GBP,
CHF, USD and PLN.
The instruments used to hedge the risk of these
investments are Forex Swaps, Forex Forward and Spot
currency purchases/sales.
In the case of this type of coverage, ineffectiveness
scenarios are considered to be low probability, since the
hedging instrument is designated considering the
position determined and the spot rate at which it is
located.
Additionally, the profile information of maturities and
the price/average rate for Banco Santander is shown:
163
Fair value hedges
633
4,584
13,475
25,468
11,310
55,470
Interest rate risk
  Interest rate instruments
    Nominal
14
1,822
3,038
21,507
10,031
36,412
     Average fixed interest rate (%) GBP
2.14
1.75
     Average fixed interest rate (%) EUR
3.86
0.99
(0.03)
1.21
1.53
     Average fixed interest rate (%) CHF
0.83
0.40
     Average fixed interest rate (%) JPY
0.46
     Average fixed interest rate (%) RON
4.21
3.20
     Average fixed interest rate (%) USD
4.75
1.45
3.46
2.74
3.37
Exchange rate risk
  Exchange rate instruments
  Nominal
503
1,634
10,350
586
13,073
     GBP / EUR average exchange rate
0.88
0.86
0.88
     USD / EUR average exchange rate
1.19
1.17
1.18
     COP / USD average exchange rate
     PEN / USD average exchange rate
4.00
     AUD / EUR average exchange rate
   SAR / EUR average exchange rate
     CNY / EUR average exchange rate
7.86
7.72
7.41
     JPY / EUR average exchange rate
132.69
130.74
Interest rate and exchange risk
  Instruments of exchange rate and interest
  Nominal
116
1,109
53
3,255
1,279
5,812
     Average fixed interest rate (%) AUD/EUR
4.00
4.66
     Average fixed interest rate (%) EUR/USD
(0.14)
     Average fixed interest rate (%) CZK/EUR
0.86
     Average fixed interest rate (%) EUR/COP
     Average fixed interest rate (%) RON/EUR
4.85
     Average fixed interest rate (%) HKD/EUR
2.58
     Average fixed interest rate (%) JPY/EUR
0.73
1.14
     Average fixed interest rate (%) NOK/EUR
3.61
     Average fixed interest rate (%) CHF/EUR
0.76
1.24
     Average fixed interest rate (%) USD/CLP
3.45
     Average fixed interest rate (%) USD/COP
5.14
9.47
6.79
7.15
     AUD/EUR average exchange rate
1.50
1.53
     NZD/EUR average exchange rate
1.67
     CZK/EUR average exchange rate
25.51
     EUR/GBP average exchange rate
1.18
     EUR/COP average exchange rate
     EUR/USD average exchange rate
0.89
     HKD/EUR average exchange rate
8.78
     JPY/EUR average exchange rate
132.97
126.60
     MXN/EUR average exchange rate
14.70
EUR million
 
31 December 2021
 
Up to one
month
One to three
months
Three months
to one year
One year to
five years
More than
five years
Total
164
     NOK/EUR average exchange rate
9.61
     RON/EUR average exchange rate
4.82
4.93
     CHF/EUR average exchange rate
1.09
1.11
     USD/CLP average exchange rate
     USD/COP average exchange rate
     USD/MXN average exchange rate
0.05
Credit risk
  Credit Risk Instruments
  Nominal
19
34
120
173
Cash flow hedges
4,279
9
6,360
40,162
408
51,218
Interest rate and exchange rate risk
  Interest rate and exchange instruments
  Nominal
9
1,169
1,848
408
3,434
Average fixed interest rate (%) AUD/EUR
0.30
Average fixed interest rate (%) EUR/PEN
3.44
Average fixed interest rate (%) EUR/AUD
1.63
1.56
     EUR / PEN average exchange rate
0.21
     EUR / USD average exchange rate
0.88
     AUD / EUR average exchange rate
1.60
1.56
     RON / EUR average exchange rate
4.89
     JPY / EUR average exchange rate
120.57
    CHF / EUR average exchange rate
1.10
EUR / GBF average exchange rate
1.10
1.11
NOK / EUR average exchange rate
10.24
CZK / EUR average exchange rate
26.13
EUR / AUD average exchange rate
0.62
 Interest rate risk
  Interest Rate Swaps
  Nominal
4,279
5,191
38,314
47,784
     Average fixed interest rate (%) EUR
(0.47)
(0.26)
     Average fixed interest rate (%) USD
1.77
     Average fixed interest rate (%) AUD
1.65
  Bond Forward Instruments
   Nominal
Net investment hedges abroad
560
1,397
11,280
10,120
23,357
Exchange rate risk
  Exchange rate instruments
  Nominal
560
1,397
11,280
10,120
23,357
     BRL / EUR average exchange rate
6.66
6.76
6.84
     CLP / EUR average exchange rate
943.35
929.69
949.61
     COP / EUR average exchange rate
4,538,971
     GBP / EUR average exchange rate
0.85
0.86
0.85
0.88
     MXN / EUR average exchange rate
25.54
25.33
25.19
     PLN / EUR average exchange rate
4.59
4.58
4.63
Total
5,472
5,990
31,115
75,750
11,718
130,045
EUR million
 
31 December 2021
 
Up to one
month
One to three
months
Three months
to one year
One year to
five years
More than
five years
Total
165
Fair value hedges
2,906
4,848
5,999
20,242
15,377
49,372
Interest rate risk
Interest rate instruments
Nominal
2,073
409
2,165
17,430
14,294
36,371
Average fixed interest rate (%) GBP
1.38
4.07
Average fixed interest rate (%) EUR
0.65
0.55
0.39
0.82
1.93
Average fixed interest rate (%) CHF
0.80
0.40
Average fixed interest rate (%) JPY
0.46
Average fixed interest rate (%) RON
3.61
Average fixed interest rate (%) USD
0.70
0.57
2.03
3.00
3.56
Exchange rate risk
Exchange rate instruments
Nominal
833
4,149
3,008
7,990
GBP / EUR average exchange rate
0.90
0.92
USD / EUR average exchange rate
1.16
1.17
1.18
COP / USD average exchange rate
3,628.14
3,603.59
PEN / USD average exchange rate
3.61
AUD / EUR average exchange rate
1.61
SAR / EUR average exchange rate
4.48
4.51
CNY / EUR average exchange rate
8.11
8.10
8.00
JPY / EUR average exchange rate
124.61
Interest rate and exchange risk
Instruments of exchange rate and interest
Nominal
282
818
2,621
1,083
4,804
Average fixed interest rate (%) AUD/EUR
4.00
4.66
Average fixed interest rate (%) COP/USD
6.00
Average fixed interest rate (%) CZK/EUR
0.86
Average fixed interest rate (%) EUR/COP
4.38
Average fixed interest rate (%) RON/EUR
4.85
Average fixed interest rate (%) HKD/EUR
2.58
Average fixed interest rate (%) JPY/EUR
2.20
0.57
1.28
Average fixed interest rate (%) NOK/EUR
3.61
Average fixed interest rate (%) CHF/EUR
1.24
Average fixed interest rate (%) USD/CLP
0.93
Average fixed interest rate (%) USD/COP
8.03
6.66
7.23
AUD/EUR average exchange rate
1.50
1.51
COP/USD average exchange rate
3,437.20
CZK/EUR average exchange rate
25.54
EUR/GBP average exchange rate
1.11
EUR/COP average exchange rate
EUR/USD average exchange rate
0.89
HKD/EUR average exchange rate
8.78
JPY/EUR average exchange rate
113.30
133.84
125.88
MXN/EUR average exchange rate
14.70
EUR million
 
31 December 2020
 
Up to one
month
One to three
months
Three months
to one year
One year to
five years
More than
five years
Total
166
NOK/EUR average exchange rate
9.61
RON/EUR average exchange rate
4.73
CHF/EUR average exchange rate
1.09
1.11
USD/CLP average exchange rate
USD/COP average exchange rate
USD/MXN average exchange rate
0.05
Credit risk
Credit Risk Instruments
Nominal
8
8
191
207
Cash flow hedges
3,164
5,000
24,247
7,521
208
40,140
Interest rate and exchange rate risk
Interest rate and exchange instruments
Nominal
1,247
3,242
208
4,697
EUR / GBP average exchange rate
1.08
1.10
EUR / USD average exchange rate
0.88
AUD / EUR average exchange rate
1.62
RON / EUR average exchange rate
4.81
JPY / EUR average exchange rate
120.57
CHF / EUR average exchange rate
1.10
Interest rate risk
Interest Rate Swaps
Nominal
3,164
5,000
23,000
4,279
35,443
Average fixed interest rate (%) EUR
(0.26)
(0.25)
(0.24)
Bond Forward Instruments
Nominal
Net investment hedges abroad
2,229
4,554
11,570
1,858
20,211
Exchange rate risk
Exchange rate instruments
Nominal
2,229
4,554
11,570
1,858
20,211
BRL / EUR average exchange rate
5.27
5.31
6.33
CLP / EUR average exchange rate
869.63
861.55
864.34
932.22
COP / EUR average exchange rate
4,471.31
GBP / EUR average exchange rate
0.91
0.92
0.91
MAD / EUR average exchange rate
23.12
25.46
26.79
MXN / EUR average exchange rate
4.43
4.42
4.52
Total
8,299
14,402
41,816
29,621
15,585
109,723
EUR million
 
31 December 2020
 
Up to one
month
One to three
months
Three months
to one year
One year to
five years
More than
five years
Total
167
Regarding the hedged items, in the following table we
have the detail of the type of coverage, the risk that is
covered and what products are being covered as of
December 31, 2021 and 2020 (mainly they are loaned
deposits, financial and corporate bonds and corporate
repos):
EUR million
 
31 December 2021
 
Amount in books of the
item covered
Cumulative amount of fair
value adjustments on the
covered line
Change in the
fair value of
the item
covered for
inefficiency
assessment
Cash flow hedge reserve /
foreign currency conversion
 
Assets
Liabilities
Assets
Liabilities
Coverage
continues
Discontinuous
coverage
Fair value hedges
22,469
27,060
(232)
575
590
Interest rate risk
8,769
24,188
65
551
613
Exchange rate risk
11,972
(282)
(48)
Interest rate and exchange rate
risk
1,549
2,872
(17)
24
27
Credit risk
179
2
(2)
Cash flow hedges
101
(109)
(16)
Interest rate risk
101
(101)
(16)
Interest rate and exchange rate
risk
(8)
Net investment hedges abroad
Exchange rate risk
Total
22,469
27,060
(232)
575
691
(109)
(16)
EUR million
 
31 December 2020
 
Amount in books of the
item covered
Cumulative amount of fair
value adjustments on the
covered line
Change in
the fair
value of the
item covered
for
inefficiency
assessment
Cash flow hedge reserve /
foreign currency conversion
 
Assets
Liabilities
Assets
Liabilities
Coverage
continues
Discontinuous
coverage
Fair value hedges
23,964
20,775
321
1,440
(356)
Interest rate risk
13,939
18,278
264
1,360
(328)
Exchange rate risk
8,030
40
1
Interest rate and exchange rate
risk
1,775
2,497
14
80
(27)
Credit risk
220
3
(2)
Cash flow hedges
231
(274)
3
Interest rate risk
231
(266)
3
Interest rate and exchange rate
risk
(8)
Net investment hedges abroad
20,211
Exchange rate risk
20,211
Total
44,175
20,775
321
1,440
(125)
(274)
3
168
The cumulative amount of adjustments of the fair value
hedging instruments that remain in the balance for
covered items that are no longer adjusted by profit and
loss of coverage as of 31 December 2021 is EUR 115
million (December 31, 2020 is EUR 150 million).
The following table contains information regarding the
effectiveness of the hedging relationships designated by
Banco Santander, as well as the impacts on profit or loss
and other comprehensive income as of 31 December
2021 and 2020:
EUR million
 
31 December 2021
 
Earnings /
(losses)
recognized in
Other
accumulated
global income
Coverage
inefficiency
recognized in
the income
statement
Line of the income statement
that includes ineffective
coverage
Reclassified amount of reserves to the
income statement due to:
 
Covered
transaction that
affects the income
statement
Line of the income
statement that
includes reclassified
amounts
Fair value hedges
(28)
Interest rate risk
4
Gains or losses of financial
assets/liabilities
N/A
Exchange rate risk
(27)
Gains or losses of financial
assets/liabilities
N/A
Interest and Exchange rate
risk
(5)
Gains or losses of financial
assets/liabilities
N/A
Credit risk
N/A
N/A
Cash flow hedges
146
(7)
Interest rate risk
145
Gains or losses of financial
assets/liabilities
(32)
Net interest income/
Gains or losses of
financial assets/
liabilities
Interest rate and exchange
rate risk
1
Gains or losses of financial
assets/liabilities
25
Net interest income/
Gains or losses of
financial assets/
liabilities
Total
146
(28)
(7)
EUR million
 
31 December 2020
 
Earnings /
(losses)
recognized in
Other
accumulated
global income
Coverage
inefficiency
recognized in
the income
statement
Line of the income statement
that includes ineffective
coverage
Reclassified amount of reserves to the
income statement due to:
 
Covered
transaction that
affects the income
statement
Line of the income
statement that
includes reclassified
amounts
Fair value hedges
10
Interest rate risk
4
Gains or losses of financial
assets/liabilities
N/A
Exchange rate risk
N/A
N/A
Interest and Exchange rate
risk
4
Gains or losses of financial
assets/liabilities
N/A
Credit risk
2
Gains or losses of financial
assets/liabilities
N/A
Cash flow hedges
(206)
33
Interest rate risk
(204)
Gains or losses of financial
assets/liabilities
(10)
Net interest income/
Gains or losses of
financial assets/
liabilities
Interest rate and exchange
rate risk
(2)
Gains or losses of financial
assets/liabilities
43
Net interest income/
Gains or losses of
financial assets/
liabilities
Total
(206)
10
33
169
The following table shows a reconciliation of each
component of equity and an analysis of other
comprehensive income in relation to hedge accounting
as of December 31, 2021 and 2020:
EUR million
 
2021
2020
Balance at the end of the previous
year
(189)
(45)
Amount recognized in Other
accumulated global income
Cash flow hedges
146
(206)
   Interest rate risk and interest rate
and exchange rate risk
146
(206)
     Changes in equity by discharge at
P&L
(6)
33
      Remains of equity movements
152
(239)
Taxes
(44)
62
Balance at year end
(87)
(189)
33. Off-balance-sheet funds
under management
As of 31 December 2021, Banco Santander held off-
balance-sheet funds under management, namely
investment funds and assets under management,
amounting to EUR 88,123 million (31 December 2020,
EUR 81,964 million). Also, as of 31 December 2021, the
funds marketed but not held under management
amounted to EUR 25,172 million (31 December 2020,
EUR 20,503 million).
34. Interest income
Interest and similar income in the accompanying income
statements comprises the interest accruing in the year
on all financial assets with an implicit or explicit return,
calculated by applying the effective interest method,
irrespective of measurement at fair value, and the
rectifications of income as a result of hedge accounting,
Interest is recognized gross, without deducting any tax
withheld originally.
The detail of the main items of interest and similar
income earned in 2021 and 2020 is as follows:
EUR million
2021
2020
Debt instruments
723
777
Central Banks
3
2
Public sector
190
210
Credit entities
316
342
Other financial companies
178
169
Non-financial companies
36
54
Loans and advances
4,811
5,095
Central Banks
25
41
Public sector
122
162
Credit entities
156
406
Other financial companies
580
467
Non-financial companies
2,634
2,607
Households
1,294
1,412
Other assets
77
85
Of which, insurance contracts linked
to pensions (note 23.c)
12
6
Deposits
727
520
Central Banks
618
375
Public sector
12
2
Credit entities
64
105
Other financial companies
22
30
Non-financial companies
11
8
Households
Hedging derivatives - Interest rate
risk
38
34
Other financial liabilities
19
12
Debt securities issued
10
5
Total
6,405
6,528
Most of the interest and similar income was generated
by Banco Santander's financial assets that are measured
either at amortized cost or at fair value through Other
comprehensive income.
170
35. Interest expense
Interest expense and similar charges in the
accompanying income statements includes the interest
accruing in the year on all financial liabilities with an
implicit or explicit return, including remuneration in kind,
calculated by applying the effective interest method,
irrespective of measurement at fair value; the
rectifications of cost as a result of hedge accounting; and
the interest cost attributable to provisions recorded for
pensions.
The detail of the main items of interest expense and
similar charges accrued in 2021 and 2020 is as follows:
EUR million
 
2021
2020
Derivatives - Trading
41
Of which: interest income from
derivatives in economic hedges
41
Debt securities Issued
1,432
1,507
Debt securities
66
97
Central Banks
Public sector
46
49
Credit entities
13
40
Other financial companies
6
8
Non-financial companies
1
Loans and advances
479
361
Central Banks
239
101
Public sector
1
9
Credit entities
162
198
Other financial companies
72
48
Non-financial companies
5
5
Households
Deposits
689
1,006
Central Banks
12
111
Public sector
156
145
Credit entities
220
351
Other financial companies
239
279
Non-financial companies
54
94
Households
8
26
Other financial liabilities
197
190
Hedging derivatives - Interest rate
risk
(154)
(35)
Pensions and other obligations of
defined post-employment benefits
(note 23)
35
34
Others
Total
2,785
3,160
Most of the interest expense and similar charges was
generated by Banco Santander's financial liabilities that
are measured at amortized cost.
36. Dividend income
‘Dividend income’ includes the dividends and payments
on equity instruments out of profits generated by
investees after the acquisition of the equity interest.
The detail of income from equity instruments is as
follows:
EUR million
 
2021
2020
Financial assets held for trading
355
264
Non-trading financial assets
mandatorily at fair value through
profit or loss
7
Financial assets at fair value through
other comprehensive income
55
62
Investments in subsidiaries, jointly
controlled entities and associates
5,072
5,316
    Group entities
4,765
5,221
    Associates
307
95
 Total
5,489
5,642
171
Investments in subsidiaries, jointly controlled entities
and associates
The detail of the main items of interest expense and
similar charges accrued in 2021 and 2020 is as follows:
EUR million
 
2021
2020
Detail of the companies:
SANTANDER CONSUMER FINANCE, S.A.
1,876
SANTANDER UK GROUP HOLDINGS PLC
1,229
88
SANTANDER HOLDING
INTERNATIONAL, S.A.
500
1,270
SANTANDER HOLDING USA,  Inc.
423
112
ZURICH SANTANDER INSURANCE
AMÉRICA, S.L.
230
80
GRUPO FINANCIERO SANTANDER
MÉXICO, S.A. de C.V.
153
SANTANDER CONSUMER FINANCE, S.A.
(AT1)
73
65
SANTANDER UK GROUP HOLDINGS PLC
(AT1)
72
72
SANTANDER INVESTMENT, S.A.
70
30
CNP SANTANDER INSURANCE LIFE
DESIGNATED ACTIVITY COMPANY
60
TEATINOS SIGLO XXI INVERSIONES S.A.
49
733
SANTANDER CHILE HOLDING S.A.
41
16
BANCO SANTANDER MÉXICO, S.A.,
INSTITUCIÓN DE BANCA MÚLTIPLE,
GRUPO FINANCIERO SANTANDER
MÉXICO
33
BANCO SANTANDER URUGUAY, S.A.
33
37
SANTANDER BANK POLSKA S.A.
33
SAM INVESTMENT HOLDINGS, S.L.
32
72
SANTANDER TOTTA, SGPGS, S.A.
32
61
SANTANDER TOTTA, SGPGS, S.A. (AT1)
28
SOCUR S.A.
18
17
SANTANDER GLOBAL TECHNOLOGY,
S.L.
14
20
SANTANDER TOWARZYSTWO
FUNDUSZY INWESTYCYJNYCH S.A.
13
20
BANCO SANTANDER (BRASIL) S.A.
1
59
STERREBEECK B.V.
1,260
SANTUSA HOLDING, S.L.
1,019
SANTANDER FACTORING Y
CONFIRMING, S.A., E.F.C
200
SANTANDER GLOBAL OPERATIONS,
S.A.
17
SAM UK INVESTMENT HOLDINGS
LIMITED
1
Other companies
59
67
Total
5,072
5,316
37. Commission income
Fee and commission income comprise the amount of all
fees and commissions accruing in favour of Banco
Santander in the year, except those that form an integral
part of the effective interest rate on financial
instruments.
The detail of fee and commission income in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
Collection and payment
services:
Current Accounts
374
300
Credit and debit cards
155
194
Transfers and other payment
orders
91
84
Other commission income in
connection with payment
services
67
71
687
649
Marketing of non-banking
financial products:
Collective Investment
512
465
Insurance
281
232
Other
1
794
697
Securities services:
Securities underwriting and
placement
125
138
Transfer orders
18
12
Other
72
90
215
240
Clearing and settlement
74
78
Asset management
88
78
Custody
75
67
Structured finance
266
229
Loan granted commitments
granted
283
217
Financial granted guarantees
granted
223
222
Other:
Foreign currency exchange
100
88
Other concepts
314
246
414
334
Total
3,119
2,811
172
38. Commission expense
Fee and commission expense show the amount of all
fees and commissions paid or payable by Banco
Santander in the year, except those that form an integral
part of the effective interest rate on financial
instruments.
The detail of fee and commission expense in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
 
2021
2020
  Clearing and settlement
71
73
  Loan commitments received
  Financial guarantees received
100
113
  Custody
  Other *
370
308
Total
541
494
* Other Includes mainly commissions paid for financial and mediation
services, as well as credit cards.
39. Gains or losses on financial
assets and liabilities
The following information is presented below regarding
the gains or losses on financial assets or liabilities:
a) Breakdown
The detail, by classification of the related instrument, of
Gains/losses on financial assets and liabilities in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
Gains or losses on financial assets and
liabilities not measured at fair value
through profit or loss, net 
318
578
  Financial assets at amortized cost
19
10
  Other financial assets and liabilities
299
568
    Of which, debt instruments
286
565
    Of which, equity instruments
Gains or losses on financial assets and
liabilities held for trading, net*
175
(29)
Gains or losses on non-trading
financial assets and liabilities
mandatory at fair value through profit
or loss
(45)
(290)
Gains or losses on financial assets and
liabilities measured at fair value
through profit or loss, net*
38
4
Gains or losses from hedge accounting,
net
(28)
10
Total
458
273
* Includes the net income obtained from transactions with debt securities,
capital instruments, derivatives and short positions included in this
portfolio when the Banco Santander jointly manages its risk in those
instruments.
173
b) Financial assets and liabilities at fair value
through profit or loss
The detail of the amount of the asset balances is as
follows:
EUR million
2021
2020
Loans and receivables
29,239
35,222
Central Banks
1,118
482
Credit institutions
10,425
9,891
Customers
17,696
24,849
Debt instruments*
15,054
18,914
Equity instruments
15,527
10,063
Derivatives
42,023
53,362
Total
101,843
117,561
* Include EUR 10,307  million related to Spanish and foreign government
debt securities at 31 December 2021 (31 December 2020, EUR 13,842
million).
The foregoing table shows the maximum credit risk
exposure of these assets at 31 December 2021 and
2020, respectively, Banco Santander mitigates and
reduces this exposure as follows.
With respect to derivatives, Banco Santander has
entered into framework agreements with a large
number of credit institutions and customers for the
netting-off of asset positions and the provision of
collateral for non-payment.
Loans and receivable' to credit institutions and loans and
receivable to 'customers' included reverse repos
amounting to EUR 28,219 million at 31 December 2021
(31 December 2020: EUR 31,070 million).
In addition, assets amounting to EUR 1,134 million have
a mortgage guarantee at 31 December 2021 (31
December 2020: EUR 1,408 million).
At 31 December 2021 the amount of the change in the
year in the fair value of financial assets at fair value
through profit or loss attributable to variations in their
credit risk (spread) was not material.
The detail of the amount of the liability balances is as
follows:
EUR million
2021
2020
Deposits
19,796
16,890
Central Banks
651
1,469
Credit Institutions
6,785
4,496
Customers
12,360
10,925
Short positions
9,244
10,338
Derivatives
40,672
50,676
Total
69,712
77,904
At 31 December 2021, the amount of the change in the
fair value of financial liabilities at fair value through
profit or loss attributable to changes in their credit risk
during the year is not material.
40. Exchange differences, net
This chapter basically includes the results obtained in the
purchase and sale of currencies, the differences that
arise when converting monetary items in foreign
currency to functional currency and those from non-
monetary assets in foreign currency at the time of
disposal.
The detail of ‘Exchange differences (net)’ in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
Exchange differences, net
(205)
372
Banco Santander manages the currencies to which it is
exposed together with the arrangement of derivative
instruments and, accordingly, the changes in this line
item should be analyzed together with those recognized
under Gains/losses on financial assets and liabilities (see
note 39).
41. Other operating income and
other operating expenses
The detail of ‘Other operating income’ in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
Exploitation of real estate
investments and operating
leases
256
241
Others
185
163
Total
441
404
The detail of ‘Other operating expenses’ in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
Contribution to Deposit
Guarantee Fund (note 1.h)
(225)
(239)
Contribution to Resolution
Fund* (note 1.h)
(307)
(262)
Other operating expenses
(362)
(284)
Total
(894)
(785)
*Includes the expense incurred by contribution to the National Resolution
Fund and to the Single Resolution Fund.
174
42. Staff costs
a) Breakdown
The detail of ‘Staff costs’ in 2021 and 2020 is as follows:
EUR million
 
2021
2020
 
Of which, in
Spain
Of which,
foreign
branches
Total
Of which, in
Spain
Of which,
foreign
branches
Total
Wages and salaries
1,728
323
2,051
1,639
241
1,880
Social security costs
343
33
376
381
27
408
Additions to provisions for defined benefit
pension plans (note 23)
5
5
11
11
Contributions to defined contribution pension
funds
67
10
77
72
8
80
Equity-instrument-based remuneration
Other staff costs
169
29
198
191
16
207
 Total
2,312
395
2,707
2,294
292
2,586
b) Headcount
The average number of employees at the Bank, by
professional category, is as follows:
Average number of employees
 
2021
2020
Executive and Senior
management
19
21
Other line personnel
23,343
26,527
Staff at branches abroad
1,150
955
 Total
24,512
27,503
The number of employees, as of December 31, 2021 and
December 31, 2020, is 23,311 and 27,337, respectively.
The functional breakdown, by gender, at 31 December
2021 is as follows:
 
Breakdown by gender
Executives
Other line personnel
Men
Women
Men
Women
Breakdown by
gender
76%
24%
50%
50%
The labour relations between employees and the various
Group companies and, therefore, the Bank are governed
by the related collective agreements or similar
regulations.
The number of employees with disabilities greater than
or equal to 33%, distributed by professional categories
at December 31, 2021 and 2020, is as follows:
2021
2020
Senior management
Other management
27
30
Other staff
280
287
Total
307
317
The average number of employees of Banco Santander
with a disability greater than or equal to 33%, during the
year 2021 was 288 (319 at the end of the year 2020).
c) Share-based payments
The main share-based payments granted by the Group in
force at 31 December,  2021, 2020 and 2019 are
described below.
i. Banco Santander
The variable remuneration policy for the Bank’s
executive directors and certain executive personnel of
the Bank and of other Group companies includes Bank
share-based payments, the implementation of which
requires, in conformity with the law and the Bank’s
Bylaws, specific resolutions to be adopted by the general
meeting.
Were it necessary or advisable for legal, regulatory or
other similar reasons, the delivery mechanisms
described below may be adapted in specific cases
without altering the maximum number of shares linked
to the plan or the essential conditions to which the
delivery thereof is subject.
175
These adaptations may involve replacing the delivery of
shares with the delivery of cash amounts of an equal
value.
The plans that include share-based payments are as
follows: (i) Deferred and Conditional Variable
Remuneration Plan; (ii) Deferred Multiyear Objectives
Variable Remuneration Plan; (iii) Digital Transformation
Award. The characteristics of the plans are set forth
below:
(i) Deferred and
conditional
variable
remuneration
plan (2015,
2016, 2017,
2018, 2019,
2020 and 2021)
The purpose of these cycles is to
defer a portion of the variable
remuneration of the beneficiaries
over a period of three years for the
sixth cycles, and over three or five
years for the fifth, seventh, eighth,
ninth, tenth and eleventh cycles, for
it to be paid, where appropriate, in
cash and in Santander shares; the
other portion of the variable
remuneration is also to be paid in
cash and Santander shares, upon
commencement of the cycles, in
accordance with the rules set forth
below.
Beneficiaries:
Executive directors and certain
executives (including senior
management) and employees
who assume risk, who perform
control functions or receive an
overall remuneration which puts
them on the same remuneration
level as senior executives and
employees who assume risks
(fifth cycle)
In the case of the sixth, seventh,
eighth, ninth, tenth and eleventh
cycle, the beneficiaries are
Material Risk Takers (Identified
staff) that are not beneficiaries of
the Deferred Multiyear Objectives
Variable Remuneration Plan.
For the fifth and sixth cycles (2015 to 2016), the
accrual of deferred compensation is conditioned, in
addition to the requirement that the beneficiary
remains in the Group's employ, with the exceptions
included in the plan regulations upon none of the
following circumstances existing during the period
prior to each of the deliveries, pursuant to the
provisions set forth in each case in the plan regulations:
i.Poor financial performance of the Group.
ii. breach by the beneficiary of internal regulations,
including, in particular, those relating to risks.
iii.material restatement of the Group's consolidated
financial statements, except when it is required
pursuant to a change in accounting standards.
iv.Significant changes in the Group’s economic
capital or risk profile.
In the case of the seventh, eight, ninth, tenth and
eleventh cycles (2017 to 2021), the accrual of deferred
compensation is conditioned, in addition to the
permanence of the beneficiary in the Group, with the
exceptions contained in the plan's regulations, to no
assumptions in which there is a poor performance of
the entity as a whole or of a specific division or area of
the entity or of the exposures generated by the
personnel, and at least the following factors must be
considered:
v.significant failures in risk management committed
by the entity , or by a business unit or risk control
unit.
vi.the increase suffered by the entity or by a business
unit of its capital needs, not foreseen at the time
of generation of the exposures.
vii.Regulatory sanctions or judicial sentences for
events that could be attributable to the unit or the
personnel responsible for those. Also, the breach
of internal codes of conduct of the entity.
viii.Irregular behaviours, whether individual or
collective, considering in particular the negative
effects derived from the marketing of
inappropriate products and the responsibilities of
the persons or bodies that made those decisions.
Fifth cycles (2015):
Executive directors and members of the Identified
Staff with total variable remuneration higher than
2.6 million euros: 40% paid immediately and 60%
deferred over3 years (fourth cycle) or 5 years (fifth
cycle).
Division managers, country heads, other executives
of the Group with a similar profile and members of
the Identified Staff  with total variable remuneration
between 1.7 million euros (1.8 million in fourth
cycle) and 2.6 million euros: 50% paid immediately
and 50% deferred over  3 years(fourth cycle) or 5
years (fifth cycle)
Other beneficiaries: 60% paid immediately and 40%
deferred over 3 years.
Sixth cycle (2016):
60% of bonus will be paid immediately and 40% 
deferred over a three years period.
Seventh, eight, ninth, tenth and eleventh cycle (2017,
2018, 2019, 2020 and 2021):
Beneficiaries of these plans with target total variable
remuneration higher or equal to 2.7 million euros:
40%  paid immediately and 60% deferred over 5
years
Beneficiaries of these plans with target total variable
remuneration between 1.7 million euros and 2.7
million euros: 50% paid immediately and 50%paid
over 5 years
Other beneficiaries of these plans: 60% paid
immediately and 40% deferred over 3 years.
Deferred
variable
remuneration
systems
Description and plan beneficiaries
Conditions
Calculation Base
176
(ii)Deferred
Multiyear
Objectives
Variable
Remuneration
Plan (2016,
2017, 2018,
2019, 2020 and
2021)
The aim is simplifying the
remuneration structure, improving
the ex ante risk adjustment and
increasing the impact of the long-
term objectives on the Group’s most
relevant roles. The purpose of these
cycles is to defer a portion of the
variable remuneration of the
beneficiaries over a period of three
or five years, for it to be paid, where
appropriate, in cash and in
Santander shares; the other portion
of the variable remuneration is also
to be paid in cash and Santander
shares, upon commencement of the
cycles, in accordance with the rules
set forth below. The accrual of the
last third of the deferral (in the case
of 3 years deferral) of the last three
fifths (in the case of 5 years deferral)
is also subject to long-term
objectives.
Beneficiaries
Executive directors, senior managers
and certain executives of the Group’s
first lines of responsibility.
In 2016 the accrual is conditioned, in addition to the
permanence of the beneficiary in the Group, with the
exceptions contained in the plan’s regulations that
none of The following circumstances during the period
prior to each of the deliveries in the terms set forth in
each case in the plan’s regulations:
i.Poor performance of the Group.
ii.breach by the beneficiary of the internal
regulations, including in particular that relating to
risks.
iii.material restatement of the Group’s consolidated
financial statements, except when appropriate
under a change in accounting regulations.
iv.Significant changes in the Group’s economic
capital or risk profile.
In 2017, 2018, 2019, 2020 and 2021 the accrual is
conditioned, in addition to the beneficiary permanence
in the Group, with the exceptions contained in the
plan’s regulations, to the non-occurrence of instances
of poor financial performance from the entity as a
whole or of a specific division or area thereof or of the
exposures generated by the personnel, at least the
following factors must be considered:
v.Significant failures in risk management committed
by the entity, or by a business unit or risk control
unit.
vi.the increase suffered by the entity or by a business
unit of its capital needs, not foreseen at the time
of generation of the exposures.
vii.Regulatory sanctions or court rulings for events
that could be attributable to the unit or the 
personnel responsible for those. Also, the breach 
of internal codes of conduct of the entity.
viii.Irregular behaviours, whether individual or
collective, considering in particular negative
effects derived from the marketing of
inappropriate products and responsibilities of
persons or bodies that made those decisions.
Paid half in cash and half in shares.
The maximum number of shares to be delivered is
calculated by taking into account the weighted average
daily volume of weighted average prices for the fifteen
trading sessions prior to the previous Friday (excluding)
on the date on which the board decides the bonus for
the Executive directors of the Bank.
First cycle (2016):
Executive directors and members of the Identified
Staff with total variable remuneration higher than or
equal to 2.7 million euros: 40% paid immediately
and 60% deferred over a 5 years  period.
Senior managers, country heads of countries
representing at least 1% of the Group´s capital and
other members of the identified staff whose total
variable remuneration is between 1.7 million and
2.7 million euros: 50% paid immediately and 50%
deferred over a 5 years period.
Other beneficiaries: 60% paid immediately and 40%
deferred over a 3 years period.
The second, third, fourth, fifth and sixth cycles (2017,
2018, 2019,2020 and 2021 respectively) are under the
aforementioned deferral rules, except that the  variable
remuneration considered is the target for each
executive and not the actual award.
In 2016 the metrics for the deferred portion subject to
long-term objectives (last third or last three fifths,
respectively, for the cases of three years and five years
deferrals) are:
Earnings per share (EPS) growth in 2018 over 2015.
Relative Total Shareholder Return (TSR) in the
2016-2018 period measured against a group of
credit institutions.
Compliance with the fully-loaded common equity
tier 1 (“CET1”) ratio target for financial year 2018.
Compliance with Santander Group’s underlying
return on risk-weighted assets (“RoRWA”) growth
target for financial year 2018 compared to financial
year 2015.
In the second, third, fourth fifth and sixth cycle (2017,
2018, 2019, 2020 and 2021) the metrics for the
deferred portion subject to long-term objectives (last
third or last three fifths, respectively, for the cases of
three years and five years deferrals) are:
EPS growth in 2019, 2020, 2021, 2022 and 2023
(over 2016, 2017, 2018, 2019 and 2020, for each
respective cycle)
Relative Total Shareholder Return (TSR) measured
against a group of 17 credit institutions (second and
third cycles) in the periods 2017-2019 and
2018-2019, respectively, and against a group of 9
entities (fourth, fifth and sixth cycle) for the
2019-2021, 2020-2022 and 2010-2023  period.
Compliance with the fully-loaded common equity
tier 1 (“CET1”) ratio target for financial years 2019,
2020, 2021,2022 and 2023, respectively.
Deferred
variable
remuneration
systems
Description and plan beneficiaries
Conditions
Calculation Base
177
(iii) Digital
Transformation
Award (2019,
2020 and 2021)
The 2019, 2020 and 2021 Digital
Transformation Incentive (the
“Digital Incentive”) is a variable
remuneration system that includes
the delivery of Santander shares and
share options.
The aim of the Digital Incentive is to
attract and retain the critical skill
sets to support and accelerate the
digital transformation of the Group.
By means of this program, the Group
offers a remuneration element
which is competitive with the
remuneration systems offered  by
other market operators who also
compete for digital talent.
The number of beneficiaries is
limited to a maximum of 250
employees and the total amount of
the incentive is limited to 30 million
euros.
The funding of this incentive is subject to meeting
important milestones that are aligned with the Group´s
digital roadmap and have been approved by the board
of directors, taking into account the digitalization
strategy of the Group, with the aim of becoming the
best open, responsible global financial services
platform.
Performance of incentive shall be measured based on
achievement of the following milestones:
1.Launch of a Global Trade Services (GTS) platform.
2.Launch of a Global Merchant Services (GMS)
platform.
3.Migration of our fully digital bank, OpenBank, to a
"next generation" platform and launch in 3 markets.
4.Extension of SuperDigital in Brazil to at least one
other country.
5.Launch of our international payments app based on
blockchain Pago FX to non-Santander customers.
The milestones for the 2020 Digital Transformation
Award were: (i) rolling out the global merchant services
(GMS) platform in 3 new geographies, enhancing the
platform functionality and achieving volume targets for
transactions and participating merchants; (ii) doing the
commercial rollout of the global trade services (GTS)
platform in 8 new geographies, enhancing platform
functionality, and achieving  volume targets for on-
boarded clients and monthly active users; (iii)
launching OpenBank in a new market and migrating
the retail banking infrastructure to “new-mode” bank;
(iv) launch the global platform SuperDigital in at least 4
countries, driving target active user growth; (v)
deploying machine learning across pre-defined
markets for 4 priority use cases, rolling out Conversion
Rate Optimization (Digital marketing) for at least 40
sales programs, delivering profit targets, and driving
reduction of agent handled calls in contact centers; (vi)
successfully implementating initiatives related to on-
board and identity services, common API (application
programming interface) layer, payment hubs, mobile
app for SMEs and virtual assistant services; and (vii)
launching the PagoFX global platform in at least 4
countries.
The milestones for 2021 are: (i)in relation to Pago Nxt
Consumer payment platform: implementation of
Superdigital platform in seven countries, acquisition of
over 1.5 million active customer base and accelerating
growth through B2B (business to business) and B2B2C
(business to business to customer) partnerships,
acquiring more than 50% of the new customers
through these channels, which are more cost-effective;
(ii)in relation to Digital Consumer Bank: launching
online API for checkout lending in the European Union
and completion of controllable items for Openbank
launch in USA; (iii)in relation to One Santander
strategy: implementation in Europe of One Common
Mobile Experience and, specifically, implementation of
Europe ONE app for individual customers in at least
three of the four countries by December 2021; and be
among the three-top rated entities in terms of Mobile
NetPromoter Score (Mobile NPS) in at least two of the
four countries by December 2021; (iv) In relation to
cloud adoption: host 75% of migratable virtual
machines on cloud technology (either public cloud or
OHE) by December 2021. For these purposes,
mainframes, physical servers and servers with non-x86
operating systems will be considered non-migratable.
The Digital Incentive is structured 50% in Santander
shares and 50% in options over Santander shares,
taking into account the fair value of the option at the
moment in which they are granted. For Material Risk
Takers subject to five years deferrals, the Digital
Incentive (shares and options over shares) shall be
delivered in thirds, on the third, fourth and fifth
anniversary from their granting. For Material Risk
Takers subject to three years deferrals and employees
not subject to deferrals, delivery shall be done on the
third anniversary from their granting.
Any delivery of shares, either directly or via exercise of
options overs shares, will be subject generally to the
Group’s general malus & clawback provisions as
described in the Group’s remuneration policy and to the
continuity of the beneficiary within the Santander
Group. In this regard, the board may define specific
rules for non-Identified Staff.
Vested share options can be exercised until maturity,
with all options lapsing after ten years (for granting the
2019 incentive) and eight years (for granting the 2020
and 2021 incentive).
The total achievement for 2021 Digital Incentive was
77.5% (85% en 2020 and 83% en 2019).
Deferred
variable
remuneration
systems
Description and plan beneficiaries
Conditions
Calculation Base
178
ii. Fair value
The fair value of the performance share plans was
calculated as follows:
Deferred variable compensation plan linked to multi-
year objectives 2019, 2020 and 2021:
The Group calculates at the grant date the fair value of
the plan based on the valuation report of an independent
expert, Willis Towers Watson. According to the design of
the plan for 2019, 2020 and 2021 and the levels of
achievement of similar plans in comparable entities, the
expert concludes that the reasonable range for
estimating the initial achievement ratio is around
60%-80%. It has been considered that the fair value is
70% of the maximum.
43. Other general
administrative expenses
a) Breakdown
The detail of Other general administrative expenses in
the accompanying income statements for 2021 and
2020 is as follows:
EUR million
2021
2020
Technology and systems
705
666
Fixtures and supplies
207
258
Other administrative expenses
619
630
Technical reports
180
194
Advertising
88
101
Per diems and travel expenses
16
19
Surveillance and cash courier
services
37
42
Communications
9
31
Taxes other than income tax
79
58
Insurance premiums
26
17
Total
1,966
2,016
b) Technical reports and other
Technical reports includes the fees paid by the various
Group companies (detailed in the accompanying
appendices) for the services provided by their respective
auditors, the detail being as follows:
EUR million
2021*
2020*
Audit fees
103.7
99.4
Audit-related fees
6.0
6.0
Tax fees
0.7
0.8
All other fees
2.4
1.2
Total
112.8
107.4
* Of those corresponding to Banco Santander, SA, EUR 30.5 million, EUR
2.3 million, EUR 0 million and EUR 0.5 million, respectively, as of
December 31, 2021 (EUR 27.7 million, EUR 2.0 million, EUR 0 million and
EUR 0.4 million, respectively, as of December 31, 2020); and Branches of
Banco Santander, SA, EUR 2.5 million, EUR 0.1 million, EUR 0 million and
EUR 0 million, respectively, as of December 31, 2021 (EUR 2.3 million of
'Audit fees' as of December 31, 2020).
The 'Audit fees' heading includes mainly, audit fees for
the Banco Santander, S.A. individual and consolidated
financial statements, of the companies forming part of
the Group, the integrated audits prepared for the annual
report filling in the Form 20-F required by the U.S.
Securities and Exchange Commission (SEC) for those
entities currently required to do so, the internal control
audit (SOx) for those required entities, the limited review
of the financial statements and the regulatory reports
required by the auditor corresponding to the different
locations of Grupo Santander.
The main concepts included in 'Audit-related fees'
correspond to aspects such as the issuance of Comfort
letters, or other reviews required by different
regulations in relation to aspects such as, for example,
Securitization.
The services commissioned from the Group's auditors
meet the independence requirements stipulated by the
Audit Law, the US SEC rules and the Public Company
Accounting Oversight Board (PCAOB), applicable to the
Group, and they did not involve in any
case the performance of any work that is incompatible
with the audit function.
179
Lastly, the Group commissioned services from audit
firms other than PwC amounting to EUR 263.8 million in
2021 (EUR 172.4 million in 2020).
The Audit fees and Audit-related fees caption includes
the fees corresponding to the audit for the year,
regardless of the date on which the audit was
completed. In the event of subsequent adjustments,
which are not significant in any case, and for purposes of
comparison, they are presented in this note in the year to
which the audit relates. The rest of the services are
presented according to their approval by the Audit
Committee.
c) Number of branches
The number of offices at 31 December 2021 and 2020 is
as follows:
Number of branches
Group
2021
2020
Spain
1,998
2,989
Group
7,881
8,247
Total
9,879
11,236
Number of branches
Of which, Banco Santander
2021
2020
Spain
1,916
2,905
International
9
9
Total
1,925
2,914
44. Impairment or reversal of
the impairment of investments
in joint ventures and associates
The detail of ‘Impairment losses on other assets (net)’ in
the accompanying income statements for 2021 and
2020 is as follows:
EUR million
2021
2020
Investments in subsidiaries, joint
ventures or  associates (note 13)
800
(5,921)
Total
800
(5,921)
45. Gains or losses on non-
financial assets and
investments, net
The detail of ‘Gains/(losses) on disposal of assets not
classified as non-current assets held for sale’ in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
On disposal of tangible assets
4
7
On disposal of investments in
subsidiaries, jointly controlled
entities and associates
(4)
1,135
  Of which (note 13. b. ii)
Banco Santander Brasil (sale to
company de Grupo Santander)
1,127
Total
1,142
46. Gains or losses on non-
current assets held for sale not
classified as discontinued
operations
The detail of ‘Gains/(losses) on non-current assets held
for sale not classified as discontinued operations’ in the
accompanying income statements for 2021 and 2020 is
as follows:
EUR million
2021
2020
Impairment of non-current assets
held for sale (note 12)
(70)
(68)
Gain / (loss) on disposal*
20
(9)
Total
(50)
(77)
* Year 2020: includes the result of extraordinary sales of real estate
portfolio.
180
47. Related parties
The parties related to Banco Santander are deemed to
include, in addition to its subsidiaries, associates and
jointly controlled entities, Banco Santander's key
management personnel (the members of its board of
directors and the executive vice presidents, together
with their close family members) and the entities over
which the key management personnel may exercise
significant influence or control.
Following is a detail of the transactions performed by
Banco Santander with its related parties at 31 December
2021 and 2020, distinguishing between group entities,
joint venture entities and associated entities, members
of Banco Santander's board of directors, Banco
Santander's executive vice presidents, and other related
parties, Related party transactions were made on terms
equivalent to those that prevail in arm's-length
transactions or, when this was not the case, the related
compensation in kind was recognized.
EUR million
2021
Subsidiaries,
associates and
jointly controlled
entities
Members of the
board of directors*
Executive vice
presidents*
Other related
parties*
Assets
150,489
14
20
Equity instruments
88,997
Debt instruments
14,352
Loans and advances
47,140
14
20
From which: impaired financial assets
270
Liabilities
24,498
8
11
193
Deposits credit institution and clients
24,277
8
11
193
Marketable debt securities
221
Income statement
6,551
1
Interest and similar income
715
1
Interest expense and similar charges
(80)
Interest from equity instruments
5,072
Gains / (Losses) on financial instruments and other
781
Fee and commission income
86
Fee and commission expense
(23)
Other
471,034
1
1
62
Contingent liabilities
6,447
3
Contingent commitments
5,371
1
1
13
Financial instruments - derivatives
459,216
46
* Includes transactions carried out with both Banco Santander and with other entities of Grupo Santander.
181
EUR million
2020
Subsidiaries,
associates and
jointly controlled
entities
Members of the
board of directors*
Executive vice
presidents*
Other related
parties*
Assets
144,956
24
90
Equity instruments
85,329
Debt instruments
10,803
Loans and advances
48,824
24
90
From which: impaired financial assets
138
Liabilities
19,740
4
16
158
Deposits credit institution and clients
19,123
4
16
158
Marketable debt securities
617
Income statement
6,555
3
Interest and similar income
671
2
Interest expense and similar charges
(62)
Interest from equity instruments
5,318
Gains / (Losses) on financial instruments and other
7
Fee and commission income
770
1
Fee and commission expense
(149)
Other
347,736
1
1
45
Contingent liabilities
5,521
3
Contingent commitments
9,070
1
1
13
Financial instruments - derivatives
333,145
29
* Includes transactions carried out with both Banco Santander and with other entities of Grupo Santander.
Additionally, the above-mentioned breakdown shows
pension insurance contracts with Grupo Santander
insurance companies amounting to EUR 232 million on
December 31 of 2021 (EUR 249 million on December 31
of 2020).
182
48. Other disclosures
a) Residual maturity periods
The detail, by maturity, of the balances of certain items
in the balance sheets as of 31 December 2021 and 2020
is as follows:
EUR million
 
31 December 2021
 
On
demand
Within 1
month
1 to 3
months
3 to 12
months
1 to 5
years
More than
5 years
Total
Assets:
Cash, cash balances at central banks and other
demand deposits
91,736
91,736
Financial assets at fair value with changes in other
comprehensive income
Representative values of debt
653
600
278
2,278
5,585
9,394
Financial assets at amortised cost
Representative values of debt
236
360
451
6,225
9,936
17,208
Loans and advances
Central banks
25
1
26
Credit institutions
212
15,859
2,048
6,949
7,056
2,960
35,084
Customer
5,701
37,915
17,853
32,304
70,133
122,829
286,735
97,649
54,688
20,861
39,983
85,692
141,310
440,183
Liabilities:
Financial liabilities at amortised cost
Deposits
Central banks
64
1,215
850
144
62,376
64,649
Credit institutions
25,263
1,880
2,052
606
3,469
1,992
35,262
Customer
270,745
4,023
5,251
8,867
5,256
2,101
296,243
Debt securities issued
5,323
9,028
8,580
33,145
48,018
104,094
Other financial liabilities
3,370
980
109
3,784
893
888
10,024
299,442
13,421
17,290
21,981
105,139
52,999
510,272
Difference (assets less liabilities)
(201,793)
41,267
3,571
18,002
(19,447)
88,311
(70,089)
183
EUR million
2020
On
demand
Within 1
month
1 to 3
months
3 to 12
months
1 to 5
years
More than
5 years
Total
Assets:
Cash, cash balances at central banks and other
demand deposits
67,561
67,561
Financial assets at fair value with changes in other
comprehensive income
Representative values of debt
50
1,466
234
1,723
11,673
15,146
Financial assets at amortized cost
Representative values of debt
107
122
276
2,366
8,542
11,413
Loans and advances
Central banks
20
1
21
Credit institutions
12,082
2,489
4,233
8,998
5,539
818
34,159
Customer
19,238
10,345
28,981
22,142
79,552
105,169
265,427
98,881
13,011
34,802
31,651
89,180
126,202
393,727
Liabilities:
Financial liabilities at amortized cost
Deposits
Central banks
42
3,368
404
56,558
60,372
Credit institutions
25,495
4,863
2,055
2,434
4,930
948
40,725
Customer
247,219
6,740
5,677
9,513
5,611
980
275,740
Debt securities issued
1,401
2,380
4,791
5,865
32,120
41,345
87,902
Other financial liabilities
123
3,453
3,935
472
778
1,119
9,880
274,280
17,436
19,826
18,688
99,997
44,392
474,619
Difference (assets less liabilities)
(175,399)
(4,425)
14,976
12,963
(10,817)
81,810
(80,892)
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b)  Equivalent euro value of assets and liabilities
The detail of the main foreign currency balances in the
balance sheets as of 31 December 2021 and 2020, based
on the nature of the related items, is as follows:
Countervalue in EUR million
2021
2020
Assets
183,507
162,058
Cash, cash balances at central banks and other deposits on demand
13,775
5,168
Financial assets held for trading
32,947
29,422
Non-trading financial assets mandatorily at fair value through profit or loss
1,279
768
Financial assets designated at fair value through profit or loss
293
11,107
Financial assets at fair value through other comprehensive income
4,785
5,419
Financial assets at amortized cost
90,011
70,802
Hedging derivatives
668
1,116
Changes in the fair value of hedged items in portfolio hedges of interest rate risk
Investments
39,492
37,215
Tangible assets
16
21
Intangible assets
4
4
Tax assets
99
28
Other assets
138
988
Non-current assets held-for-sale
Liabilities
114,567
100,734
  Financial liabilities held for trading
23,869
26,178
  Financial liabilities designated at fair value through profit or loss
5,888
6,143
  Financial liabilities at amortized cost
83,923
67,101
  Hedging derivatives
391
362
  Changes in the fair value of hedged items in portfolio hedges of interest risk rate
  Provisions
120
88
  Tax liabilities
21
  Refundable equity on demand
  Other liabilities
355
862
Liabilities associated with non-current assets held-for-sale
c) Fair value of financial assets and liabilities not
measured at fair value
Financial assets are measured at fair value in the
accompanying balance sheets, except for loans and
receivables under a business model whose objective is to
collect the flows of principal and interest , equity
instruments whose market value cannot be estimated
reliably and derivatives that have these instruments as
their underlying and are settled by delivery thereof.
Similarly, financial liabilities except for financial
liabilities held for trading, those measured at fair value
and derivatives having equity instruments whose market
value cannot be estimated reliably as their underlying-
are measured at amortized cost in the accompanying
balance sheets.
The following is a comparison between the value of
Grupo Santander's financial instruments valued using
other criteria rather than fair value and their
corresponding fair value at year-end:
Financial assets and liabilities measured at other than
fair value
The fair value of financial instruments measured at
amortized cost as of 31 December 2021 was as follows:
a.The fair value of debt securities is 4.98% higher
than the carrying amount.
b.The fair value of the loans and advances is 0.36%
lower than the carrying amount.
c.The fair value of deposits is 0.19% lower than the
carrying amount.
d.The fair value of marketable debt securities is
3.15% greater than the carrying amount.
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Set forth below are the main valuation methods and
inputs used in the estimates made at 31 December 2021
to determine the fair values of the financial assets and
liabilities recognized at cost detailed above:
Loans and receivables: The fair value has been
estimated using the present cost method, the
estimation has considered factors such as the
expected maturity of the portfolio, market interest
rates, spreads of new concession of operations, or
market spreads – If these were available.
Held to maturity portfolio: The fair value has been
determined based on market prices for those
instruments.
Financial liabilities at amortized cost:
a.The fair value of deposits at Central Banks has
been assimilated to their carrying amount
because they are mainly short-term balances.
b.Credit Institutions: Fair value has been obtained
using the present value technique by applying
interest rates and market spreads.
c.Customer deposits: Fair value has been
estimated using the present value technique. The
estimation has considered factors such as the
expected maturity of the operations and the
current financing cost of Grupo Santander in
similar operations.
d.Marketable debt securities: Fair value has been
determined based on market prices for these
instruments, when available, or using the
present value technique, by applying interest
rates and market spreads.
Additionally, the fair value of Cash, Cash Balances at
central banks and other deposits on demand has been
assimilated to its carrying amount, mainly because of
short-term balances.
49. Risk management                
a) Risk principles and culture
Banco and Grupo Santander’s risk principles below are
compulsory. They comply with regulatory requirements
and are inspired by best market practices:
1.All employees are risk managers who must
understand the risks associated with their functions
and not assume risks with an impact that exceeds
the Group’s risk appetite or is unknown.
2.Involvement of senior managers, with consistent risk
management and control through their conduct,
actions and communications, as well as oversight of
the risk culture and make sure Grupo Santander
maintain the risk profile within the defined risk
appetite.
3.Independent risk management and control functions,
according to the three lines of defence model of
Grupo Santander.
4.A forward-looking, comprehensive approach to risk
management and control for all businesses and risk
types.
5.Complete and timely information to identify, assess,
manage and disclose risks to the appropriate level.
Banco Santander’s holistic control structure stands on
these principles and includes strategic tools and
processes set out in the risk appetite statement, such as
annual planning and budget planning, scenario analysis,
the risk reporting structure and risk identification and
assessment.
1. Risk factors
Grupo and Banco Santander’s risks categorization
ensures effective risk management, control and
reporting. The risk framework distinguishes these risk
types:
Credit risk relates to financial loss arising from the
default or credit quality deterioration of a customer
or counterparty, to which Santander has directly
provided credit or assumed a contractual obligation.
Market risk results from changes in interest rates,
exchange rates, equities, commodities and other
market factors, and from their effect on profit or
capital. It includes the structural risk relates to
market movements or balance sheets behaviour will
change the value or profit generation of assets or
liabilities in the banking book.
Liquidity risk occurs if liquid financial resources are
insufficient or too costly to obtain in order to meet
liabilities when they fall due.
186
Capital risk is the risk that arises from the possibility
of having an inadequate quantity or quality of capital
to meet internal business objectives, regulatory
requirements or market expectations in the area of
structural risk.
Grupo and Banco Santander also take into account, on an
ongoing basis in its management of the risk function,
operational, regulatory compliance, model, reputational
and strategic risks.
Besides, environmental and climate-related risk drivers
are considered as factors that could impact the existing
risks in the medium-to-long-term.
These elements include, on the one hand, those derived
from the physical effects of climate change, generated
by one-off events as well as by chronic changes in the
environment and, on the other hand, those derived from
the process of transition to a development model with
lower emissions, including legislative, technological or
behaviour of economic agents changes.
The analysis of climate change scenarios has continued
to advance during 2021 in the Group to try to cover the
different casuistry related to the risks of transition to a
low-carbon economy and/or the effects derived from the
physical risk of possible climatic events in certain
geographies where the Group operates.
Grupo Santander continues to make progress in the
credit granting process following the EBA guidelines as
well as in the development of a more restrictive
financing policy, taking special account of the most
sensitive sectors/activities, which includes ceasing to
provide financial services to medium term to electricity
generation customers with more than 10% of revenues
dependent on coal and eliminate exposure to coal
mining production in the world.
Grupo Santander has scheduled a series of actions to
continue integrating climatic and environmental factors
in the credit admission process, through i) their
incorporation in the assessment processes of local credit
committees, ii) their inclusion in the assignment of
corporate ratings in the wholesale market (with a future
expansion to retail banking) and in the process of setting
prices through the entities' own ratings and the specific
pricing that already exists for specific products with
discount rates based on the fulfillment of various
conditions , and iii) the inclusion of energy certificates in
the valuation of collaterals.
Additionally, Grupo Santander has increased focus on the
impact of climate risk in relation to market, structural
and liquidity risk, which arise from the possibility that
changes in climate may adversely affect the value of a
financial instrument, a portfolio or the Group as a whole.
This risk may have an impact both on financial
instruments value or portfolios and on Santander's
liquidity. Grupo Santander measures this risk through
stress scenarios for both market and liquidity risk, which
arises from the possibility that climate change may
adversely affect the value of a financial instrument, a
portfolio or the Group as a whole
2. Risk governance
Grupo and Banco Santander robust risk and compliance
governance structure allows us to conduct effective
oversight in line with our risk appetite. It stands on three
lines of defence, a structure of committees and strong
Group-subsidiary relations, guided by our risk culture,
Risk Pro.
2.1 Lines of defence
Grupo and Banco Santander’s model of three lines of
defence effectively manages and controls risks:
First line: formed by businesses and functions that take
or  originate exposure to risk, it recognizes, measures,
controls, monitors and reports on risks according to
internal risk management regulation. Risk origination
must be consistent with the approved risk appetite and
related limits.
Second line: formed by the Risk and Compliance and
Conduct functions, it independently oversees and
challenges the first line’s risk management. Its duties
include ensuring that risks are managed according to
the risk appetite defined by senior management and
strengthening our risk culture throughout Grupo and
Banco Santander.
Third line: the Internal Audit function, which is
independent to ensure the board of directors and
senior managers with high-quality and efficient
internal controls, governance and risk management
systems, helping to safeguard our value, solvency
and reputation. 
The Risk, Compliance & Conduct and Internal Audit
functions are separate and independent. Each has direct
access to the board of directors and its committees.
2.2 Risk committee structure
The board of directors is ultimately responsible for risk
and compliance management and control. It revises and
approves the bank's risk frameworks and appetite, while
promoting a strong risk culture across the Group and the
Bank. The board relies on its risk supervision, regulation
and compliance committee for risk control and on the
group’s executive committee for risk approval.
The Group chief risk officer (Group CRO), who decides
risk strategy and promotes proper risk culture, is in
charge of overseeing all risks and challenging and
advising business lines on risk management.
The Group chief compliance officer (Group CCO), who
decides compliance and conduct strategy, is in charge of
controlling the risks within their purview and must
provide the Group CRO with a complete overview on the
situation of risks being monitored. 
187
Both the Group CRO and the Group CCO have direct
access and report to the risk supervision, regulation and
compliance committee and the board of directors.
The executive risk, risk control and compliance and
conduct committees are executive committees and have
been delegated powers by the board.
Furthermore, risk functions have forums and regular
meetings to manage and control the risks within their
purview. Executive committees also delegate some
duties to subordinate forums.
Their responsibilities include:
Reporting to the Group CRO, the Group CCO, the risk
control committee and the compliance and conduct
committee on risk management according to risk
appetite;
monitoring and ensuring proper management of
each risk factor; and
overseeing measures to comply with supervisors and
auditors' expectations.
Besides, Grupo and Banco Santander, in order to
establish an adequate control environment for the
management of each risk factors, the Risk and
Compliance and Conduct functions have effective
internal regulation to create the right environment to
manage and control all risks.
Grupo and Banco Santander can also dictate new
governance measures for special situations. During the
Brexit crisis transition process, it set up separate steering
committees and working groups with Santander UK.
Also, to cope with the covid-19 crisis, it created special
situation forums, in which close coordination with
subsidiaries, local contingency plan activation and
scenario analysis enhanced allocated resources and
governance.
2.3 The Group's relationship with subsidiaries
In all subsidiaries, the risk and compliance management
and control model is consistent with the frameworks
approved by Grupo Santander's board of directors, which
they adhere to through their own boards and can only
adapt according to local law and regulation. In its duty to
carry out aggregate risk oversight, Grupo Santander
validates and challenges subsidiaries’ internal regulation
and transactions, which results in a common risk
management model across the Group.
In 2021, Grupo Santander continued to strengthen the
regional subsidiary relations model, based on regions, to
find synergies for common operations and platforms
building on the global and regional scale; to streamline
processes; and to tighten control mechanisms so Grupo
Santander's business can grow, allocate capital more
efficiently and offer the best service to customers.
In this sense, each local CRO interact regularly with their
regional head of risk, the Group CRO and the Group CCO
in periodic regional or country control meetings. Local
and global Risk and Compliance functions also hold
follow-up meetings to address special matters. The
Group CRO and the Group CCO and regional heads of risk
are involved in appointing, setting of objectives,
reviewing and compensating their local counterparts to
ensure proper risk management.
Grupo Santander enhances its relations with subsidiaries
and its advanced risk management model through:
Close collaboration between countries in the same
region to carry out common initiatives efficiently.
structural change, subsidiary benchmarks and a
strategic vision for the function to implement
advanced risk management infrastructures and
practices.
the exchange of best practices to strengthen
processes and drive innovation in order to achieve a
quantitative impact.
identification of talent in risk and compliance teams,
promoting international mobility through a global
risk talent programme and tightening succession
plans.
3. Management processes and tools
Grupo and Banco Santander have these effective risk
management processes and tools:
3.1 Risk appetite and structure of limits
Risk appetite is the volume and type of risks Grupo and
Banco Santander deem prudent for the business
strategy, even in unforeseen circumstances. It considers
adverse scenarios that could have a negative impact on
capital, liquidity and profitability.
The board sets the Group and Bank's risk appetite
statement (RAS) every year. Grupo Santander
subsidiaries' boards also set their own risk appetites
annually. Each of those risk appetites translates into risk
management limits and policies based on risk type,
portfolio and segment.
3.1.1. Business model and risk appetite fundamentals
Grupo and Banco Santander’s risk appetite is consistent
with the risk culture and business model built on
customer focus, scale and diversification. At the core of
Grupo Santander's risk appetite are:
A medium-low and predictable target risk profile
that is centred on retail and commercial banking,
internationally diversified operations and strong
market share;
Stable, recurrent earnings and shareholder
remuneration, sustained by a sound base of capital,
liquidity and sources of funding;
188
Independent subsidiaries that manage their own
capital and liquidity, with risk profiles that do not
compromise Grupo Santander’s solvency;
An independent risk function with involvement by
senior management to embed a strong risk culture
and drive a sustainable return on capital;
A global and holistic vision through a meticulous
control and monitoring of risks, businesses and
markets
A focus on products Grupo and Banco Santander
know well;
A conduct model that protects Grupo and Banco
Santander`s customers; and
A remuneration policy that aligns employees and
executives' interests with risk appetite and long-
term results.
3.1.2. Corporate risk appetite principles
The principles that inform Grupo and Banco Santander's
risk appetite are:
The board and senior management's responsibility
for risk appetite;
An enterprise-wide view of risk, back-testing and
challenge of risk profile based on quantitative
metrics and qualitative indicators;
A forward-looking view based on plausible
assumptions and adverse/stress scenarios to reflect
the desired risk profile in the short and medium
term;
Strategic and business plans embedded in daily
management by policies and limits;
Common standards that align each subsidiary's
appetite with the Group's; and
Regular reviews, best practice and regulatory
requirements, with mechanisms in place to keep the
risk profile stable and mitigate non-compliance.
3.1.3. Structure of limits, monitoring and control
Risk appetite is expressed in qualitative terms and limits,
structured on these five core elements.
1
Earnings volatility
The maximum loss Grupo Santander can tolerate in an
acute  -but- plausible stress scenario.
2
Solvency
Minimum capital position Grupo Santander can tolerate in
a stress scenario.
Maximum leverage Grupo Santander can tolerate in a
stress scenario.
3
Liquidity
Minimum structural liquidity position.
Minimum liquidity horizon Grupo Santander can tolerate
in peak stress scenario.
Minimum liquidity coverage position.
4
Concentration
Concentration in single names, industries and portfolios.
Concentration in non-investment grade counterparties.
Concentration in large exposures.
5
Non-financial risks
Maximum operational risk losses.
Maximum risk profile.
Non-financial risk indicators:
Financial crime compliance (FCC)
Cyber and security risk
Model risk
Reputational risk
189
b) Credit risk
1. Introduction to the credit risk treatment
Credit risk refers to a potential financial loss from the
default or credit quality deterioration of a customer or
other third party with whom Grupo and Banco Santander
have a contractual obligation. It is our most important
risk, both in terms of exposure and capital consumption.
It also includes counterparty risk, country risk and
sovereign risk.
Credit risk management
Grupo and Banco Santander identify, analyse, control
and decide on credit risk based on holistic view of the
credit risk cycle, which includes the transaction, the
customer and the portfolio.
Credit risk identification is key to managing and
controlling Grupo and Banco Santander's portfolios
effectively. Grupo and Banco Santander classify external
and internal risks in each business and adopt corrective
and mitigating measures when needed through these
processes:
1.1. Planning
Grupo and Banco Santander´s planning helps to set
business targets and define specific action plans within
our risk appetite framework.
Strategic commercial plans (SCP) are a management and
control tool the business and risk areas prepare for
Grupo Santander's credit portfolios. They determine
commercial strategies, risk policies, resources and
infrastructure, ensuring a holistic view of the portfolios.
They provide managers with an updated view of credit
portfolio quality to measure credit risk, run internal
controls over the defined strategy coupled with regular
monitoring, detect significant deviations in risk and
potential impacts, and take corrective actions when
necessary.  They also align with Grupo Santander's risk
appetite and its subsidiaries’ capital targets, and are
approved and monitored by senior managers at each
subsidiary before being reviewed and validated by
Group.
1.2. Risk assessment and credit rating process
To analyse customers’ ability to meet contractual
obligations, Grupo Santander uses valuation and
parameter estimation models in each of the segments.
Grupo Santander's credit quality valuation models are
based on credit rating drivers, which Grupo Santander
monitors to calibrate and adjust the decisions and
ratings they assign. Depending on each segment, drivers
can be:
Rating: from mathematical algorithms that have a
quantitative model based on balance sheet ratios or
macroeconomic variables, and a qualitative module
supplemented by the credit analyst’s expert
judgement. It is used for SCIB, corporate,
institutional and SME segments (with individualised
treatment).
Scoring: an automatic system to evaluate credit
applications that assigns an individual score to
customers for subsequent decision-making,
generally in the retail and smaller SME segments.
Grupo and Banco Santander's parameter estimation
models follow econometric models built on the Group
and the Bank's portfolios' historical defaults and losses.
Grupo and Banco Santander uses them to calculate
economic and regulatory capital as well as Bank of Spain
circular 4/2017provisions for each portfolio.
Grupo and Banco Santander regularly monitoring and
evaluate models'  appropriateness, predictive capacity,
performance, granularity, compliance with policies and
other related factors. Grupo and Banco Santander
reviews ratings with the latest available financial and
economic information. Grupo and Banco Santander has
also increased the reviews for customers who are under
closer observation or have automatic warnings in the risk
management systems.
1.3. Credit risk mitigation techniques
We approve risks generally on the basis of borrowers’
ability to pay in fulfilment of financial obligations,
notwithstanding any additional collateral or personal
guarantees we can require from them.  To determine
this, we analyse funds or net cash flows from their
businesses or income with no guarantors or the assets
pledged as collateral. We always consider guarantors
and collateral when deciding to approve a loan as a
secondary means of recourse if the first channel fails.
In general, a guarantee is as a reinforcement measure
added to a credit transaction to mitigate a loss due to a
failure to meet a payment obligation.
Grupo and Banco Santander have credit risk mitigation
techniques for various types of customer and products.
Some are for specific transactions (e.g., property) while
others apply to a series of transactions (e.g., derivatives
netting and collateral). Grupo and Banco Santander can
be grouped into personal guarantees, guarantees in the
form of credit derivatives or collateral.
190
1.4. Definition of limits, pre-classifications and pre-
approvals
Grupo and Banco Santander use SCPs to manage credit
portfolios, defining limits for each of them and for new
originations, in line with the Group´s credit risk appetite
and its target risk profile. Transposing the risk appetite
to portfolio management strengthens controls over our
credit portfolios.
Grupo and Banco Santander's limits, pre-classifications
and pre-approvals processes determine the risk we can
assume with each customer. Limits are approved by the
executive risk committee (or delegated committees) and
should reflect a transaction’s expected risk-return
Grupo and Banco Santander apply various limits models
to each segment:
Large corporate groups: are subject to a pre-
classification model based on a system for
measuring and monitoring economic capital. Pre-
classification models express the level of risk the
Group and the Bank are willing to assume in
transactions with customers/groups in terms of
capital at risk, nominal cap and maximum tenors. To
manage limits with financial entities, Grupo
Santander uses Credit Equivalent Risk (CER), which
includes actual and expected risks with customers
according to risk appetite and credit policies.
Corporates and institutions: that meet certain
requirements (strong relationships, rating, etc.):
Grupo and Banco Santander use simpler pre-
classification model with an internal limit. It
establishes a reference point in a customer's level of
risk based on repayment capacity, overall
indebtedness and a pool of banks.
Transactions with large corporates, corporates and
institutions above certain limits or with special
characteristics could require approval from a senior
credit analyst or a committee.
For individual customers and SMEs with low
turnover, Grupo Santander manages large volumes
of credit transactions with automatic decision
models to classify customers and transactions.
1.5. Scenario analysis
Grupo and Banco Santander´s scenario analyses
determine the potential risks in its credit portfolios and
provide a better understanding of our portfolios'
performance under various macroeconomic conditions.
They allow us to anticipate management strategies that
will avoid future deviations from defined plans and
targets. They simulate the impact of alternative
scenarios in portfolios’ credit parameters (PD, LGD) and
expected credit losses. We compare findings with 
portfolios’ credit profile indicators to find the right
measures for managers to take. Credit risk management
of portfolios and SCPs incorporate scenario analyses.
1.6. Monitoring
Regularly monitoring business performance and
comparing it to pre-defined plans is key to our
management of risk.
Grupo and Banco Santander's holistic monitoring of
customers helps detect impacts on risk performance and
credit quality early.
Grupo and Banco Santander assign customers a
classification with a pre-defined course of action and ad
hoc measures to correct any deviations.
Monitoring, which considers transaction forecasts and
characteristics, in addition to changes in classification, is
performed by local and global risk teams and is based on
customer segmentation:
For SCIB, monitoring is initially a function of business
managers and risk analysts which provide an up-to-
date view of customers’ credit quality to predict a
potential customer's deterioration.
For commercial banking, institutions and SMEs
assigned a credit analyst, Grupo and Banco
Santander track customers requiring closer
monitoring and review their ratings based on
relevant indicators.
Monitoring of individual customers, businesses and
smaller SMEs  follows a system of automatic alerts
to detect shifts in portfolios’ performance.
Monitoring uses the Santander Customer Assessment
Note (SCAN) tool. Grupo and Banco Santander fully
rolled it out in our subsidiaries in 2019. It helps set
individual monitoring levels and frequencies, policies,
and actions for customers based on credit quality and
particular circumstances.
In addition to monitoring customer credit quality, Grupo
and Banco Santander define control procedures to
analyse portfolios and performance, as well as any
deviations from planning or approved alert levels.
191
1.7. Recovery and collections management
The Collections & Recoveries area carries out recoveries,
which are important to risk management. It defines a
global, enterprise-wide management strategy with
guidelines and general lines of action, based on the
economic environment. business model and other local
recovery conditions. Recovery management follows
regulatory requirements set out in the EBA Guidelines on
the management of non-performing and forborne
exposures. In addition, Grupo and Banco Santander apply
specific policies on recovery management that include
the principles of the different strategies.
The Collections & Recoveries areas directly manage
customers. As sustained value creation is based on
effective and efficient collections, digital channels that
develop new customer relations are gaining importance.
Grupo and Banco Santander’s diverse customer base
requires segmentation to manage recoveries
appropriately. The highly technological and digital
processes Grupo and Banco Santander follow help us
attend to large groups of customers with similar profiles
and products. Grupo and Banco Santander's personalized
management, however, focus on customer profiles that
require a special manager and approach.
Grupo and Banco Santander split recovery management
into four phases: arrears, credit impaired loans, write-
offs and foreclosed assets. Grupo and Banco Santander
may use mechanisms to rapidly reduce assets like sales
of foreclosed assets or credit impaired loans pool sales.
Grupo and Banco Santander constantly seek alternatives
to legal action in order to collect debt.
Grupo and Banco Santander include debt instruments as
written-off loans (even if they are not past-due) if an
individual analysis of the solvency of a transaction and
the borrower leads us to believe recovery is remote due
to a notorious and unrecoverable impairment. Though
this may lead to full or partial cancellation and de-
recognition of the gross carrying amount of debt, it does
not mean we interrupt negotiations and legal
proceedings to recover debt. In countries with high
exposure to real estate risk, we have efficient sales
management instruments that help maximize recovery
and optimize balance sheet stocks.
192
2. Main aggregates and variations
Following are the main aggregates relating to credit risk
from our activities with customers:
Main credit risk performance metrics from activity with customers*
December data
Credit risk with customers **
(EUR million)
Credit impaired loans
(EUR million)
NPL ratio (%)
2021
2020
2021
2020
2021
2020
Europe
636,123
606,997
19,822
20,272
3.12
3.34
Spain
221,100
221,341
12,758
13,796
5.77
6.23
UK**
262,869
252,255
3,766
3,138
1.43
1.24
Portugal
41,941
40,693
1,442
1,584
3.44
3.89
Poland
33,497
31,578
1,210
1,496
3.61
4.74
North America
149,792
131,626
3,632
2,938
2.42
2.23
US
112,808
99,135
2,624
2,025
2.33
2.04
Mexico
36,984
32,476
1,009
913
2.73
2.81
South America
141,874
129,590
6,387
5,688
4.50
4.39
Brazil
85,702
74,712
4,182
3,429
4.88
4.59
Chile
41,479
42,826
1,838
2,051
4.43
4.79
Argentina
5,481
4,418
198
93
3.61
2.11
Digital Consumer Bank
117,049
116,381
2,490
2,525
2.13
2.17
Corporate Centre
6,277
4,862
903
344
14.38
7.08
Total Group
1,051,115
989,456
33,234
31,767
3.16
3.21
*Management perimeter according to the reported segments
** Includes gross lending to customers, guarantees and documentary credits
Key figures by geographic region are described below at
31 December 2021:
Europe:  the NPL ratio fell 22 bps to 3.12% from 2020
due to a significant reduction in credit impaired loans
in Spain and Poland, offsetting the increase observed
in the UK.
North America: the NPL ratio increased 19 bps to
2.42% from 2020, mainly due to increases at SC USA.
NPL stock rose 24% year-on-year.
South America: the NPL ratio rose 11 bps to 4.50%.
comparing to 2020, due to the increase observed in
Argentina (+150 bps) and Brazil (+29 bps), offsetting
the decrease in Chile (-36 bps).
Digital Consumer Bank: The NPL ratio decreased 4 bp
to 2.13% comparing to 2020, despite the decrease in
automobile financing.
Information on the estimation of impairment losses
Estimation of expected credit losses:
The covid-19 health crisis, since its beginning in 2020,
was unexpected, unpredictable and severe, but it is
estimated to be of a temporary nature. Grupo and Banco 
Santander’s priority in these circumstances has been to
look after the health of its employees, customers and
shareholders, but also to help reduce the economic
impact of the pandemic. This includes trying to offer the
best solutions to help customers.
Conceptually, the phases in managing the effects of
covid-19 have been:
Identification of customers or groups affected or
potentially affected by the pandemic.
Early relief of temporary financial difficulties caused
by covid-19 through measures promoted by
governments, central banks, and financial
institutions.
Monitoring the evolution of customers, to ensure
that they continue to be provided with the best
solution for their situation, and also to guarantee
that their potential impairment is correctly reflected
in the risk management and accounting. This point is
particularly relevant at the expiry of any moratorium
or liquidity support measures to which customers
may have availed themselves.
Monitoring is accompanied by recovery management
activities when necessary.
193
These conceptual phases do not occur sequentially but
overlap in time. Additionally, the continuous interaction
and coordination between the different local units of the
Group proved to be a fundamental asset in the
management of this crisis. The experience obtained in
the fight against the health crisis and its financial
consequences in our different geographies, and the
different speeds at which it has been developing in each
of them, allow us to share the best practices identified
and to implement in an agile and efficient manner those
strategies and concrete actions that have been most
successful, always adapted to the local reality of each
market.
Estimation of expected loss
In the context described above on the measures taken in
relation to covid-19, many regulators and supervisors
highlighted the uncertainties surrounding the economic
impacts of the health crisis. This is also evident in the
frequent updates of macroeconomic forecasts, with
different perspectives and views on the depth and
duration of the crisis. Thus, the general recommendation
(including IASB, ESMA, EBA and ECB) was not to
mechanistically apply the usual techniques for
calculating expected losses under Bank of Spain Circular
4/2017, in order to avoid that this variability of economic
conditions would translate into volatility in results, with
its potential pro-cyclical effects on the economy.
Thus, Group and Banco Santander analyses losses under
IFRS 9 and Bank of Spain Circular 4/2017 on the basis of
three types of elements:
1. Continuous monitoring of customers
Monitoring the credit quality of customers could have
been more complex in the current circumstances. For
such monitoring, and in addition to the application of
internal customer monitoring policies, all available
information should be used. The availability of
information and its relevance is different in the various
portfolios of the different countries in which the Group
and the Bank operate but it may include, but is not
limited to the following:
The payment of interest in the case of principal-only
shortfalls.
The payment of other operations of the same client
in the institution (not subject to moratorium).
Information on payment of loans in other entities
(through credit bureaus).
Customer financial information: average balances in
current accounts, availability/use of limits, etc.
Available behavioural elements (variables that feed
the behavioural scores, etc.).
Information gathered from customer contacts
(surveys, calls, questionnaires, etc.). This may
include: customers who have taken up furlough
programs, direct government aid, etc.
2. Forward-looking vision
As it was reflected by the IASB, macroeconomic
uncertainty makes the usual application of IFRS 9
expected loss calculation models difficult but did not
exempt the incorporation of the prospective feature of
the standard. To this end, the European Central Bank
recommended the use of a stable, long-term view (long-
run) of the macroeconomic forecasts, which takes into
account in the assessment the multiple support
measures explained above.
During 2021, this uncertainty has been reduced as
vaccination progressed, hospitalisation rates gradually
declined, allowing, in some cases, for the reduction of
restriction measures. In parallel, support measures
expired while maintaining the good performance of the
portfolios.
This implies that once the economic scenarios have been
stabilising and converging to their potential growth,
these new economic scenarios have been gradually
updated in the models by returning to the standard
forward-looking calculation.
3. Additional elements
Additional elements will be required when necessary
because they have not been captured under the two
previous elements. This has included, among others, the
analysis of sectors most affected by the pandemic if their
impacts are not sufficiently captured by the
macroeconomic scenarios. Also collective analysis
techniques, when the potential impairment in a group of
clients cannot be identified individually.
With the elements indicated above, Grupo and Banco
Santander have evaluated the evolution of the credit
quality of its customers, for the purposes of their
classification in  Grupo and Banco Santander financial
statements.
In terms of classification, in 2021 Grupo and Banco
Santander have maintained the criteria and thresholds
for classification applied prior to the start of the
pandemic, eliminating regulatory criteria of the effect of
moratorium classification as they have expired, as well
as the collective analyses associated with these groups
of loans.
Regarding moratorium measures, a rigorous
identification and periodic monitoring of the credit
quality of the clients and their payment behaviour have
been carried out and, through a specific individual or
collective evaluation, the timely detection of the
Significant Increase in Credit Risk (SICR).
As part of governance processes, Grupo Santander
issued guideline documents to all subsidiaries to ensure
consistent standards and governance in managing the
new treatment and particular impacts on pandemic-
related provisions. The guidelines included instructions
on how to calculate the macroeconomic impact of the
crisis using overlay and potential collective assessments
194
that considered impairment caused by covid-19. Those
documents also include a monitoring guide to ensure the
appropriateness of special insolvency fund adjustments
for covid-19-related situations and anticipate any other
necessary adjustment
Regarding moratoria measures, a rigorous identification
and regular monitoring of customer credit quality and
payment behavior have been performed and through
specific individual or collective assessment, the timely
detection of SICR have been assured.
Details of the exposure by stage can be found in notes 6,
7 and 10, as well as in this note of  these annual
accounts.
Grupo and Banco Santander estimate the impairment
losses by calculating the expected loss at 12 months or
for the entire life of the transaction, based on the stage
in which each financial asset is classified in accordance
with IFRS 9 and Bank of Spain Circular 4/2017,
respectively.
Then, considering the most relevant units of the Group
(United Kingdom, Spain, United States, Brazil, also Chile,
Mexico, Portugal, Poland, Argentina and Santander
Consumer Finance), which represent approximately 96%
of the total Group's provisions. The table below shows
the impairment losses associated with each stage as of
31 December 2021 and 2020. In addition, depending on
the transactions credit quality, the exposure is divided
into three categories according to Standard & Poor's
rating scale:
Exposure and impairment losses by stage
EUR million
2021
Credit quality *
Stage 1
Stage 2
Stage 3
Total
From AAA to BB
565,443
13,798
579,241
From BB- to CCC
237,525
56,170
293,695
Default
30,711
30,711
Total exposure **
802,968
69,968
30,711
903,647
Impairment
losses***
4,149
5,103
12,873
22,125
Exposure and impairment losses by stage
EUR million
2020
Credit quality *
Stage 1
Stage 2
Stage 3
Total
From AAA to BB
489,518
9,124
498,642
From BB- to CCC
276,516
55,838
332,354
Default
30,436
30,436
Total exposure **
766,034
64,962
30,436
861,432
Impairment
losses***
4,458
5,461
13,503
23,422
*Detail of credit quality ratings calculated for Group management
purposes.
**Total exposure includes loan balances (drawn amounts) and off
balance (letters of credit + guarantees) and excludes REPOs, FV
portfolio, trading portfolio and undrawn commitments.
***Includes provisions for undrawn authorized lines (loan
commitments)
The remaining units that form the totality of the Group
exposure, contributed EUR 102,631 million in stage 1;
EUR 1,870 million in stage 2, and EUR 2,522 million  in
stage 3 (in 2020 EUR 98,121 million in stage 1; EUR
3,613 million in stage 2, and EUR 1,322 millionn stage 3,
and impairment losses of EUR 408 million in stage 1;
EUR 322 million for stage 2, and EUR 841 million in
stage 3 (in 2020, EUR 180 million, EUR 393 million and
EUR 277 million).
The remaining exposure, including all financial
instruments not included before, amounts to EUR
349,228 million (EUR 478,093 million in 2020), and it
includes all undrawn authorized lines (loan
commitments).
As of 31 December 2021, the Group had EUR 420 million
net of provisions (EUR 497 million at 31 December 2020)
of purchased credit-impaired assets, which relate mainly
to the business combinations carried out by the Group.
Regarding the evolution of credit risk provisions, Grupo
and Banco Santander, in collaboration with the main
geographical areas, monitors them by carrying out
sensitivity analyses considering changes in
macroeconomic scenarios and main variables that have
an impact on the financial assets distribution in the
different stages and calculating credit risk provisions.
Additionally, based on consistent macroeconomic
scenarios, Grupo and Banco Santander also perform
stress tests and sensitivity analysis in a regular basis,
such as ICAAP, strategic plans, budgets and recovery and
resolution plans. In this sense, a prospective view of the
sensitivity of each of the Group’s loan portfolio is created
in relation to the possible deviation from the base
scenario, considering both the macroeconomic
developments in different scenarios and the three year
evolution of the business. These tests include potentially
adverse and favourable scenarios.
195
The transactions classification into the different Bank of
Spain Circular 4/2017 stages is carried out in accordance
with the regulation through the risk management
policies, which are consistent with the risk management
policies defined by the Group. In order to determine the
classification in stage 2, the Group assesses whether
there has been a significant increase in credit risk (SICR)
since the initial recognition of the transactions,
considering a series of common principles throughout
the Group that guarantee that all financial instruments
are subject to this assessment, which considers the
particularities of each portfolio and type of product on
the basis of various quantitative and qualitative
indicators. Furthermore, transactions are subject to the
expert judgement of the analysts, who set the
thresholds under an effective integration in
management. All is implemented according to the
approved governance.
The criteria thresholds used by the Group and the Bank
are based on a series of principles, and develop a set of
techniques. The principles are as follows:
Universality: all financial instruments subject to a
credit rating must be assessed for their possible
SICR.
Proportionality: the definition of the SICR must take
into account the particularities of each portfolio.
Materiality: its implementation must be also
consistent with the relevance of each portfolio so as
not to incur in unnecessary costs or efforts.
Holistic vision:  the approach selected must be a
combination of the most relevant credit risk aspects
(e.g. quantitative and qualitative).
Bank of Spain Circular 4/2017: the approach must
take into consideration Bank of Spain Circular 4/2017
(aligned with IFRS 9) characteristics, focusing on a
comparison with credit risk at initial recognition, as
well as considering forward-looking information.
Risk management integration: the criteria must be
consistent with those metrics considered in the day-
to-day risk management.
Documentation: Appropriate documentation must be
prepared.
The techniques are summarised below:
Stability of stage 2: in the absence of significant
changes in the portfolios credit quality, the volume of
assets in stage 2 should maintain a certain stability as
a whole.
Economic reasonableness: at transaction level, stage 2
is expected to be a transitional rating for exposures
that could eventually move to a deteriorating credit
status at some point or stage 3, as well as for
exposures that have suffered credit deterioration and
whose credit quality is improving.
Predictive power: it is expected that the SICR definition
avoids, as far as possible, direct migrations from stage
1 to stage 3 without having been previously classified
in stage 2.
Time in stage 2: it is expected that the exposures do
not remain categorized as stage 2 for an excessive
time.
The application of the aforementioned techniques, 
conclude in the setting of one or several thresholds for
each portfolio in each geography. Likewise, these
thresholds are subject to a regular review by means of
calibration tests, which may entail updating the
thresholds types or their values.
Covid-19 credit risk evolution and customer support
programmes
In the context of the general response of  the Group and
the Bank to the covid-19 pandemic, and specifically with
the purpose to help the customers from the credit
perspective and foster their economic resilience during
the crisis, Grupo Santander implemented several actions
in addition to those listed above, the following:
The severity of the pandemic's effects was
significantly different depending on the economic
sector. Consequently, the Group and the Bank
launched a process to identify those that could be
more affected in order to focus credit risk
management on them.
Due to the covid-19 crisis, great focus was placed on
collections & recoveries readiness across Grupo and
Banco Santander to deal with the impact expected on
its portfolios once the support measures granted
have expired.
Since the start of the pandemic in 2020, at the end of
December 2021, Grupo Santander granted a total of EUR
93,112 million in payment moratoria, equivalent to
9.68% of the loan portfolio.
From the total moratoria, 99.8% had expired at 31
December 2021, from which 74.6% were classified in
stage 1, 18.7% in stage 2 and 6.7% in stage 3. At
December 2020, 79.1% of total moratoria has expired,
from which 82.4% classified in stage 1, 14.5% in stage 2
and 3.1% in stage 3.
At the end of December 2021, total lending under
government liquidity programmes amounted to EUR
39,879 million. By geography, Spain represent 68% of
total exposure granted to these types of programmes,
with an average coverage of ICO guarantees of 77%. UK
constitutes the 13% of total exposure with an average
coverage of 98%.
Quantification of additional provisions for covid-19
In relation to the measures in the insolvency funds, the
Group and the Bank set up additional provisions during
196
2020 based on a collective analysis of vulnerable
sectors, and segments affected by the crisis derived from
the covid-19 pandemic, as well as an estimate of the
additional impairment of the loan and advance portfolio
caused by the economic effects of the pandemic,
realistically reflecting the structural deterioration of the
economy at the date of construction of the estimate. This
estimate was made on the basis of the information
available at that date, which was affected by the high
degree of uncertainty at the time of the estimate, and
was aligned with the projections generated by the ECB.
This macroeconomic scenario included a balance
between short- and long-term forecasts, without being a
'through the cycle' scenario. The convergence of these
scenarios with pre-crisis paths was expected to occur in
the first quarter of 2022 for most macroeconomic
indicators (except for house prices, which were expected
to converge in the first quarter of 2023).
Grupo and Banco Santander have continuously and
regularly monitored the following aspects during 2021
and 2020: (1) the evolution of the pandemic and the
macroeconomic outlook, (2) forecasts from institutions
and central banks, and (3) the evolution of portfolios in
each of the countries where Grupo Santander is present.
Based on that monitoring, the Group updates and
evaluates the adequacy of the macroeconomic scenarios
in accordance with the established governance, when
reliable and supportable information is available. At the
end of 2021, we updated the most recent scenarios to
calculate of Bank of Spain Circular 4/2017 and IFRS 9,
respectively, provisions by recalibrating and revising the
forward-looking information and risk model parameters.
Following that process, during 2021 the model update
included the macroeconomic scenarios. Out of the EUR
3,105 million at the end of December 2020, EUR
1,235 million overlay remain in additional provisions,
motivated by several countries' government relief
measures, in particular income support measures in the
US, payment holiday extensions for longer periods in
Portugal, and from continued volatility in the UK.
3. Details of the management units of Banco Santander,
S.A.
Following is the risk information relating to the
geography of Grupo España, as well as the Santander
Corporate & Investment Banking (SCIB) portfolio, both in
terms of exposure and risk allowances.
This information includes sensitivity analysis, consisting
on simulations of +/-100 bp in the main macroeconomic
variables. A set of specific and complete scenarios is
used in each geography, where different shocks that
affect both the reference variable as well as the rest of
the parameters is simulated. These shocks may be
originated by productivity, tax, wages or exchange and
interest rates factors. Sensitivity is measured as the
average variation on expected loss corresponding to the
aforementioned scenarios. Following a conservative
approach, the negative movements take into account
one additional standard deviation in order to reflect  the
potential higher variability of losses.
3.1 Santander Spain
Portfolio overview
Santander España’s credit risk, excluding intra-group
financing operations and foreign branches, amounts to
EUR 221,100 million (21% of Grupo Santander’s total). It
is appropriately diversified among products and
customer segments.
Amid economic and credit recovery, as macroeconomic
figures improved after the end of the covid-19
lockdowns in 2020, consumer loans (especially
mortgages) grew significantly, as the corporate and SME
lending remained below 2020 numbers, as we
maintained positions with customers in liquidity support
programmes (i.e. ICO lines of credit) without having to
seek new financing.
Total credit risk decreased -0.1% from December 2020.
The ICO loans in Corporate and SME lending amounted
to a significant EUR 27,294 (around half of them were
extended according to the current regulation).
The credit portfolio’s NPL ratio was 5.77%, 46 bp lower
than in December 2020.  This better overall portfolio
performance was driven by customer support
programmes; the regularization of several restructured
positions; and portfolio sales.
The additional provisions raised to mitigate the potential
impacts from the exceptional circumstances of the
covid-19 pandemic, increased the NPL coverage ratio to
52% (+5 bp vs. December 2020). On the other hand, the
non-performing portfolio declined mainly from loans
with the highest expected losses.
The cost of credit reflects the rise in Covid-19 provisions,
with slight improvement at the end of 2021 compared to
December 2020.
197
Information on the estimation of impairment losses
The detail of Santander Spain exposure and impairment
losses associated with each of the stages at 31
December, 2021 and 2020 is shown below. In addition,
the exposure is divided in three tranches of the Standard
& Poor's rating scale, according to their current credit
quality:
Exposure and impairment losses per stage
EUR million
2021
Credit quality *
Stage 1
Stage 2
Stage 3
Total
From AAA to BB
153,120
908
154,028
From BB- to CCC
33,233
14,740
47,973
Default
12,761
12,761
Total exposure **
186,353
15,648
12,761
214,762
Impairment
losses***
422
580
5,005
6,007
Exposure and impairment losses per stage
EUR million
2020
Credit quality *
Stage 1
Stage 2
Stage 3
Total
From AAA to BB
146,992
1,517
148,509
From BB- to CCC
40,630
11,541
52,171
Default
13,762
13,762
Total exposure **
187,622
13,058
13,762
214,442
Impairment
losses***
479
732
5,277
6,488
* Detail of credit quality ratings calculated for Group management
purposes.
** Total exposure includes loan balances (drawn amounts) and off-balance
(letters of credit + guarantees) and excludes REPOs, FV portfolio, trading
portdolio and undrawn commitments
*** Includes provisions for undrawn authorized lines (loan commitments).
The real estate unit in Spain (UAI) was consolidated
within Santander Spain in 2019,  (this process was
completed in 2020). Consequently, in 2021 and 2020 the
perimeter is aligned.
From the information detailed above, Banco Santander,
S.A. reaches a total gross exposure of EUR 328,748
million in the heading of financial assets at amortized
cost (see note 6 and 10) and EUR 111,410 million in loan
commitments granted for off-balance sheet exposures
(see note 31) Impairment losses amount to EUR 6,903
and EUR 190 million, respectively. (The amount of losses
due to impairment of off-balance sheet exposures
includes the coverage of financial guarantees and other
commitments granted in addition to the aforementioned
loan commitments).
The Government support measures taken in Spain in
2020 as response to the covid-19 pandemic have
gradually expired and at the end of December 2021
Santander Spain had granted, since the start of the
pandemic in 2020, a total amount of EUR 9,819 million
moratoriums, equivalent to 4.87% of the loan portfolio.
Of the total moratoriums, 99.6% had expired at 31
December 2021, from which 75.6% was in stage 1,
14.9% in stage 2 and 9.5% in stage 3. At the end of
2020, of the total moratoria, 26.4% had expired, of
which 77.2% were in stage 1, 15% in stage 2 and 7.8%
in stage 3.
For the estimation of the expected losses, the
prospective information is taken into account.
Specifically, Santander Spain considers three
macroeconomic scenarios, which are updated
periodically. The projected evolution for a period of five
years of the main macroeconomic indicators used by
Santander Spain for estimating expected losses as of
2021, is presented below:
2022-2026
Variables
Pessimistic
scenario 
Base
scenario
Optimistic
scenario 
Interest rate
0.6%
(0.2)%
(0.2)%
Unemployment
rate
18.3%
13.0%
11.2%
Housing price
change
1.6%
2.6%
3.2%
GDP growth
1.1%
2.9%
3.7%
198
Each macroeconomic scenarios is associated with a given
weight. As for its allocation, Santander Spain associates
the Base scenario with the highest weight, while
associating the lower weights to the most extreme
scenarios:
2021
2020
Pessimistic scenario
30%
30%
Base scenario
40%
40%
Optimistic scenario 1
30%
30%
The sensitivity analysis of the main portfolios expected
loss to variations of +/-100 bp for the macroeconomic
variables used in the construction of the scenarios is as
follows:
Change in Provision
Mortgages
Corporates
Others
GDP Growth
-100 bp
11.9%
5.4%
4.9%
100 bp
(4.9)%
(2.9)%
(2.7)%
Housing price
change
-100 bp
4.1%
3.2%
3.3%
100 bp
(2.5)%
(1.7)%
(1.4)%
With regards to the stage 2 classification determination,
the quantitative criteria applied in Santander Spain are
based on identifying whether an increase in the PD for
the expected lifetime of the transaction when compared
to the one at its origination is greater than an absolute
threshold. The threshold established is different for each
portfolio based on the transactions characteristics,
considering that a transaction is above this threshold
when the PD for the life of the transaction increases by a
certain quantity over the initial recognized PD. The
values of these thresholds depend on their calibration,
carried out periodically as indicated in the preceding
paragraphs, which currently ranges from 25% to 1%,
depending on the type of product and estimated
sensitivity.
In the case of non-retail portfolios, Santander Spain uses
the transaction's rating as a reference for its PD, taking
into account its rating at the time of origination and its
current rating, setting absolute thresholds for the
different rating bands that depend on each portfolio
characteristics. A SICR implies changes in the rating
value between 0.1 and 4, depending on the portfolio and
the estimated sensitivity (from lower to higher credit
quality, the rating range goes from 1 to 9.3).
In addition, for each portfolio, a series of specific
qualitative criteria are defined indicating that the
exposure experienced a significant increase in credit risk,
regardless of the evolution of its PD since the time of
initial recognition. Santander Spain, among other
criteria, considers that an operation presents a
significant increase in credit risk when positions have
been past due for more than 30 days. These criteria
depend on the risk management practices of each
portfolio.
Residential mortgage portfolio
Residential mortgages in Spain, including Santander
Consumer Finance business, amounted to EUR
62,324 million in 2021 (EUR 59,605 million in 2020),
99.33% of which have a mortgage guarantee (99.35% in
2020).
EUR million
2021
Santander Group Spain
Of Which, Banco Santander, S.A.
Gross amount
Of which: impaired
Gross amount
Of which: Non-
performing
Home purchase loans to families
62,324
1,860
60,947
1,798
Without mortgage guarantee
419
115
418
115
With mortgage guarantee
61,905
1,745
60,529
1,683
199
EUR million
2020
Santander Group Spain
Of Which, Banco Santander, S.A.
Gross amount
Of which: impaired
Gross amount
Of which: Non-
performing
Home purchase loans to families
59,605
1,850
58,079
1,784
Without mortgage guarantee
387
75
387
75
With mortgage guarantee
59,218
1,775
57,692
1,709
The mortgage portfolio for the acquisition of homes in
Spain is characterised by its medium-low risk profile,
which limits expectations of any potential additional
impairment:
Principal is repaid on all mortgages from the start.
Early repayment is common so the average life of the
transaction is well below that of the contract.
High quality of collateral, concentrated almost
exclusively in financing for first homes.
The average affordability rate stood at 27% (27% in
2020).
The 89.41% of the portfolio has a LTV below 80%
calculated as total risk/latest available house
appraisal.
200
Breakdown of the credit with mortgage guarantee to
households for house acquisition, according to the
percentage that the total risk represents on the amount
of the latest available valuation (loan to value):
EUR million
2021
Loan to value ratio
Less than or
equal to 40%
More than
40% and less
than 60%
More than
60% and less
than 80%
More than
80% and less
than or equal
to 100%
More than
100%
Total
Santander Group
 
 
 
 
 
Gross amount
16,479
19,391
19,479
4,376
2,180
61,905
Of which, impaired
187
240
349
313
656
1,745
Of which, Banco Santander, S.A.
 
 
 
 
 
 
Gross amount
16,151
19,019
19,236
4,186
1,937
60,529
Of which,  impaired
183
230
339
303
628
1,683
Businesses portfolio
Credit risk with SME and corporates amounted to EUR
117,544 million, 3.1% lower than in December 2020,
mainly due to the fall in the portfolio of SMEs. This is
Santander Spain's main lending segment, accounting for
51% of the total. Most of the portfolio corresponds to
customers with an assigned credit analyst to monitor
their loans throughout the risk cycle.
The portfolio is broadly diversified and not concentrated
by sector of activity. 2021 was a year of stability in the
portfolio figures after the significant growth in 2020 due
to the liquidity support programmes (ICO), which after
the initial grace period have begun to be amortised.
The portfolio’s NPL ratio stood at 7.50% in December
2021. Even though total risk decreased, the NPL ratio
increased by 8 bp compared to December 2020, due to
lower portfolio volume, while the stock of credit
impaired loans slightly reduced.
Real estate activity
The Real Estate Unit in Spain (UAI) was consolidated
within Santander Spain in 2019 (this process was
completed in 2020). The part of the portfolio resulting
from the past financial crisis and the new business that is
identified as viable should be differentiated. In both
cases, Santander has specialized teams that are in
charge of their management and risk areas that cover
the entire life cycle of these operations.
In recent years the Group and the Bank's strategy has
been geared towards reducing these assets. The changes
in gross property development loans to customers were
as follows:
EUR million
2021
2020
Balance at beginning of year
2,871
2,939
Foreclosed assets
(1)
(6)
Reductions*
(230)
(24)
Written-off assets
(15)
(38)
Balance at end of year
2,625
2,871
*Includes portfolio sales, cash recoveries and third-party subrogations
and new production.
The NPL ratio of this portfolio ended the year at 6.13%
(compared with 6.13% at December 2020 due to the
decrease of non-performing assets in the troubled loan
portfolio and, in particular, to the sharp reduction in
lending in this segment. The table below shows the
distribution of the portfolio. The coverage ratio of the
real estate doubtful exposure in Spain stands at 30.08%
(32.95% in 2020).
201
EUR million
2021
Santander Group
Of which,  Banco Santander, S.A.
Gross amount
Excess of gross
exposure over
maximum
recoverable
amount
Specific
allowance
Gross amount
Excess of gross
exposure over
maximum
recoverable
amount
Specific
allowance
Financing for construction and
property development (including
land) (business in Spain)
2,625
380
53
2,641
380
-53
Of which impaired
133
22
40
133
22
(40)
Memorandum items written-off
assets
650
(650)
 
 
Memorandum items: Data from the public balance sheet
EUR million
2021
Carrying amount
Santander Group
Of which, Banco Santander, S.A.
Total loans and advances to customers excluding the Public sector
(business in Spain) (Book value)
239,328
238,861
Total consolidated assets (Total business) (Book value)
1,595,835
657,950
Impairment losses and credit risk allowances. Coverage for unimpaired
assets (business in Spain)
1,472
1,279
At year-end, the distribution of this portfolio was as
follows:
EUR million
2021
Loans: Gross amount
Santander
Group
Of which, 
Banco
Santander,
S.A.
1. Without mortgage
guarantee
180
180
2. With mortgage guarantee
2,445
2,461
2.1 Completed buildings
1,412
1,428
2.1.1 Residential
876
892
2.1.2 Other
536
536
2.2 Buildings and other
constructions under
construction
969
968
2.2.1 Residential
907
906
2.2.2 Other
62
62
2.3 Land
64
65
2.3.1 Developed consolidated
land
46
46
2.3.2 Other land
18
19
Total
2,625
2,641
202
Policies and strategies in place for the management of
these risks
The policies in force for the management of this portfolio
are periodically reviewed and approved on a regular
basis by Santander's senior management
As has already been disclosed in this section, the Group
and the Bank’s anticipatory management of these risks
enabled it to significantly reduce its exposure, and it has
a granular, geographically diversified portfolio in which
the financing of second residences accounts for a very
small proportion of the total.
Mortgage lending on non-urban land represents a low
percentage of mortgage exposure to land, while the
remainder relates to land already classified as urban or
approved for development.
The significant reduction of exposure in the case of
residential financing projects in which the construction
work has already been completed was based on various
actions. As well as the specialised marketing channels
already in existence, campaigns were carried out with
the support of specific teams of managers for this
function who, in the case of the Santander network,
were directly supervised by the recoveries business area.
These campaigns, which involved the direct
management of the projects with property developers
and purchasers, reducing sale prices and adapting the
lending conditions to the buyers’ needs, enabled loans
already in force to be subrogated. These subrogations
enable the Group and the Bank to diversify its risk in a
business segment that displays a clearly lower non-
performing loans ratio.
In the case of construction-phase projects that are
experiencing difficulties of any kind, the policy adopted
is to ensure completion of the construction work so as to
obtain completed buildings that can be sold in the
market. To achieve this aim, the projects are analysed on
a case-by-case basis in order to adopt the most effective
series of measures for each case (structured payments to
suppliers to ensure completion of the work, specific
schedules for drawing down amounts, etc.).
For the new post-crisis real estate business production,
the admission processes are managed by specialized
teams that work in direct coordination with the
commercial teams, with clearly defined policies and
criteria:
Property developers with a robust solvency profile
and a proven track record in the market.
Medium-high level projects, conducting to
contracted demand and significant cities.
Strict criteria regarding the specific parameters of the
transactions: exclusive financing for the construction
cost, high percentages of accredited sales, principal
residence financing, etc.
Support of financing of government-subsidised
housing, with accredited sales percentages.
Restricted financing of land purchases dealt with
exceptional nature.
In addition to the permanent control performed by its
risk monitoring teams, the Group has a specialist
technical unit that monitors and controls this portfolio
with regard to the stage of completion of construction
work, planning compliance and sales control, and
validates and controls progress billing payments. The
Group has created a set of specific tools for this function.
All mortgage distributions, amounts drawn down of any
kind, changes made to the grace periods, etc. are
authorised on a centralised basis.
Foreclosed properties
At 31 December 2021, the net balance of these assets
amounted to EUR 3,591 million gross amount: of EUR
7,364 million; recognised allowance: of EUR 3,773
million, of which EUR 2,729 million related to
impairment after the foreclosure date. At 31 December
2020, the net balance of these assets amounted to EUR
3,962 million (gross amount: EUR 7,937 million;
recognised allowance: EUR 3,975 million, of which EUR
2,834 million related to impairment after the foreclosure
date). At 31 December, 2019, the net balance of these
assets amounted to EUR 4,190 million (gross amount:
EUR 8,226 million; recognised allowance: EUR
4,036 million, of which EUR  2,812 million related to
impairment after the foreclosure date).
203
The following table shows the detail of the assets
foreclosed by the businesses in Spain at the end of 2021:
EUR million
2021
Gross carrying
amount
Valuation
adjustments
Of which
impairment losses
on assets since
time of
foreclosure
Carrying amount
Property assets arising from financing provided to
construction and property development companies
6,313
3,376
2,455
2,937
Of which:
Completed buildings
1,900
799
627
1,101
Residential
470
181
143
289
Other
1,430
618
484
812
Buildings under construction
112
57
42
55
Residential
56
26
17
30
Other
56
31
25
25
Land
4,301
2,520
1,786
1,781
Developed land
1,506
805
496
701
Other land
2,795
1,715
1,290
1,080
Property assets from home purchase mortgage loans to
households
838
310
211
528
Other foreclosed property assets
213
87
63
126
Total property assets
7,364
3,773
2,729
3,591
The same information in the previous table reference to Banco Santander, S.A. is presented below:
EUR million
2021
Gross carrying
amount
Valuation
adjustments
Of which
impairment losses
on assets since
time of
foreclosure
Carrying amount
Property assets arising from financing provided to
construction and property development companies
974
373
290
601
Of which:
    Completed buildings
917
356
275
561
            Residential
186
64
49
122
            Other
731
292
226
439
    Buildings under construction
            Residential
            Other
    Land
57
17
15
40
            Developed land
47
15
13
32
            Other land
10
2
2
8
Property assets from home purchase mortgage loans to
households
773
279
190
494
Other foreclosed property assets
171
68
51
103
Total property assets
1,918
720
531
1,198
204
In addition, the Group has shareholdings in entities
holding foreclosed assets amounting to EUR 701 million
(mainly Project Quasar Investment 2017, S.L. with EUR
655 million), and equity instruments foreclosed or
received in payment of debts amounting to EUR 16
million.
In recent years, the Group and the Bank have considered
foreclosure to be a more efficient method for resolving
cases of default than legal proceedings. The Group and
the Bank initially recognise foreclosed assets at the
lower of the carrying amount of the debt (net of
provisions) and the fair value of the foreclosed asset
(less estimated costs to sell).Subsequent to initial
recognition, the assets are measured at the lower of fair
value (less costs to sell) and the amount initially
recognised.
The fair value of this type of assets is determined by the
Group and the Bank’s directors based on evidence
obtained from qualified valuers or evidence of recent
transactions.
The management of real estate assets on the balance
sheet is carried out through companies specializing in
the sale of real estate that is complemented by the
structure of the commercial network. The sale is realised
with at prices in accordance with the market situation
and the offer of wholesale buyers.
The gross movement in foreclosed properties were as
follows (EUR billion):
2021
2020
Gross additions
0.4
0.5
Disposals
(1.1)
(0.9)
Difference
(0.7)
(0.4)
4. Other credit risk aspects
4.1. Credit risk by activity in the financial markets
This section covers credit risk generated in treasury
activities with customers, mainly with credit institutions.
Transactions are undertaken through money market
financial products with different financial institutions
and through counterparty risk products, which serve the
Group’s customer needs.
According to regulation (EU) n.º 575/2013,  counterparty
credit risk, which includes derivative instruments,
transactions with a repurchase obligation, stock and
commodities lending, transactions with deferred
repayment and financing of guarantees, arises from the
likelihood that a counterparty will default before the
final settlement of the transaction's cash flows.
There are two methodologies for measuring this
exposure: (i) mark-to-market (MtM) methodology
(replacement value of derivatives) plus potential future
exposure (add-on); and the Montecarlo simulation to
calculate exposures for some countries and products.
We also calculate capital at risk and unexpected loss,
which is the difference between the economic capital,
net of guarantees and recoveries, and expected loss.
After market close, the exposures are recalculated by
adjusting transactions to their new time frame, adapting
potential future exposure and applying mitigation
measures (netting, collateral, etc.) to control exposures
directly against the limits approved by senior
management. Grupo Santander runs risk control with an
integrated system in real time that enables us to know
the exposure limit with any counterparty, product and
maturity and in any of Santander’s subsidiaries at any
time.
4.2. Concentration risk
Concentration risk control is a vital part of our
management. the Group and the Bank continuously
monitor ,the degree of concentration of its credit risk
portfolios using various criteria: geographic areas and
countries, economic sectors and groups of customers.
The board, via the risk appetite framework, determines
the maximum levels of concentration.
In line with these maximum levels and limits, the
executive risk committee establishes the risk policies
and reviews the appropriate exposure levels for the
effective management of the degree of concentration in
Santander’s credit risk portfolios.
Grupo and Banco Santander must adhere to the
regulation on large risks contained in the CRR, according
to which the exposure contracted by an entity with a
customer or group of associated customers will be
considered a large exposure when its value is equal to or
greater than  10% of eligible capital.
In addition, in order to limit large exposures, no entity
may assume exposures exceeding 25% of its eligible
capital with a single customer or group of associated
customers, having factored in the credit risk mitigation
effect contained in the regulation.
At the end of December, after applying risk mitigation
techniques, no group reaches the above-mentioned
thresholds.
Regulatory credit exposure with the 20 largest groups
within the scope of large risks represented 5% of the
outstanding credit risk with customers (lending to
customers plus off-balance sheet risks) as of December
2021.The detail, by activity and geographical area of  the
Group's risk concentration at 31 December  2021 is as
follows:
205
EUR million
2021
Total
Spain
Other EU
countries
America
Rest of the
world
Central banks and Credit institutions
327,984
93,520
59,499
81,647
93,318
Public sector
149,623
35,258
26,276
82,194
5,895
Of which:
Central government
124,807
23,188
24,525
71,639
5,455
Other central government
24,816
12,070
1,751
10,555
440
Other financial institutions (financial business activity)
120,294
14,228
40,344
35,818
29,904
Non-financial companies and individual entrepeneurs (non-
financial business activity) (broken down by purpose)
415,297
121,795
86,183
141,139
66,180
Of which:
Construction and property development
21,523
3,607
3,392
7,309
7,215
Civil engineering construction
5,857
2,397
2,442
847
171
Large companies
248,955
58,030
49,343
94,496
47,086
SMEs and individual entrepreneurs
138,962
57,761
31,006
38,487
11,708
Households – other (broken down by purpose)
543,804
88,763
95,458
122,809
236,774
Of which:
Residential
353,752
63,487
35,978
40,265
214,022
Consumer loans
169,897
18,078
56,879
75,837
19,103
Other purposes
20,155
7,198
2,601
6,707
3,649
Total
1,557,002
353,564
307,760
463,607
432,071
*  For the purposes of this table, the definition of risk includes the following items in the public balance sheet: 'Loans and advances to credit institutions', 'Loans
and advances to Central Banks', 'Loans and advances to Customers', 'Debt Instruments', 'Equity Instruments', 'Trading Derivatives', 'Hedging derivatives',
'Investments and financial guarantees given'.
The same information in the previous table referring to Banco Santander, S.A. it is presented below:
EUR million
2021*
Total
Spain
Other EU
countries
America
Rest of the
world
Central banks and Credit institutions
207,265
110,832
37,237
28,840
30,356
Public sector
29,774
23,332
1,002
2,588
2,852
Of which:
Central government
17,743
11,441
921
2,538
2,843
Other central government
12,031
11,891
81
50
9
Other financial institutions (financial business activity)
158,780
51,116
41,610
39,030
27,024
Non-financial companies and individual entrepreneurs (Non-
financial business activity) (broken down by purpose)
207,999
116,044
29,472
25,519
36,964
Of which:
Construction and property development
2,418
2,401
16
1
Civil engineering construction
3,683
2,094
909
510
170
Large companies
142,835
56,969
27,044
23,525
35,297
SMEs and individual entrepreneurs
59,063
54,580
1,503
1,484
1,496
Households – other (broken down by purpose)
77,853
76,439
352
362
700
Of which:
Residential
61,963
60,830
293
227
613
Consumer loans
8,607
8,550
5
16
36
Other purposes
7,283
7,059
54
119
51
Total
681,671
377,763
109,673
96,339
97,896
* For the purposes of this table, the definition of risk includes the following items in the public balance sheet: Loans and advances to credit institutions, Loans and
advances to Central Banks, Loans and advances to Customers, Debt Instruments, Equity Instruments, trading Derivatives, Hedging derivatives, Investments and
financial guarantees given.
206
4.3. Sovereign risk and exposure to other public sector
entities
Sovereign risk occurs in transactions with a central bank.
It includes the regulatory cash reserve, issuer risk with
the Treasury (public debt portfolio) and risk from
transactions with government institutions whose
funding only come from the state’s budgetary revenue
and not commercial operations.
The historic criteria of the Group can differ from regular
EBA stress test standards. Though the EBA does include
national, regional and local government institutions, it
does not include deposits with central banks, exposures
with insurance companies, indirect exposures via
guarantees and other instruments.
Grupo Santander´s local sovereign exposure, in
currencies other than the official currency of the country
of issuance, is not significant ( EUR 10,013 million,  2.6%
of total sovereign risk) according to our management
criteria. Furthermore, exposure to non-local sovereign
issuers involving cross-border risk is even less significant
(EUR 7,011 million, 1.8% of total sovereign risk).
Sovereign exposure in Latin America is mostly in local
currency, and is recognised in the local accounts and
concentrated in short- term maturities.
Over the past few years, total exposure to sovereign risk
has remained in line with regulatory requirements and
our strategy to manage this portfolio.
The shifts observed in the different countries exposure is
due to our liquidity management strategy and the
hedging of interest and exchange rates risks. Santander's
exposure spreads among countries with varied
macroeconomic outlooks and dissimilar scenarios in
terms of growth, interest and exchange rates.
Our investment strategy for sovereign risk considers
country’s credit quality to set the maximum exposure
limits*:
2021
2020
AAA
15%
18%
AA
32%
25%
A
26%
25%
BBB
11%
14%
Less than BBB
16%
18%
*Internal ratings are applied
207
The exposure in the table below is disclosed following
the latest amendments of the regulatory reporting
framework carried out by the EBA, which entered into
force in 2021:
2021
2020
Portfolio
Country
Financial assets
designated at
fair value
through profit
or loss
Financial assets
at fair value
through other
comprehensive
income
Financial assets
at amortized
cost
Non-trading
financial assets
mandatorily at
fair value
through profit or
loss
Total net direct
exposure
Total net direct
exposure
Spain
2,574
2,805
14,178
19,557
24,245
Portugal
(20)
2,287
4,277
6,544
8,730
Italy
(73)
634
323
884
4,015
Greece
Ireland
9
9
Rest Eurozone
(233)
1,231
2,631
3,629
4,054
UK
(538)
676
228
366
(97)
Poland
(15)
10,819
489
11,293
10,947
Rest of Europe
77
1,291
1,368
1,070
US
1,050
13,803
7,616
22,469
15,548
Brazil
8,733
16,432
3,394
28,559
27,717
Mexico
2,150
10,253
1,106
13,509
21,029
Chile
56
1,134
4,881
6,071
6,955
Rest of America
94
651
680
1,425
958
Rest of the World
2
1,524
1,811
3,337
4,752
TOTAL
13,780
62,326
42,914
119,020
129,923
208
5. Forborne loan portfolio
Grupo and Banco Santander's internal forbearance policy
acts as a reference for Group's subsidiaries and the
Bank's units. It shares the principles of regulations and
supervisory expectations. It includes the requirements of
the EBA guidelines on management of non performing
and forborne exposures.
It defines forbearance as the modification of the
payment conditions of a transaction to allow a customer
experiencing financial difficulties (current or
foreseeable) to fulfil their payment obligations. If
forbearance is not allowed, there would be reasonable
certainty that the customer would not be able to meet
their financial obligations.
In addition, this policy also sets down rigorous criteria
for evaluating, classifying and monitoring forbearances
to ensure the strictest possible care and diligence in
recovering due amounts. Thus, it dictates that we must
adapt payment obligations to customers' current
circumstances. Our forbearance policy also defines
classification criteria to ensure we recognize risks
appropriately. They must remain classified as non-
performing or in watch-list for a prudential period for
reasonable certainty of repayment.
Forbearances may never be used to delay the immediate
recognition of losses or hinder the appropriate
recognition of risk of default.
A consolidated level, the total volume of forborne
portfolio, at the end of December 2021, stood at EUR
36,042 million. After years of decreases due to the
positive macroeconomic situation of the group's main
geographies, the forborne stock remained practically flat
in 2020. The portfolio increased by 24% in 2021, as a
result of greater volume of forbearance carried out to
attend to the needs of customers facing financial
difficulties. In terms of credit quality, 43% of the loans  is
classified as doubtful, with a coverage ratio of 41%.
The following terms are used with the meanings
specified below:
Refinancing transaction: transaction that is granted
or used, for reasons relating to current or
foreseeable financial difficulties of the borrower, to
repay one or more of the transactions granted to it,
or through which the payments on such transactions
are brought fully or partially up to date, in order to
enable the borrowers of the cancelled or refinanced
transactions to repay their debt (principal and
interest) because they are unable, or might
foreseeably become unable, to comply with the
conditions there of in due time and form.
Restructured transaction: transaction with respect to
which, for economic or legal reasons relating to
current or foreseeable financial difficulties of the
borrower, the financial terms and conditions are
modified in order to facilitate the payment of the
debt (principal and interest) because the borrower is
unable, or might foreseeably become unable, to
comply with the aforementioned terms and
conditions in due time and form, even if such
modification is envisaged in the agreement.
209
Current refinancing and restructuring balances
Amounts in EUR million, except number of transactions that are in units
2021
Total
Of which, non-performing/Doubtful
Without real guarantee
With real guarantee
Without real guarantee
With real guarantee
Maximum amount of
the actual collateral
that can be
considered
Impairment of
accumulated
value or
accumulated
losses in fair
value due to
credit risk
Maximum amount of
the actual collateral
that can be considered
Impairment of
accumulated
value or
accumulated
losses in fair
value due to
credit risk
Number of
transactions
Gross amount
Number of
transactions
Gross
amount
Real estate
guarantee
Rest of real
guarantees
Number of
transactions
Gross
amount
Number of
transactions
Gross
amount
Real estate
guarantee
Rest of real
guarantees
Credit entities
Public sector
32
18
15
7
2
4
7
1
14
5
2
4
Other financial institutions and:
individual shareholder
1,002
93
720
200
102
79
30
421
51
528
67
54
7
27
Non-financial institutions and
individual shareholder
248,375
11,548
47,865
8,915
5,517
1,206
4,367
116,009
4,377
32,263
5,261
3,308
424
3,891
Of which financing for
constructions and property
development
8,576
113
1,321
550
390
40
176
4,638
63
849
301
172
34
148
Other warehouses
3,650,507
4,491
451,930
10,771
6,063
3,615
3,860
1,839,629
1,879
162,177
3,898
2,641
434
2,382
Total
3,899,916
16,150
500,530
19,893
11,684
4,900
8,261
1,956,066
6,308
194,982
9,231
6,005
865
6,304
Financing classified as non-current
assets and disposable groups of
items that have been classified as
held for sale
210
The same information in the previous table referring to Banco Santander, S.A. it is presented below:
Amounts in EUR million, except number of transactions that are in units
2021
Total
Of which, non-performing/Doubtful
Without real guarantee
With real guarantee
Without real guarantee
With real guarantee
Maximum amount of
the actual collateral
that can be
considered
Impairment of
accumulated
value or
accumulated
losses in fair
value due to
credit risk
Maximum amount of
the actual collateral
that can be
considered
Impairment
of
accumulated
value or
accumulated
losses in fair
value due to
credit risk
Number of
transactions
Gross amount
Number of
transactions
Gross
amount
Real estate
guarantee
Rest of real
guarantees
Number of
transactions
Gross amount
Number of
transactions
Gross
amount
Real estate
guarantee
Rest of real
guarantees
Credit entities
Public sector
24
17
8
4
2
1
3
1
7
2
2
1
Other financial companies and sole
proprietorships (financial business
activity)
411
72
150
156
67
72
26
149
36
109
31
26
1
24
Non-financial corporations and sole
proprietorships (non-financial business
activity)
93,041
8,546
23,508
6,197
4,110
758
2,613
31,926
2,828
18,940
3,810
2,689
227
2,397
Of which, financing for construction
and real estate development (including
land)
42
3
340
192
159
22
38
39
2
223
110
77
22
34
Other warehouses
30,917
501
41,846
3,259
2,797
29
811
12,757
269
29,960
2,083
1,714
6
745
Total
124,393
9,136
65,512
9,616
6,976
859
3,451
44,835
3,134
49,016
5,926
4,431
234
3,167
Financing classified as non-current assets
and disposable groups of items that have
been classified as held for sale
211
In 2021, the amortised cost of financial assets at a
consolidated level, whose contractual cash flows were
modified during the year when the corresponding loss
adjustment was valued at an amount equal to the
expected credit losses over the life of the asset
amounted to EUR 2,480 million without these
modifications having a material impact on the income
statement. Also, during 2021, the total of financial
assets that have been modified since the initial
recognition, and whose correction for expected loss has
gone from being valued during the entire life of the asset
to the following twelve months, amounts to EUR 1,868
million.
In 2021, the amortised cost of financial assets owned by
the Bank whose contractual cash flows were modified
during the year when the corresponding loss adjustment
was valued at an amount equal to the expected credit
losses over the life of the asset amounted to EUR 1,396
million, without these modifications having a material
impact on the income statement. Also, during 2021, the
total of financial assets owned by the Bank that have
been modified since the initial recognition, and whose
correction for expected loss has gone from being valued
during the entire life of the asset to the following twelve
months, amounts to EUR 711 million.
The transactions presented in the foregoing tables were
classified at 31 December 2021 by nature, as follows:
Non-performing: Operations that rest on an
inadequate payment scheme will be classified within
the non-performing category, regardless they
include contract clauses that delay the repayment of
the operation throughout regular payments or
present amounts written off the balance sheet for
being considered irrecoverable.
Performing: Operations not classifiable as non-
performing will be classified within this category.
Operations will also be classified as normal if they
have been reclassified from the non-performing
category for complying with the specific criteria
detailed below:
a)A period of a year must have passed from the
refinancing or restructuring date.
b)The owner must have paid for the accrued
amounts of the capital and interests, thus
reducing the rearranged capital amount, from the
date when the restructuring of refinancing
operation was formalised.
c) The owner must not have any other operation with
amounts past due by more than 90 days on the
date of the reclassification to the normal risk
category.
Attending to the credit attention 57% of the forborne
loan transactions are classified as other than non-
performing. Particularly noteworthy are the level of
existing guarantees (46% of transactions are secured by
collateral) and the coverage provided by specific
allowances (representing 23% of the total forborne loan
portfolio and 41% of the non-performing portfolio).
c) Market risk, structural and liquidity risk
1. Activities subject to market risk and types of market
risk
Activities exposed to market risk encompass transactions
where risk is assumed as a consequence of potential
changes in interest rates, inflation rates, exchange rates,
stock prices, credit spreads, commodity prices, volatility
and other market factors; the liquidity risk from our
products and markets, and the balance-sheet liquidity
risk. Therefore, they include trading risks and structural
risks.
Interest rate risk arises from movements in interest
rates that reduce the value of a financial instrument,
a portfolio or the Group or the Bank. It can affect
loans, deposits, debt securities, most assets and
liabilities held for trading, and derivatives.
Inflation rate risk arises from movements in inflation
that can reduce the value of a financial instrument, a
portfolio or the Group or the Bank. It can affect loans,
debt securities and derivatives (e.g. inflation swaps
and futures) whose profitability is linked to inflation.
Exchange rate risk is the possibility of loss because
the currency of a long or open position will
depreciate against the base currency. It can affect
debt in subsidiaries whose local currency is not the
euro, as well as loans denominated in a foreign
currency.
Equity risk is the possibility of loss from open
positions in securities if their market price or
expected future dividends fall. It affects shares, stock
market indices,  convertible bonds and derivatives
with shares as the underlying asset (put, call, equity
swaps, etc.)
Credit spread risk is the possibility of loss from open
positions in fixed-income securities or credit
derivatives if their yield curve, or the recovery rate of
their issuer or type change. A spread is the yield
difference between financial instruments against a
benchmark (e.g. the internal rate of return (IRR) of
government bonds and interbank interest rates).
Commodity price risk is the possibility of loss from
movements in commodity prices. Grupo and Banco
Santander's commodity exposure is minor and stems
mainly from commodity derivatives.
212
Volatility risk is the possibility of loss caused by
movements in interest rates, exchange rates, the
stock market, credit spreads and other risk factors
affecting portfolio value. It is inherent to all financial
instruments whose value considers volatility
(especially options contracts).
Derivative contracts (such as options, futures, forwards
and swaps) can mitigate market risks partially or fully.
Additionally, other more complex hedging market risks
are considered, such as correlation risk, market liquidity
risk, prepayment or cancellation risk, and underwriting
risk.
Balance sheet liquidity risk (unlike market liquidity risk)
is the possibility of loss caused by forced disposal of
assets or cash flow imbalance if the bank meets its
payment obligations late or at excessive cost. It can
cause losses by forced asset sales or impacts on margins
due to the mismatch between expected cash inflows and
outflows.
Pension and actuarial risks (explained at the end of this
section) also depend on market variables.
Grupo and Banco Santander aim to comply with the
Basel Committee’s Fundamental Review of the Trading
Book (FRTB) and the EBA’s Guidelines on the
management of interest rate risk arising from non-
trading book activities. The purpose of several projects
Grupo Santander runs is to provide risk control managers
and teams with the best market risk management tools
under the right governance framework for the models
Grupo Santander uses for metric reporting; and to
comply with regulation on the risks mentioned above.
2. Trading market risk management
Setting market risk limits in a dynamic process according
to the risk appetite in the annual limits plan prepared by
senior management and extended to all subsidiaries.
The standard methodology for risk management and
control in trading, measures the maximum expected loss
with a specific level of confidence and time frame. The
standard for historical simulation is a confidence level of
99% over one day. We apply statistical adjustments
efficiently to incorporate recent developments affecting
our levels of risk. Our time frame is two years or at least
520 days from the reference date of the VaR calculation.
The balance sheet items in the Group’s consolidated
position that are subject to market risk are shown below,
distinguishing those positions for which the main risk
metric is VaR from those for which risk monitoring is
carried out using other metrics:
213
EUR million
Main market risk metric
Balance sheet
amount
VaR
Other
Main risk factor for 'Other'
balance
Assets subject to market risk
Cash, cash balances at central banks and other
deposits on demand
210,689
210,689
Interest rate
Financial assets held for trading
116,953
116,953
Non-trading financial assets mandatorily at fair
value through profit or loss
5,536
4,042
1,494
Interest rate, spread
Financial assets designated at fair value through
profit or loss
15,957
5,489
10,468
Interest rate, spread
Financial assets designated at fair value through
other comprehensive income
108,038
2,453
105,585
Interest rate, spread
Financial assets at amortized cost
1,037,898
1,037,898
Interest rate, spread
Hedging derivatives
4,761
4,761
Interest rate, exchange
rate
Changes in the fair value of hedged items in
portfolio hedges of interest risk
410
410
Interest rate
Other assets
95,593
Total assets
1,595,835
Liabilities subject to market risk
Financial liabilities held for trading
79,469
79,469
Financial liabilities designated at fair value through
profit or loss
32,733
390
32,343
Interest rate, spread
Financial liabilities at amortized cost
1,349,169
1,349,169
Interest rate, spread
Hedging derivatives
5,463
5,463
Interest rate, exchange
rate
Changes in the fair value of hedged items in
portfolio hedges of interest rate risk
248
248
Interest rate
Other liabilities
31,700
Total liabilities
1,498,782
Equity
97,053
214
The following table displays the latest and average VaR
values at 99% by risk factor over the last three years. It
also shows the minimum and maximum VaR values in
2021 and 97.5% at the end of December 2021:
VaR statistics and expected shortfall by risk factorA
EUR million. VaR at 99% and ES at 97.5% with one day time horizon
2021
2020
VaR (99%)
ES (97.5%)
VaR
Min
Average
Max
Latest
Latest
Average
Latest
Total Trading
6.8
10.5
15.9
12.3
11.9
12.5
8.3
Diversification effect
(6.3)
(12.9)
(26.6)
(13.4)
(15.0)
(13.0)
(11.8)
Interest rate
6.0
9.6
15.3
9.1
9.4
9.2
5.4
Equities
2.2
3.5
7.7
5.1
5.1
4.4
3.1
Exchange rate
1.9
4.2
8.0
5.7
5.6
5.9
6.0
Credit spread
2.6
4.8
8.0
5.1
6.0
5.5
4.5
Commodities
0.4
1.3
3.5
0.7
0.8
0.5
1.1
Total Europe
6.1
9.3
16.1
9.9
9.7
10.5
8.0
Diversification effect
(5.2)
(9.3)
(16.9)
(12.6)
(13.1)
(10.7)
(8.9)
Interest rate
5.3
7.7
11.7
7.1
6.7
7.9
6.5
Equities
1.8
3.3
8.3
5.8
5.2
4.3
3.0
Exchange rate
1.6
2.8
5.0
4.5
4.9
3.5
2.9
Credit spread
2.6
4.8
8.0
5.1
6.0
5.5
4.5
Commodities
Total North America
1.6
2.5
7.4
2.7
2.8
6.6
2.9
Diversification effect
0.2
(0.7)
(2.9)
(0.6)
(0.5)
(2.2)
(1.0)
Interest rate
1.3
2.5
7.0
2.7
2.7
3.4
3.3
Equities
0.1
1.5
0.3
0.1
Exchange rate
0.1
0.6
1.8
0.6
0.6
5.1
0.5
Total South America
3.3
5.9
10.5
6.3
6.4
5.6
4.5
Diversification effect
(1.2)
(4.9)
(16.0)
(5.1)
(3.8)
(3.8)
(5.4)
Interest rate
3.0
5.5
12.2
5.8
6.3
5.2
4.1
Equities
0.4
1.2
3.2
1.1
1.0
1.0
0.5
Exchange rate
0.7
2.8
7.6
3.8
2.1
2.7
4.2
Commodities
0.4
1.3
3.5
0.7
0.8
0.5
1.1
A. In South and North America, VaR levels of credit spreads and commodities are not shown separately due to their low or null materiality.
At the end of December, VaR had increased by EUR
4 million higher than at  the end of 2020; however,
average VaR fell by EUR 2.0 million. Average VaR fell for
most risk factors owing to low market volatility
throughout the year. By region, average VaR decreased
in Europe and especially in North America with lower
exchange rate volatility.
By risk factor, VaR has followed a generally stable trend
in recent years. For many factors, temporary VaR
increases generally owe more to short-term price
volatility than to significant changes in positions.
Backtesting
Actual losses can differ from predicted losses because of
the VaR’s limitations. Grupo Santander measures the
accuracy of the VaR calculation model to make sure it is
reliable. The most important tests Grupo Santander runs
involve backtesting:
Backtesting of hypothetical P/L and of the entire
trading book showed no exceptions to  99% VaR and
VaE in 2021.
The exceptions observed in the past year are
consistent with the assumptions of the VaR
calculation model.
215
IBOR Reform
Regulatory and supervisory context
In 2013, IOSCO published the Principles for Financial
Benchmarks (IOSCO Principles) that establish standards
for the development of benchmarks. Subsequently, the
FSB established the Official Sector Steering Group
(OSSG) for the application of the IOSCO Principles to the
IBOR (Interbank Offered Rates) indices. Since then, the
central banks and regulators of various jurisdictions have
organized working groups to recommend alternative
indices to indices such as the EONIA (Euro Overnight
Index Average) and the LIBORs (London Interbank
Offered Rates).
On 13 September 2018, the European Central Bank's
working group recommended that the euro short-term
interest rate (€STR) replace the EONIA. From 2 October
2019, the date on which the €STR was made available,
the EONIA changed its methodology to be calculated as
€STR plus a spread of 8.5 basis points. This change in the
EONIA methodology was intended to facilitate the
transition of the EONIA market to €STR before its
definitive cessation on 3 January 2022.
On 5 March 2021, the Financial Conduct Authority (FCA)
announced the final dates for the cessation of LIBORs:
On 31 December 2021, the publication of USD LIBOR
(1 week and 2 months term), CHF LIBOR (all terms),
GBP LIBOR (overnight term, 1 week, 2 months and
12 months), JPY LIBOR (overnight term, 1 week, 2
months, and 12 months) and EUR LIBOR (all terms).
On 31 December 2021, the calculation methodology
of some LIBORs was reformed to publish temporary
synthetic LIBORs that became non-representative:
GBP LIBOR (1-month, 3-month and 6-month terms)
and JPY LIBOR (1-month term, 3 months and 6
months).
On 30 June 2023, the publication of the USD LIBOR
will cease (overnight terms, 1 month, 3 months, 6
months and 12 months).
In October 2020, the International Swaps and
Derivatives Association (ISDA) launched the fallbacks
Protocol and Supplement for IBORs (effective 25 January
2021), and provided market participants with of new
derivatives fallbacks of LIBORs (among others IBOR, such
as EURIBOR) for current derivative contracts and for new
contracts. Additionally, on 19 August 2021, ISDA
launched a new protocol that allowed entities to
incorporate a fallback to the EONIA as the rate applicable
to collateral in ISDA collateral agreements (known as
CSAs). Banco Santander SA and various Santander Group
entities have adhered to these protocols.
On December 2020, the Council of the European Union
endorsed the modification of the EU Benchmark
Regulation (BMR), giving the European Commission the
power to establish a legislative solution that proposes a
replacement rate to indices the cessation of which could
cause a significant disturbance to the functioning of
financial markets in the EU. In this context, on 14 and 21
October 2021, the European Commission published the
Implementing Regulations regarding the designation of
a substitute reference index for CHF LIBOR and EONIA.
Given the relevance of the IBOR indices, the volume of
contracts and exposures is very high in the banking
sector. Santander Group has a significant number of
contracts linked to these interest rates. The most
relevant are EURIBOR, EONIA, and LIBOR. These
benchmarks are widely used, including derivative
products, corporate loans, retail, discount products,
deposits, repos, securities lending, collateral
agreements, and floating rate notes, among others.
LIBOR and EONIA Reform
The main risks to which Santander is exposed arising
from the transition of the EONIA and LIBORs are: (i) legal
risks arising from potential changes in the
documentation required for new or existing operations;
(ii) financial and accounting risks derived from market
risk models and from the valuation, coverage,
cancellation and recognition of the financial instruments
associated with the reference indices; (iii) business risk
that revenues from LIBOR-linked products decline; (iv)
pricing risks arising from how changes to benchmark
indices could impact pricing mechanisms on some
instruments; (v) operational risks arising from the
potential requirement to adapt IT systems, trade
reporting infrastructure and operational processes; (vi)
conduct risks arising from the potential impact of
communications with customers during the transition
period and (vii) litigation risks regarding our existing
products and services, which could adversely impact our
profitability.
In order to monitor the risks and address the challenges
of the transition, Santander launched the IBOR Transition
Programme in 2019. The global program ensures that all
affected business units and subsidiaries have a
consistent understanding of the risks associated with the
transition and can take appropriate steps to mitigate
them.
This transition program incorporates the
recommendations, guidelines and milestones defined by
the regulators and working groups of the different
jurisdictions. The structure of the program focuses on
the following areas: Technology and Operations, Legal,
Customer Relations, Risk Management and Models,
Conduct and Communication, and Accounting and
Finance.
216
During 2021, the IBOR Transition Program has focused
on making all the contractual, commercial, operational
and technological changes necessary to undertake the
transition of the LIBOR and EONIA rates that have been
discontinued in 2021. In 2022, the program will continue
to attend to the next steps of the transition related to the
management of the contract history and the milestone
of the cessation of the LIBOR dollar of June 2023. 
In addition, Grupo and Banco Santander continue to
participate, throughout 2022, in the initiatives developed
by the public and private sectors related to the reform of
the interest rate reference indices.
Additionally, see information included in notes 1.b and
32.
3. Structural balance sheet risks
3.1. Main aggregates and variations
Consistent with previous years, the market risk profile of
Grupo and Banco Santander’s balance sheet remained
moderate in 2021 in terms of asset, shareholders’ equity
and NII volumes.
To measure interest rate risk, Grupo Santander uses
statistical models based on strategies to mitigate
structural risk with interest-rate instruments (such as
bonds and derivatives) to keep risk profile within risk
appetite.
The NII and EVE sensitivities below are based on
scenarios of parallel interest rate movements from -100
to +100 basis points.
Structural VaR
With such a homogeneous metric as VaR, we can fully
monitor market risk in the banking book We differentiate
fixed income based on interest rates and credit spreads
in ALCO portfolios, FX rates and shares.
In general, the structural VaR of Grupo and Banco
Santander total assets and equity is minor.
Structural VaR
EUR million. Structural VaR 99% with a temporary horizon of one day.
2021
2020
2019
Min
Average
Max
Latest
Average
Latest
Average
Latest
Structural VaR
895.8
993.7
1,090.7
1,011.9
911.1
903.2
511.4
729.2
Diversification effect
(158.8)
(327.3)
(431.4)
(240.2)
(349.8)
(263.4)
(304.2)
(402.0)
VaR Interest Rate*
224.2
400.7
540.5
287.8
465.1
345.5
345.6
629.7
VaR Exchange Rate
521.3
600.6
655.2
655.2
499.9
502.6
308.1
331.7
VaR Equities
309.1
319.7
326.4
309.1
295.9
318.5
161.9
169.8
* Includes credit spread VaR on ALCO portfolios.
217
Structural interest rate risk
Europe
In general, the NII and EVE of Grupo Santander's main
balance sheets (i.e. Santander España and Santander UK)
show positive sensitivity to rising interest rates. Across
our footprint, exposure was moderate in relation to
annual budget and capital levels in 2021.
At the end of December 2021, under the scenarios
previously described, the most significant NII sensitivity
risk concentration in euros amounted to EUR 703 million;
in pounds sterling, EUR 541 million; in Polish złoty EUR
65 million; and in the US dollar, EUR 54 million.
The most significant EVE risk concentration amounted to
EUR 3,684 million; in the yield curve of the euro; of the
pound sterling, EUR 1,056 million ; of the US dollar, EUR
221 million; and of the Polish zloty EUR 56 million, all
relating to the interest rate cut risks.
North America
In general, the NII and EVE of Grupo Santander's North
American balance sheets tend to show positive
sensitivity to rising interest rates. Exposure was
moderate in relation to annual budget and capital levels
in 2021.
At the end of December, the most significant risk to NII
was mainly in the US and amounted to EUR 152 million.
South America
The EVE and NII of our Grupo Santander's South
American balance sheets are positioned for interest rate
cuts.
Exposure in all countries was moderate in relation to the
annual budget and capital levels in 2020.
In 2021, exposure was moderate in relation to annual
budget and capital levels. At the end of December, the
most significant risks to NII were mainly in Chile (EUR
86 million) and Brazil (EUR 83 million).
The most significant risks to EVE were recorded in Brazil
(EUR 271 million) and Chile (EUR 258 million).
Structural foreign currency rate risk/results hedging
Grupo Santander's structural FX risk stems mainly from
the income and hedging of foreign currency transactions
for permanent financial investments. In the dynamic
management of this risk, Grupo Santander aims to limit
the impact of FX rate movements on the core capital
ratio. In 2021, the hedged of the different currencies that
have an impact on our core capital ratio was close to
100%.
In December 2021, the permanent exposures (with
potential impact on shareholders’ equity) were, from
largest to smallest, in US dollars, British pounds sterling,
Brazilian reais, Mexican pesos, Chilean pesos and Polish
złoty.
Grupo Santander uses FX derivatives to hedge part of
those permanent positions. The Finance division
manages FX risk and hedging for the expected profits
and dividends of subsidiaries whose base currency is not
the euro.
Structural equity risk
Grupo Santander holds equity positions in its banking
and trading books. They are either equity instruments or
stock, depending on the share of ownership or control.
By the end of December 2021, the equities and
shareholdings in the banking book were diversified
among Spain, China, Morocco, Poland and other
countries. Most of them invest in the financial and
insurance sectors. Grupo Santander has minor equity
exposure to property and other sectors.
Structural equity positions are exposed to market risk.
VaR is calculated for these positions with a set of market
prices and proxies. At the end of December 2021, VaR at
a 99% confidence level over a one day horizon was EUR
325 million (EUR 319 million at the end of 2020).
3.2. Methodologies
Structural interest rate risk
As part of structural risk, interest rate risk in the banking
book (IRRBB) is the main source of balance sheet risk.
Grupo Santander measures the potential impact of
interest rate movements on EVE and NII. Because
changing rates may generate impacts, Grupo Santander
must manage and control many subtypes of interest rate
risk, such as repricing risk, curve risk, basis risk and
option risk (e.g. behavioural or automatic). Interest rate
risk in the balance sheet and market conditions and
outlooks could necessitate certain financial measures to
achieve Grupo Santander's desired risk profile (such as
selling positions or setting interest rates on products we
market). The metrics Grupo Santander uses to monitor
IRRBB include NII and EVE sensitivity to interest rate
movements.
Net interest income sensitivity
Net interest income (NII) is the difference between
interest income from assets and the interest cost of
liabilities in the banking book over a typical one- to
three-year horizon (one year being standard in Grupo
Santander). Because NII sensitivity is the difference in
income between a selected scenario and the base
scenario, its values can be as many as considered
scenarios. It enables us to see short-term risks and
supplement economic value of equity (EVE) sensitivity.
218
Economic value of equity sensitivity
Economic value of equity (EVE) is the difference between
the current value of all assets minus the current value of
all liabilities in the banking book. It does not include
shareholders’ equity and non-interest-bearing
instruments. Because EVE sensitivity is the difference in
EVE between a selected scenario and the base scenario,
it can have as many values as considered scenarios. It
enables us to see long-term risks and supplement NII
sensitivity.
Structural exchange-rate risk/hedging of results
Every day, Grupo Santander measures FX positions, VaR
and P/L.
Structural equity risk
Grupo Santander measures equity positions, VaR and P/
L.
4. Liquidity risk
Structural liquidity management aims to fund the Group
and the Bank’s recurring activity optimising maturities
and costs, while avoiding taking on undesired liquidity
risks.
Group and Banco Santander’s liquidity management is
based on the following principles:
Decentralised liquidity model.
Medium- and long-term (M/LT) funding needs must
be covered by medium- and long-term instruments.
High contribution from customer deposits due to the
retail nature of the balance sheet.
Diversification of wholesale funding sources by
instruments/ investors, markets/currencies and
maturities.
Limited recourse to short-term funding.
Availability of sufficient liquidity reserves, including
standing facilities/discount windows at central banks
to be used in adverse situations.
Compliance with regulatory liquidity requirements
both at Group and subsidiary level, as a new factor
conditioning management.
The effective application of these principles by all
institutions comprising the Group required the
development of a unique management framework built
upon three fundamental pillars:
A solid organisational and governance model that
ensures the involvement of the subsidiaries’ senior
management in decision-taking and its integration
into the Group’s global strategy. The decision-
making process for all structural risks, including
liquidity and funding risk, is carried out by local Asset
and Liability Committees (ALCOs) in coordination
with the global ALCO, which is the body empowered
by the Bank's board in accordance with the corporate
Asset and Liability Management (ALM) framework.
This governance model has been reinforced as it has
been included within Santander's Risk Appetite
Framework. This framework meets demands from
regulators and market players emanating from the
financial crisis to strengthen banks’ risk management
and control systems.
In-depth balance sheet analysis and measurement of
liquidity risk, supporting decision-taking and its
control. The objective is to ensure the Group and the
Bank maintain adequate liquidity levels necessary to
cover its short- and long-term needs with stable
funding sources, optimising the impact of their costs
on the income statement. Grupo and Banco
Santander’s liquidity risk management processes are
contained within a conservative risk appetite
framework established in each geographic area in
accordance with its commercial strategy. This risk
appetite establishes the limits within which the
subsidiaries and, therefore, the Bank can operate in
order to achieve their strategic objectives.
Management adapted in practice to the liquidity
needs of each business. Every year, based on
business needs, a liquidity plan is developed which
seeks to achieve:
a solid balance sheet structure, with a diversified
presence in the wholesale markets;
the use of liquidity buffers and limited
encumbrance of assets;
compliance with both regulatory metrics and
other metrics included in each entity’s risk
appetite statement.
219
Over the course of the year, all dimensions of the plan
are monitored.
Grupo Santander continues to develop the ILAAP
(Internal Liquidity Adequacy Assessment Process), an
internal self-assessment of liquidity adequacy which
must be integrated into the Group’s other risk
management and strategic processes. It focuses on both
quantitative and qualitative matters and is used as an
input to the SREP (Supervisory Review and Evaluation
Process). The ILAAP evaluates the liquidity position both
in ordinary and stressed scenarios.
i. Liquidity risk measurement
Grupo Santander measures liquidity risk with tools and
metrics that account for the appropriate risk factors
a) Liquidity buffer
The liquidity buffer is the total liquid assets a bank has to
cope with cash outflows during periods of stress. The
assets are free of encumbrances and can be used
immediately to generate liquidity without losses or
excessive discounts. The liquidity buffer is a tool for
calculating most liquidity metrics. It is also a metric with
defined limits for each subsidiary.
b) Liquidity Coverage Ratio (LCR)
The liquidity coverage ratio (LCR) is a regulatory metric.
Its purpose is to promote the short-term resilience of a
bank’s liquidity profile and make sure it has enough
high-quality liquid assets to withstand a considerable
idiosyncratic or market stress scenario over 30 calendar
days.
c) Wholesale liquidity metric
The wholesale liquidity metric measures the number of
days Grupo and Banco Santander would survive if it used
liquid assets to cover lost liquidity from a wholesale
deposit run-off (without possible renewal) over a set
time horizon.Grupo and Banco Santander also uses it as
an internal short-term liquidity metric to reduce risk
from dependence on wholesale funding.
d) Net Stable Funding Ratio (NSFR)
The net stable funding ratio (NSFR) is a regulatory metric
we use to measure long-term liquidity risk. It is the ratio
of available stable funding to required stable funding. It
requires banks to keep a robust balance sheet, with off-
balance-sheet assets and operations financed by stable
liabilities.
e) Asset Encumbrance metrics
Grupo and Banco Santander calculate two metrics to
measure asset encumbrance risk. On the one hand, the
asset encumbrance ratio gives the proportion of
encumbered assets to total assets; on the other, the
structural asset encumbrance ratio gives the proportion
of encumbered assets by structural funding transaction
(namely long-term collateralized issues and credit
transactions with central banks).
f) Other additional liquidity indicators
In addition to traditional tools to measure short and
long-term liquidity and funding risk, Grupo and Banco
Santander have a set of additional liquidity indicators to
complement those and to measure other non-covered
liquidity risk factors. These include concentration
metrics, such as the main and the five largest funding
counterparties, or the distribution of funding by
maturity.
In addition, we calculate a number of metrics on the
institution’s ability to generate liquidity through
collateralized financing, such as overcollateralization,
eligibility ratios assets without charges and deadlines for
their placement.
g) Liquidity scenario analysis
As liquidity stress tests, four standard scenarios have
been defined:
i.An idiosyncratic scenario of events detrimental only
to the Group;
ii.a local market scenario of events highly detrimental
to a base country’s financial system or real economy;
iii.a global market scenario of events highly
detrimental to the global financial system; and
iv.combined scenario consisting of a combination of
more severe idiosyncratic and market events (local
and global) occurring simultaneously and
interactively.
Grupo and Banco Santander use these stress test
outcomes as tools to determine risk appetite and
support business decision-making.
220
h) Liquidity early warning indicators
The system of early warning indicators (EWI) consists of
quantitative and qualitative liquidity indicators that help
predict stress situations and weaknesses in the funding
and liquidity structure of Grupo Santander entities.
External indicators relate to market-based financial
variables; internal indicators relate to our own
performance.
i) Intraday liquidity metrics
Grupo Santander follows Basel regulation and calculates
several metrics and stress scenarios for intraday liquidity
risk to maintain a high level of control.
ii. Liquidity coverage ratio and net stable financing ratio
As regards the liquidity coverage ratio (LCR), the
regulatory requirement for this ratio, set at 100%, has
been at its maximum level since 2018.
Below is a breakdown of the composition of the Group's
liquid assets under the criteria set out in the supervisory
prudential reporting (Commission Implementing
Regulation (EU) 2017/2114 of 9 November 2017) for the
determination of high quality liquid assets for the
calculation of the LCR ratio (HQLA):
EUR million
2021
2020
Amount
weighted
applicable
Amount
weighted
applicable
High-quality liquid assets-
HQLAs
Cash and reserves available
at central banks
206,507
149,893
Marketable assets Level 1
81,925
104,270
Marketable assets Level 2A
3,422
5,272
Marketable assets Level 2B
5,446
4,200
Total high-quality liquid
assets
297,300
263,635
In relation to the net stable funding ratio (NSFR), its
definition was approved by the Basel Committee in
October 2014. The transposition of this requirement to
the European regulation took place in June 2019 with
the publication in the Official Gazette of the European
Union of Regulation (EU) 2019/876 of the European
Parliament and of the Council of May 20, 2019. The
Regulation establishes that entities must have a net
stable financing ratio, as defined in the Regulation,
higher 100% from June 2021. For this reason, the figures
for 2019 and 2020 for this ratio are calculated using the
Basel methodology, while those for 2021 already
include the requirement as transposed into European
regulations.
The liquidity coverage ratio, broken down by component,
and the net stable funding ratio for the Group at year-
end 2021 and and 2020 are presented below:
EUR million
2021
2020
High-quality liquid assets-HQLAs
(numerator)
297,300
263,635
Total net cash outflows (denominator)
181,953
157,368
Cash outflows
233,294
204,813
Cash inflows
51,341
47,445
LCR ratio (%)
163%
168%
NSFR ratio (%)
126%
120%
As regards the funding structure, given the
predominantly commercial nature of the Group's
balance sheet, the loan portfolio is mainly financed by
customer deposits. Note 22 of the consolidated annual
accounts and Note 20 of the individual accounts, under
the name, Debt securities' shows the composition of
these liabilities on the basis of their nature and
classification, the movements and maturity profile of the
debt securities issued by the Group, reflecting the
strategy of diversification by products, markets, issuers
and maturities followed by the Group in its approach to
the wholesale markets.
iii. Asset encumbrance
In accordance with the guidelines established by the
European Banking Authority (EBA) in 2014 on committed
and uncommitted assets, the concept of assets
committed in financing transactions (asset
encumbrance) includes both on-balance sheet assets
provided as collateral in transactions to obtain liquidity
and off-balance sheet assets that have been received
and reused for similar purposes, as well as other assets
associated with liabilities for reasons other than
financing.
221
The residual maturities of the liabilities associated with
the assets and guarantees received and committed are
presented below, as of 31 of December of 2021 (EUR
thousand million):
Residual maturities of
the liabilities
Unmatured
<=1month
>1 month
<=3
months
>3 months
<=12
months
>1 year
<=2
years
>2 years
<=3
years
3 years
<=5
years
5 years
<=10
years
>10
years
Total
Committed assets
39.5
32.7
8.2
29.6
106.8
37.1
80.1
20.7
10.4
365.1
Guarantees received
committed
24.2
15.3
12.8
25.8
1.9
0.4
0.4
80.8
The reported Group information as required by the EBA
at 2020 year-end is as follows:
On-balance-sheet encumbered assets
EUR billion
Carrying amount of
encumbered assets
Fair value of encumbered
assets
Fair value of non-
encumbered assets
Carrying amount of non-
encumbered assets
Loans and advances
262.8
984.4
Equity instruments
8.4
8.4
13.1
13.1
Debt securities
61.0
61.1
102.9
102.8
Other assets
32.9
130.3
Total assets
365.1
1,230.7
Encumbrance of collateral received
EUR billion
Fair value of
encumbered
collateral
received or own
debt securities
issued
Fair value of
collateral
received or own
debt securities
issued available
for
encumbrance
Collateral received
80.8
31.5
Loans and advances
1.2
Equity instruments
5.4
7.0
Debt securities
74.2
24.5
Other collateral received
Own debt securities
issued other than own
covered bonds or ABSs
0.6
Encumbered assets and collateral received and matching
liabilities
EUR billion
Matching
liabilities,
contingent
liabilities or
securities lent
Assets, collateral
received and own
debt securities issued
other than covered
bonds and ABSs
encumbered
Total sources of
encumbrance
(carrying amount)
325.2
445.9
On-balance-sheet encumbered assets amounted to EUR
365,100 million, of which 72% are loans (mortgage
loans, corporate loans, etc.). Guarantees received
committed amounted to EUR 80,800 million, relating
mostly to debt securities received as security in asset
purchase transactions and re-used.
Taken together, these two categories represent a total of
EUR 445,900 million of encumbered assets, which give
rise to EUR 325,200 million matching liabilities.
As of December 2021, total asset encumbrance in
funding operations represented 26.1% of the Group’s
extended balance sheet under EBA criteria (total assets
plus guarantees received: EUR 1,708,000 million as of
December 2021). This percentage has decreased from
26.6% that presented the Group as of December 2020,
mainly as a result of the increase in the balance sheet.
222
d) Capital risk
In the second line of defence, capital risk management
can independently challenge business and first-line
activities by:
Supervising capital planning and adequacy exercises
through a review of the main components affecting
the capital ratios.
Identifying key metrics to calculate the Group’s
regulatory capital, setting tolerance levels and
analysing significant variations, as well as single
transactions with impact on capital.
Reviewing and challenging the execution of capital
actions proposed in line with capital planning and
risk appetite.
Grupo Santander commands a sound solvency position,
above the levels required by regulators and by the
European Central bank.
Regulatory capital
At 1 January 2022, at a consolidated level, the Group
must maintain a minimum capital ratio of 8.85% of CET1
(4.50% being the requirement for Pillar I, 0.84% being
the requirement for Pillar 2R (requirement), 2.50% being
the requirement for capital conservation buffer, 1.00%
being the requirement for G-SIB and 0.01% being the
requirement for anti-cyclical capital buffer).
Grupo Santander must also maintain a minimum capital
ratio of 10.64% of tier 1 and a minimum total ratio of
13.01%.
In 2021, the solvency target set was achieved.
Santander’s CET1 ratio stood at 12.51%3 at the close of
the year, demonstrating its organic capacity to generate
capital. The key regulatory capital figures are indicated
below:
Reconciliation of accounting capital with regulatory capital
EUR million
2021
2020
Subscribed capital
8,670
8,670
Share premium account
47,979
52,013
Reserves
56,606
62,777
Treasury shares
(894)
(69)
Attributable profit
8,124
(8,771)
Approved dividend***
(836)
Shareholders’ equity on public
balance sheet
119,649
114,620
Valuation adjustments
(32,719)
(33,144)
Non-controlling interests
10,123
9,846
Total Equity on public balance sheet
97,053
91,322
Goodwill and intangible assets
(16,132)
(15,711)
Eligible preference shares and
participating securities
10,050
9,102
Accrued dividend***
(895)
(478)
Other adjustments*
(7,624)
(5,734)
Tier 1**
82,452
78,501
*Fundamentally for non-computable non-controlling interests and
deductions and reasonable filters in compliance with CRR.
**Figures calculated by applying the transitional provisions of IFRS 9.
***Assumes 20% of ordinary profit, see note 4.a for proposed distribution
of results.
The following table shows the capital coefficients and a
detail of the eligible internal resources of the Group:
2021
2020
Capital coefficients
Level 1 ordinary eligible capital (EUR
million)
72,402
69,399
Level 1 additional eligible capital
(EUR million)
10,050
9,102
Level 2 eligible capital (EUR million)
14,865
12,514
Risk-weighted assets (EUR million)
578,930
562,580
Level 1 ordinary capital coefficient
(CET 1)
12.51%
12.34%
Level 1 additional capital coefficient
(AT1)
1.73%
1.61%
Level 1 capital coefficient (TIER1)
14.24%
13.95%
Level 2 capital coefficient (TIER 2)
2.57%
2.23%
Total capital coefficient
16.81%
16.18%
223
3 Figures calculated by applying the transitional provisions of IFRS 9
.
Eligible capital
EUR million
2021
2020
Eligible capital
Common Equity Tier I
72,402
69,399
Capital
8,670
8,670
(-) Treasure shares and own shares
financed
(966)
(126)
Share Premium
47,979
52,013
Reserves
58,157
64,766
Other retained earnings
(34,784)
(34,937)
Minority interests
6,736
6,669
Profit net of dividends
6,394
(9,249)
Deductions
(19,784)
(18,407)
Goodwill and intangible assets
(16,064)
(15,711)
Others
(3,720)
(2,696)
Additional Tier I
10,050
9,102
Eligible instruments AT1
10,102
8,854
T1-excesses-subsidiaries
(52)
248
Residual value of dividends
Others
Tier II
14,865
12,514
Eligible instruments T2
15,424
13,351
Gen. funds and surplus loans loss
prov. IRB
75
T2-excesses -  subsidiaries
(634)
(837)
Others
0
0
Total eligible capital
97,317
91,015
Note: Banco Santander, S.A. and its affiliates had not taken part in any
State aid programmes.
Leverage ratio
Basel III established the leverage ratio as a non-risk
sensitive measure aimed at limiting excessive balance
sheet growth relative to available capital.
The Group performs the calculation in accordance with
Regulation (EU) 2019/876 of 20 May 2019 amending
Regulation (EU) No 575/2013 as regards the leverage
ratio.
This ratio is calculated as tier 1 capital divided by
leverage exposure. Exposure is calculated as the sum of
the following items:
Accounting assets, excluding derivatives and items
treated as deductions from tier 1 capital (for
example, the balance of loans is included, but not
that of goodwill) further excluding the exposures
referred to in Article 429a(1) of the regulation.
Off-balance-sheet items (mainly guarantees, unused
credit limits granted and documentary credits)
weighted using credit conversion factors.
Inclusion of net value of derivatives (gains and losses
are netted with the same counterparty, minus
collaterals if they comply with certain criteria) plus a
charge for the future potential exposure.
A charge for the potential risk of security funding
transactions.
Lastly, it includes a charge for the risk of credit
derivative swaps (CDS).
With the publication of Regulation (EU) 2019/876 of 20
May, 2019, amending Regulation (EU) n.º 575/2013 as
regards the leverage ratio, the final calibration of the
ratio is set at 3% for all entities and, for systemic entities
G-SIB, an additional surcharge is also established which
will be 50% of the cushion ratio applicable to the EISM.
In addition, modifications are included in its calculation,
including the exclusion of certain exposures from the
total exposure measure: public loans, transfer loans and
officially guaranteed export credits.
Banks implemented this final definition of the leverage
ratio in June 2021, however, the new calibration of the
ratio (the additional surcharge for G-SIBs) will take
effect from January 2023.
EUR million
2021
2020
Leverage
Level 1 Capital
82,452
78,501
Exposure
1,536,516
1,471,480
Leverage Ratio
5.37%
5.33%
Global systemically important banks
Grupo Santander is one of 30 banks designated as global
systemically important banks (G-SIBs).
The designation as a systemically important entity is
based on the measurement set by regulators (the FSB
and BCBS), based on 5 criteria (size, cross-jurisdictional
activity, interconnectedness with other financial
institutions, substitutability and complexity).
This definition means it has to fulfil certain additional
requirements, which consist mainly of a capital buffer
-1%, in TLAC requirements (total loss absorbing
capacity), that we have to publish relevant information
more frequently than other banks, greater regulatory
requirements for internal control bodies, special
supervision and drawing up of special reports to be
submitted to supervisors.
The fact that Grupo Santander has to comply with these
requirements makes it a more solid bank than its
domestic rivals.
224
Appendix I
2 & 3 Triton Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Real estate
78
107
12
A & L CF (Guernsey) Limited (n)
Guernsey
0.00%
100.00%
100.00%
100.00%
Leasing
0
0
0
A & L CF June (2) Limited (e)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
A & L CF June (3) Limited (e)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
6
(2)
0
A & L CF March (5) Limited (d)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
1
0
0
A & L CF September (4) Limited (f)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
21
0
0
A3T Luxco 1 S.A.
Luxembourg
0.00%
100.00%
100.00%
0.00%
Holding
company
4
(1)
4
A3T Luxco 2 S.A.
Luxembourg
100.00%
0.00%
100.00%
0.00%
Holding
company
(18)
18
0
Abbey Business Services (India) Private
Limited (d)
India
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Abbey Covered Bonds (Holdings) Limited
United
Kingdom
(b)
Securitization
0
0
0
Abbey Covered Bonds (LM) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
0
0
0
Abbey Covered Bonds LLP
United
Kingdom
(b)
Securitization
75
168
0
Abbey National Beta Investments Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Abbey National Business Office
Equipment Leasing Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Abbey National International Limited
Jersey
0.00%
100.00%
100.00%
100.00%
Financial
services
4
0
4
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
225
Abbey National Nominees Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Abbey National PLP (UK) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Abbey National Property Investments
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
296
(3)
165
Abbey National Treasury Services
Investments Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Abbey National Treasury Services
Overseas Holdings
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Abbey National UK Investments
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Abbey Stockbrokers (Nominees) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Abbey Stockbrokers Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securities
company
0
0
0
Abent 3T, S.A.P.I de C.V.
Mexico
0.00%
100.00%
100.00%
0.00%
Electricity
production
115
(18)
5
Ablasa Participaciones, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
210
23
894
Aduro S.A.
Uruguay
0.00%
100.00%
100.00%
100.00%
Payments and
collection
services
0
0
2
Aevis Europa, S.L.
Spain
96.34%
0.00%
96.34%
96.34%
Cards
1
0
1
AFB SAM Holdings, S.L.
Spain
1.00%
99.00%
100.00%
100.00%
Holding
company
0
0
0
Afisa S.A.
Chile
0.00%
100.00%
100.00%
100.00%
Fund
management
company
4
0
4
Aljardi SGPS, Lda.
Portugal
0.00%
100.00%
100.00%
100.00%
Holding
company
1,195
(3)
1,148
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
226
Allane Leasing GmbH
Austria
0.00%
46.95%
100.00%
100.00%
Renting
(2)
0
0
Allane Location Longue Durée S.a.r.l.
France
0.00%
46.95%
100.00%
100.00%
Renting
10
3
0
Allane Mobility Consulting AG
Switzerland
0.00%
46.95%
100.00%
100.00%
Consulting
services
1
0
0
Allane Mobility Consulting B.V.
Netherlands
0.00%
46.95%
100.00%
100.00%
Consulting
services
(2)
0
0
Allane Mobility Consulting GmbH
Germany
0.00%
46.95%
100.00%
100.00%
Consulting
services
1
1
0
Allane Mobility Consulting Österreich
GmbH
Austria
0.00%
46.95%
100.00%
100.00%
Consulting
services
0
0
0
Allane Mobility Consulting S.a.r.l
France
0.00%
46.95%
100.00%
100.00%
Consulting
services
(1)
0
0
Allane Schweiz AG
Switzerland
0.00%
46.95%
100.00%
100.00%
Renting
13
0
0
Allane SE
Germany
0.00%
46.95%
92.07%
92.07%
Leasing
192
0
175
Allane Services GmbH & co. KG
Germany
0.00%
46.95%
100.00%
100.00%
Services
1
0
0
Allane Services Verwaltungs GmbH
Germany
0.00%
46.95%
100.00%
100.00%
Management
of portfolios
0
0
0
Alliance & Leicester Cash Solutions
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Alliance & Leicester Commercial Bank
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Alliance & Leicester Investments
(Derivatives) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Alliance & Leicester Investments (No.2)
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
227
Alliance & Leicester Investments Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Alliance & Leicester Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Alliance & Leicester Personal Finance
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
(241)
0
0
Altamira Santander Real Estate, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Real estate
(369)
(161)
0
Alternative Leasing, FIL (Compartimento
B)
Spain
100.00%
0.00%
100.00%
99.99%
Investment
fund
75
3
75
Amazonia Trade Limited
United
Kingdom
100.00%
0.00%
100.00%
100.00%
Holding
company
0
0
0
AN (123) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Andaluza de Inversiones, S.A.
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
37
0
27
ANITCO Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Apê11 Tecnologia e Negócios Imobiliários
S.A.
Brazil
0.00%
80.92%
90.00%
0.00%
Real estate
6
0
9
Aquanima Brasil Ltda.
Brazil
0.00%
100.00%
100.00%
100.00%
E-commerce
2
1
0
Aquanima Chile S.A.
Chile
0.00%
100.00%
100.00%
100.00%
Services
2
1
0
Aquanima México S. de R.L. de C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
E-commerce
2
1
2
Aquanima S.A.
Argentina
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
Artarien S.A. (o)
Uruguay
0.00%
100.00%
100.00%
0.00%
Insurance
auxiliary
services
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
228
Asto Digital Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
39
(26)
0
Athena Corporation Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Financial
services
(9)
0
0
Atlantes Azor No. 2
Portugal
(b)
Securitization
0
0
0
Atlantes Mortgage No. 2
Portugal
(b)
Securitization
0
0
0
Atlantes Mortgage No. 3
Portugal
(b)
Securitization
0
0
0
Atlantes Mortgage No. 4
Portugal
(b)
Securitization
0
0
0
Atlantes Mortgage No. 5
Portugal
(b)
Securitization
0
0
0
Atlantes Mortgage No. 7
Portugal
(b)
Securitization
0
0
0
Atual - Fundo de Invest Multimercado
Crédito Privado Investimento no Exterior
Brazil
0.00%
89.91%
100.00%
100.00%
Investment
fund
325
18
308
Atual Serviços de Recuperação de Créditos
e Meios Digitais S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Financial
services
410
15
383
Auto ABS Belgium Loans 2019, SA/NV
Belgium
(b)
Securitization
0
0
0
Auto ABS DFP Master Compartment
France 2013
France
(b)
Securitization
0
0
0
Auto ABS French Leases 2018
France
(b)
Securitization
0
0
0
Auto ABS French Leases 2021
France
(b)
Securitization
0
0
0
Auto ABS French Leases Master
Compartiment 2016
France
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
229
Auto ABS French Loans Master
France
(b)
Securitization
0
0
0
Auto ABS French LT Leases Master
France
(b)
Securitization
0
0
0
Auto ABS Italian Balloon 2019-1 S.R.L.
Italy
(b)
Securitization
0
0
0
Auto ABS Italian Loans 2018-1 S.R.L.
Italy
(b)
Securitization
0
0
0
Auto ABS Italian Rainbow Loans 2020-1
S.R.L.
Italy
(b)
Securitization
0
0
0
Auto ABS Spanish Loans 2018-1, Fondo de
Titulización
Spain
(b)
Securitization
0
0
0
Auto ABS Spanish Loans 2020-1, Fondo de
Titulización
Spain
(b)
Securitization
0
0
0
Auto ABS UK Loans 2017 Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Auto ABS UK Loans 2017 Plc
United
Kingdom
(b)
Securitization
0
0
0
Auto ABS UK Loans 2019 Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Auto ABS UK Loans 2019 Plc
United
Kingdom
(b)
Securitization
(3)
0
0
Auto ABS UK Loans Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Auto ABS UK Loans PLC
United
Kingdom
(b)
Securitization
(10)
2
0
Autodescuento, S.L.
Spain
0.00%
93.89%
93.89%
93.89%
Vehicles
purchase by
Internet
1
1
18
Autohaus24 GmbH
Germany
0.00%
46.95%
100.00%
100.00%
Renting
(2)
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
230
Auttar HUT Processamento de Dados
Ltda.
Brazil
0.00%
89.91%
100.00%
100.00%
IT services
4
1
5
Aviación Antares, A.I.E.
Spain
99.99%
0.01%
100.00%
100.00%
Renting
48
5
28
Aviación Británica, A.I.E.
Spain
99.99%
0.01%
100.00%
100.00%
Renting
22
4
6
Aviación Centaurus, A.I.E.
Spain
99.99%
0.01%
100.00%
100.00%
Renting
7
18
25
Aviación Comillas, S.L. Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Renting
7
0
8
Aviación Intercontinental, A.I.E.
Spain
99.97%
0.03%
100.00%
100.00%
Renting
66
(24)
42
Aviación Laredo, S.L.
Spain
99.00%
1.00%
100.00%
100.00%
Air transport
3
0
3
Aviación Oyambre, S.L. Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Renting
1
0
1
Aviación Santillana, S.L.
Spain
99.00%
1.00%
100.00%
100.00%
Renting
3
1
2
Aviación Suances, S.L.
Spain
99.00%
1.00%
100.00%
100.00%
Air transport
5
1
3
Aviación Tritón, A.I.E.
Spain
99.99
0.01
100.00
100.00
Renting
22
7
19
Aymoré Crédito, Financiamento e
Investimento S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Finance
company
205
160
328
Azor Mortgages PLC (j)
Ireland
(b)
Securitization
0
0
0
Banca PSA Italia S.p.A.
Italy
0.00%
50.00%
50.00%
50.00%
Banking
320
72
153
Banco Bandepe S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Banking
832
24
770
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
231
Banco de Albacete, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Banking
14
0
9
Banco Hyundai Capital Brasil S.A.
Brazil
0.00%
44.96%
50.00%
50.00%
Banking
51
5
25
Banco Madesant - Sociedade Unipessoal,
S.A.
Portugal
0.00%
100.00%
100.00%
100.00%
Banking
1,076
(3)
1,073
Banco PSA Finance Brasil S.A.
Brazil
0.00%
44.96%
50.00%
50.00%
Banking
37
4
18
Banco Santander - Chile
Chile
0.00%
67.12%
67.18%
67.18%
Banking
2,963
803
2,827
Banco Santander (Brasil) S.A.
Brazil
0.04%
89.88%
90.50%
90.58%
Banking
10,104
2,373
10,795
Banco Santander (México), S.A.,
Institución de Banca Múltiple, Grupo
Financiero Santander México como
Fiduciaria del Fideicomiso 100740
Mexico
0.00%
96.24%
100.00%
100.00%
Finance
company
66
11
74
Banco Santander (México), S.A.,
Institución de Banca Múltiple, Grupo
Financiero Santander México como
Fiduciaria del Fideicomiso 2002114
Mexico
0.00%
96.47%
100.00%
100.00%
Holding
company
8
0
7
Banco Santander (México), S.A.,
Institución de Banca Múltiple, Grupo
Financiero Santander México como
Fiduciaria del Fideicomiso GFSSLPT
Mexico
0.00%
96.64%
100.00%
100.00%
Finance
company
14
1
14
Banco Santander de Negocios Colombia
S.A.
Colombia
94.90%
5.10%
100.00%
100.00%
Banking
134
6
141
Banco Santander International
United
States
0.00%
100.00%
100.00%
100.00%
Banking
1,110
85
1,195
Banco Santander International SA
Switzerland
0.00%
100.00%
100.00%
100.00%
Banking
1,113
49
815
Banco Santander México, S.A., Institución
de Banca Múltiple, Grupo Financiero
Santander México
Mexico
21.19%
75.04%
96.24%
91.80%
Banking
6,376
778
7,425
Banco Santander Perú S.A.
Peru
100.00%
0.00%
100.00%
100.00%
Banking
194
37
122
Banco Santander Río S.A.
Argentina
0.00%
99.31%
99.26%
99.26%
Banking
1,532
92
550
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
232
Banco Santander S.A.
Uruguay
97.75%
2.25%
100.00%
100.00%
Banking
359
69
191
Banco Santander Totta, S.A.
Portugal
0.00%
99.86%
99.96%
99.96%
Banking
3,857
303
3,415
Bansa Santander S.A.
Chile
0.00%
100.00%
100.00%
100.00%
Real estate
21
1
22
BEN Benefícios e Serviços Instituição de
Pagamento S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Payment
services
11
(1)
9
Bilkreditt 6 Designated Activity Company
(j)
Ireland
(b)
Securitization
0
0
0
Bilkreditt 7 Designated Activity Company
Ireland
(b)
Securitization
0
0
0
Bond Company Merger Sub LLC
United
States
0.00%
100.00%
100.00%
0.00%
Inactive
0
0
0
Bond First Merger Sub Inc.
United
States
0.00%
100.00%
100.00%
0.00%
Inactive
0
0
0
Bond Fourth Merger Sub LLC
United
States
0.00%
100.00%
100.00%
0.00%
Inactive
0
0
0
Bond Second Merger Sub LLC
United
States
0.00%
100.00%
100.00%
0.00%
Inactive
0
0
0
Bond Third Merger Sub LLC
United
States
0.00%
100.00%
100.00%
0.00%
Inactive
0
0
0
BRS Investments S.A.
Argentina
5.10%
94.90%
100.00%
100.00%
Finance
company
41
23
35
Cántabra de Inversiones, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
(118)
262
187
Cántabro Catalana de Inversiones, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
275
3
267
Canyon Multifamily Impact Fund IV LLC (c)
United
States
0.00%
98.00%
98.00%
98.00%
Real estate
26
0
27
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
233
Capital Street Delaware LP
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Capital Street Holdings, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
14
0
14
Capital Street REIT Holdings, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
1,212
1
1,213
Capital Street S.A.
Luxembourg
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Carfax (Guernsey) Limited (j) (n)
Guernsey
0.00%
100.00%
100.00%
100.00%
Insurance
brokerage
0
0
0
Casa de Bolsa Santander, S.A. de C.V.,
Grupo Financiero Santander México
Mexico
0.00%
99.97%
99.97%
99.97%
Securities
company
55
2
58
Cater Allen Holdings Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Cater Allen International Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Cater Allen Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Banking
685
34
265
Cater Allen Lloyd's Holdings Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Cater Allen Syndicate Management
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
CCAP Auto Lease Ltd.
United
States
0.00%
80.22%
100.00%
100.00%
Leasing
182
162
276
Centro de Capacitación Santander, A.C.
Mexico
0.00%
96.24%
100.00%
100.00%
Non-profit
institute
1
0
1
Certidesa, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Aircraft rental
(59)
(5)
0
Chrysler Capital Auto Funding I LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
30
24
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
234
Chrysler Capital Auto Funding II LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
4
(4)
0
Chrysler Capital Auto Receivables LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
0
0
0
Chrysler Capital Master Auto Receivables
Funding 2 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
(217)
(27)
0
Chrysler Capital Master Auto Receivables
Funding 4 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
(3)
(4)
0
Chrysler Capital Master Auto Receivables
Funding LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
61
48
0
Cobranza Amigable, S.A.P.I. de C.V.
Mexico
0.00%
85.00%
100.00%
100.00%
Collection
services
4
0
3
Community Development and Affordable
Housing Fund LLC (c)
United
States
0.00%
96.00%
96.00%
96.00%
Asset
management
0
0
0
Compagnie Generale de Credit Aux
Particuliers - Credipar S.A.
France
0.00%
50.00%
100.00%
100.00%
Banking
363
161
428
Compagnie Pour la Location de Vehicules
- CLV
France
0.00%
50.00%
100.00%
100.00%
Banking
20
2
26
Compartment German Auto Loans 2021-1
Luxembourg
0.00%
(b)
0.00%
0.00%
Securitization
0
0
0
Comunidad Laboral Trabajando Argentina
S.A. (j)
Argentina
100.00
100.00
100.00
Services
0
0
0
Consulteam Consultores de Gestão,
Unipessoal, Lda.
Portugal
100.00%
0.00%
100.00%
100.00%
Real estate
0
0
0
Consumer Lending Receivables LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
0
0
0
Crawfall S.A. (g) (j)
Uruguay
100.00%
0.00%
100.00%
100.00%
Services
0
0
0
Darep Designated Activity Company
Ireland
100.00%
0.00%
100.00%
100.00%
Reinsurances
8
0
7
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
235
Decarome, S.A.P.I. de C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
Finance
company
50
5
51
Deva Capital Advisory Company, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Advisory
services
1
1
2
Deva Capital Holding Company, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
226
(9)
228
Deva Capital Investment Company, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
111
4
111
Deva Capital Management Company, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Advisory
services
17
(10)
7
Deva Capital Servicer Company, S.L.
Unipersonal
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
97
4
96
Digital Procurement Holdings N.V.
Netherlands
0.00%
100.00%
100.00%
100.00%
Holding
company
5
0
1
Diners Club Spain, S.A. Unipersonal
Spain
100.00%
0.00%
100.00%
75.00%
Cards
10
(1)
9
Dirección Estratega, S.C.
Mexico
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
Drive Auto Receivables Trust 2017-3
United
States
0.00%
(b)
0.00%
0.00%
Securitization
38
53
0
Drive Auto Receivables Trust 2018-1
United
States
(b)
Securitization
25
45
0
Drive Auto Receivables Trust 2018-2
United
States
(b)
Securitization
(6)
77
0
Drive Auto Receivables Trust 2018-3
United
States
(b)
Securitization
(31)
82
0
Drive Auto Receivables Trust 2018-4
United
States
(b)
Securitization
(41)
82
0
Drive Auto Receivables Trust 2018-5
United
States
(b)
Securitization
(37)
79
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
236
Drive Auto Receivables Trust 2019-1
United
States
(b)
Securitization
(29)
83
0
Drive Auto Receivables Trust 2019-2
United
States
(b)
Securitization
(51)
97
0
Drive Auto Receivables Trust 2019-3
United
States
(b)
Securitization
(69)
136
0
Drive Auto Receivables Trust 2019-4
United
States
(b)
Securitization
(92)
149
0
Drive Auto Receivables Trust 2020-1
United
States
(b)
Securitization
(122)
156
0
Drive Auto Receivables Trust 2020-2
United
States
(b)
Securitization
(135)
181
0
Drive Auto Receivables Trust 2021-1
United
States
(b)
Securitization
0
(115)
0
Drive Auto Receivables Trust 2021-2
United
States
(b)
Securitization
0
(310)
0
Drive Auto Receivables Trust 2021-3
United
States
(b)
Securitization
0
(275)
0
Ductor S.à r.l. (f)
Luxembourg
1.00
1.00
Holding
company
26
1
20
EDT FTPYME Pastor 3 Fondo de
Titulización de Activos
Spain
0.00%
(b)
0.00%
0.00%
Securitization
0
0
0
Elcano Renovables, S.L
Spain
0.70
0.70
Holding
company
1
0
1
Electrolyser, S.A. de C.V.
Mexico
0.00%
96.24%
100.00%
100.00%
Services
0
0
0
Entidad de Desarrollo a la Pequeña y
Micro Empresa Santander Consumo Perú
S.A.
Peru
100.00%
0.00%
100.00%
100.00%
Finance
company
27
6
33
Erestone S.A.S.
France
0.00%
90.00%
90.00%
90.00%
Inactive
1
0
1
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
237
Esfera Fidelidade S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Services
58
56
102
Evidence Previdência S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Insurance
132
(12)
95
Eyemobile Tecnologia S.A.
Brazil
0.00%
53.95%
60.00%
0.00%
IT services
2
0
1
F1rst Tecnologia e Inovação Ltda.
Brazil
0.00%
89.91%
100.00%
100.00%
IT services
2
2
4
Financeira El Corte Inglés, Portugal, S.F.C.,
S.A.
Portugal
0.00%
51.00%
100.00%
100.00%
Finance
company
8
0
4
Financiera El Corte Inglés, E.F.C., S.A.
Spain
0.00%
51.00%
51.00%
51.00%
Finance
company
260
59
140
Finsantusa, S.L. Unipersonal
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
1,259
(2)
1,020
First National Motor Business Limited (j)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
0
0
0
First National Motor Contracts Limited (j)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
0
0
0
First National Motor Facilities Limited (j)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
0
0
0
First National Motor Finance Limited (j)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Advisory
services
0
0
0
First National Motor Leasing Limited (j)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
0
0
0
First National Motor plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
First National Tricity Finance Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
6
0
6
Fondation Holding Auto ABS Belgium
Loans
Belgium
0.00%
(b)
0.00%
0.00%
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
238
Fondo de Titulización de Activos
Santander Consumer Spain Auto 2014-1
Spain
(b)
Securitization
0
0
0
Fondo de Titulización PYMES Santander
13
Spain
(b)
Securitization
0
0
0
Fondo de Titulización PYMES Santander
14
Spain
(b)
Securitization
0
0
0
Fondo de Titulización PYMES Santander
15
Spain
(b)
Securitization
0
0
0
Fondo de Titulización Santander
Consumer Spain Auto 2016-1
Spain
(b)
Securitization
0
0
0
Fondo de Titulización Santander
Consumer Spain Auto 2016-2
Spain
(b)
Securitization
0
0
0
Fondo de Titulización Santander
Financiación 1
Spain
(b)
Securitization
0
0
0
Fondo de Titulización, RMBS Santander 7
Spain
(b)
Securitization
0
0
0
Fondos Santander, S.A. Administradora de
Fondos de Inversión (en liquidación) (j)
Uruguay
100.00
100.00
100.00
Fund
management
company
0
0
0
Fortensky Trading, Ltd.
Ireland
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Fosse (Master Issuer) Holdings Limited
United
Kingdom
0.00%
(b)
0.00%
0.00%
Securitization
0
0
0
Fosse Funding (No.1) Limited
United
Kingdom
1.00
1.00
1.00
Securitization
(134)
136
0
Fosse Master Issuer PLC
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
5
(6)
0
Fosse PECOH Limited
United
Kingdom
0.00%
(b)
—%
—%
Inactive
0
0
0
Fosse Trustee (UK) Limited
United
Kingdom
100.00
100.00
100.00
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
239
FTPYME Banesto 2, Fondo de Titulización
de Activos
Spain
0.00%
(b)
0.00%
0.00%
Securitization
0
0
0
Fundo de Investimento em Direitos
Creditórios Atacado- Não Padronizado
Brazil
(b)
Investment
fund
130
(6)
0
Fundo de Investimentos em Direitos
Creditórios Multisegmentos NPL Ipanema
VI – Não padronizado
Brazil
(b)
Investment
fund
194
23
0
Gamma, Sociedade Financeira de
Titularização de Créditos, S.A.
Portugal
1.00
1.00
1.00
Securitization
7
0
8
GC FTPYME Pastor 4 Fondo de Titulización
de Activos
Spain
0.00%
(b)
0.00%
0.00%
Securitization
0
0
0
Gentium Payments Processing FZ-LLC
United Arab
Emirates
100.00
100.00
Financial
services
4
(2)
2
Gesban México Servicios Administrativos
Globales, S.A. de C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
Services
1
0
0
Gesban Santander Servicios Profesionales
Contables Limitada
Chile
0.00%
100.00%
100.00%
100.00%
Accounting
services
1
0
0
Gesban Servicios Administrativos
Globales, S.L.
Spain
99.99%
0.01%
100.00%
100.00%
Services
5
0
1
Gesban UK Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Payments and
collection
services
1
0
0
Gestión de Instalaciones Fotovoltaicas,
S.L. Unipersonal
Spain
0.00%
100.00%
100.00%
100.00%
Renewable
energies
1
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net
results
Carrying
amount
240
Gestión de Inversiones JILT, S.A.
Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Services
5
(2)
5
Gestora de Procesos S.A. en liquidación
(j)
Peru
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Getnet Adquirência e Serviços para
Meios de Pagamento S.A.
Brazil
0.04%
89.88%
89.91%
100.00%
Payment
services
340
75
297
Getnet Europe, Entidad de Pago, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Payment
services
215
6
218
Getnet Sociedade de Credito Direto S.A.
Brazil
0.00%
89.91%
100.00%
0.00%
Finance
company
12
1
12
Gira, Gestão Integrada de Recebíveis do
Agronegócio S.A.
Brazil
0.00%
71.93%
80.00%
0.00%
Consulting
services
1
(1)
2
Golden Bar (Securitisation) S.R.L.
Italy
(b)
Securitization
0
0
0
Golden Bar Stand Alone 2016-1
Italy
(b)
Securitization
0
0
0
Golden Bar Stand Alone 2018-1
Italy
(b)
Securitization
0
0
0
Golden Bar Stand Alone 2019-1
Italy
(b)
Securitization
0
0
0
Golden Bar Stand Alone 2020-1
Italy
(b)
Securitization
0
0
0
Golden Bar Stand Alone 2020-2
Italy
(b)
Securitization
0
0
0
Golden Bar Stand Alone 2021-1
Italy
(b)
Securitization
0
0
0
Grupo Empresarial Santander, S.L.
Spain
99.62%
0.38%
100.00%
100.00%
Holding
company
3,348
637
2,406
Grupo Financiero Santander México,
S.A. de C.V.
Mexico
100.00%
0.00%
100.00%
100.00%
Holding
company
4,837
584
4,510
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
241
Guaranty Car, S.A. Unipersonal
Spain
0.00%
100.00%
100.00%
100.00%
Automotive
2
1
2
Hipototta No. 13
Portugal
(b)
Securitization
0
0
0
Hipototta No. 4 FTC
Portugal
(b)
Securitization
(51)
(2)
0
Hipototta No. 4 plc
Ireland
(b)
Securitization
(3)
(1)
0
Hipototta No. 5 FTC
Portugal
(b)
Securitization
(39)
(2)
0
Hipototta No. 5 plc
Ireland
(b)
Securitization
(11)
(2)
0
Holbah II Limited
Bahamas
0.00%
100.00%
100.00%
100.00%
Holding
company
404
0
557
Holbah Santander, S.L. Unipersonal
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
213
349
785
Holmes Funding Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
(3)
11
0
Holmes Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Holmes Master Issuer plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
(11)
(1)
0
Holmes Trustees Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
0
0
0
Hyundai Capital Bank Europe GmbH
Germany
0.00%
51.00%
51.00%
51.00%
Banking
701
(6)
391
Ibérica de Compras Corporativas, S.L.
Spain
97.17%
2.83%
100.00%
100.00%
E-commerce
7
1
6
Independence Community Bank Corp.
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
3,501
85
3,587
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
242
Insurance Funding Solutions Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Interfinance Holanda B.V.
Netherlands
100.00%
0.00%
100.00%
100.00%
Holding
company
0
0
0
Inversiones Capital Global, S.A.
Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
105
(6)
111
Inversiones Marítimas del
Mediterráneo, S.A.
Spain
0.00%
100.00%
100.00%
100.00%
Inactive
5
(1)
0
Isar Valley S.A.
Luxembourg
(b)
Securitization
0
0
0
Isla de los Buques, S.A.
Spain
99.98%
0.02%
100.00%
100.00%
Finance
company
1
0
1
Klare Corredora de Seguros S.A.
Chile
0.00%
33.63%
50.10%
50.10%
Insurance
brokerage
6
(3)
1
Landcompany 2020, S.L.
Spain
17.66%
82.34%
100.00%
100.00%
Real estate
management
1,779
(78)
1,704
Langton Funding (No.1) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
(22)
22
0
Langton Mortgages Trustee (UK)
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
0
0
0
Langton PECOH Limited
United
Kingdom
(b)
Inactive
0
0
0
Langton Securities (2008-1) plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
1
(1)
0
Langton Securities (2010-1) PLC
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
2
(2)
0
Langton Securities (2010-2) PLC
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
0
0
0
Langton Securities Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
243
Laparanza, S.A.
Spain
61.59%
0.00%
61.59%
61.59%
Agricultural
holding
28
0
16
Liderança Serviços Especializados em
Cobranças Ltda.
Brazil
0.00%
89.91%
100.00%
0.00%
Collection
services
(1)
2
1
Liquetine, S.L
Spain
0.00%
70.00%
100.00%
0.00%
Renewable
energies
0
0
1
Liquidity Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Factoring
(1)
0
0
Luri 1, S.A., en liquidación (j) (m)
Spain
46.00%
0.00%
46.00%
46.00%
Real estate
0
0
0
Luri 6, S.A. Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Real estate
investment
1,366
(8)
1,373
MAC No. 1 Limited
United
Kingdom
(b)
Mortgage
credit
company
0
0
0
Master Red Europa, S.L.
Spain
96.34%
0.00%
96.34%
96.34%
Cards
1
0
1
Mata Alta, S.L.
Spain
0.00%
61.59%
100.00%
100.00%
Real estate
0
0
0
Max Merger Sub, Inc.
United
States
0.00%
100.00%
100.00%
0.00%
Inactive
0
0
0
Mercadotecnia, Ideas y Tecnología, S.A.
de C.V.
Mexico
0.00%
70.00%
70.00%
0.00%
Payment
methods
1
3
15
Merciver, S.L.
Spain
99.90%
0.10%
100.00%
100.00%
Financial
advisory
1
0
1
Mercury Trade Finance Solutions S.A.S.
Colombia
0.00%
50.10%
100.00%
0.00%
IT services
0
0
0
Mercury Trade Finance Solutions, S.A.
de C.V.
Mexico
0.00%
50.10%
100.00%
100.00%
IT services
0
0
0
Mercury Trade Finance Solutions, S.L.
Spain
0.00%
50.10%
50.10%
50.10%
IT services
10
1
24
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
244
Mercury Trade Finance Solutions, S.p.A.
Chile
0.00%
50.10%
100.00%
100.00%
IT services
1
0
0
Merlion Aviation One Designated
Activity Company
Ireland
(b)
Renting
25
6
0
Mortgage Engine Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Financial
services
(7)
(4)
0
Motor 2016-1 Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Motor 2016-1 PLC
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
0
0
0
Motor 2017-1 Holdings Limited
United
Kingdom
(b)
Securitization
0
0
0
Motor 2017-1 PLC
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Securitization
(6)
6
0
Motor Securities 2018-1 Designated
Activity Company
Ireland
(b)
Securitization
(1)
(1)
0
Mouro Capital I LP
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Investment
fund
281
211
249
Multiplica SpA
Chile
0.00%
100.00%
100.00%
100.00%
Payment
services
4
0
4
Naviera Mirambel, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Finance
company
0
0
0
Naviera Trans Gas, A.I.E.
Spain
99.99%
0.01%
100.00%
100.00%
Renting
21
(3)
40
Naviera Trans Iron, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Leasing
24
0
21
Naviera Trans Ore, A.I.E.
Spain
99.99%
0.01%
100.00%
100.00%
Renting
25
3
17
Naviera Transcantábrica, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Leasing
5
0
4
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
245
Naviera Transchem, S.L. Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Leasing
1
0
1
NeoAuto S.A.C.
Peru
0.00%
55.00%
55.00%
55.00%
Vehicles
purchase by
Internet
1
0
1
Newcomar, S.L., en liquidación (j)
Spain
40.00%
40.00%
80.00%
80.00%
Real estate
1
0
0
Novimovest – Fundo de Investimento
Imobiliário
Portugal
0.00%
78.63%
78.74%
78.74%
Investment
fund
254
4
203
NW Services CO.
United
States
0.00%
100.00%
100.00%
100.00%
E-commerce
6
0
2
Open Bank Argentina S.A.
Argentina
0.00%
99.66%
100.00%
100.00%
Banking
35
(8)
33
Open Bank, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Banking
451
10
462
Open Digital Market, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
Open Digital Services Argentina S.A.U.
Argentina
0.00%
100.00%
100.00%
0.00%
IT services
0
0
0
Open Digital Services, S.L.
Spain
99.97%
0.03%
100.00%
100.00%
Services
176
(108)
18
Open Mx Servicios Administrativos, S.A.
de C.V.
Mexico
0.00%
100.00%
100.00%
0.00%
Financial
services
0
0
0
Operadora de Carteras Gamma, S.A.P.I.
de C.V.
Mexico
100.00%
0.00%
100.00%
100.00%
Holding
company
8
1
6
Optimal Investment Services SA
Switzerland
100.00%
0.00%
100.00%
100.00%
Fund
management
company
33
9
29
Optimal Multiadvisors Ireland Plc /
Optimal Strategic US Equity Ireland Euro
Fund (e) (p)
Ireland
0.00%
0.00%
0.00%
54.10%
Fund
management
company
0
0
0
Optimal Multiadvisors Ireland Plc /
Optimal Strategic US Equity Ireland US
Dollar Fund (e) (p)
Ireland
0.00%
0.00%
0.00%
51.93%
Fund
management
company
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
246
PagoFX Europe S.A.
Belgium
0.00%
100.00%
100.00%
100.00%
Payment
services
2
(1)
1
PagoFX UK Ltd
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Payment
services
5
(3)
2
PagoNxt Ltd
United
Kingdom
100.00%
0.00%
100.00%
0.00%
Holding
company
0
0
0
PagoNxt Merchant
SoluçõesTecnológicas Brasil Ltda.
Brazil
0.00%
100.00%
100.00%
100.00%
IT services
57
(20)
37
PagoNxt Merchant Solutions, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
913
(46)
938
PagoNxt One Trade UK Ltd
United
Kingdom
0.00%
100.00%
100.00%
0.00%
Financial
services
0
0
0
PagoNxt OneTrade España, E.D.E., S.L.
Spain
0.00%
100.00%
100.00%
0.00%
Financial
services
0
0
0
PagoNxt Solutions, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Payment
services
90
(61)
29
PagoNxt Trade Services, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Services
197
(58)
140
PagoNxt Trade, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
IT services
244
(71)
172
PagoNxt, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
1,815
(153)
1,838
Parasant SA
Switzerland
100.00%
0.00%
100.00%
100.00%
Holding
company
1,162
(2)
927
Paytec Logística e Armazém Ltda.
Brazil
0.00%
89.91%
100.00%
0.00%
Logistics
services
0
0
0
Paytec Tecnologia em Pagamentos
Ltda.
Brazil
0.00%
89.91%
100.00%
0.00%
Commerce
3
0
3
PBD Germany Auto 2018 UG
(Haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
247
PBD Germany Auto Lease Master 2019
Luxembourg
(b)
Securitization
0
0
0
PBD Germany Auto Lease Master S.A,
Compartment 2021-1
Luxembourg
(b)
Securitization
0
0
0
PBD Germany Auto Loan 2021 UG
(Haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
PBE Companies, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Real estate
110
0
110
PECOH Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Pereda Gestión, S.A.
Spain
99.99%
0.01%
100.00%
100.00%
Holding
company
45
35
4
Phoenix C1 Aviation Designated Activity
Company
Ireland
(b)
Renting
13
4
0
Phoenix S.A.
Uruguay
0.00%
100.00%
100.00%
0.00%
Payment
methods
0
0
3
PI Distribuidora de Títulos e Valores
Mobiliários S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Securities
company
79
(6)
66
Pingham International, S.A. (j)
Uruguay
100.00
100.00
100.00
Inactive
0
0
0
Pony S.A.
Luxembourg
(b)
Securitization
0
0
0
Portal Universia Argentina S.A.
Argentina
0.00%
75.75%
75.75%
75.75%
Internet
0
0
0
Portal Universia Portugal, Prestação de
Serviços de Informática, S.A.
Portugal
0.00%
100.00%
100.00%
100.00%
Internet
0
0
0
Prime 16 – Fundo de Investimentos
Imobiliário
Brazil
0.00%
89.91%
100.00%
100.00%
Investment
fund
31
(2)
24
PSA Bank Deutschland GmbH
Germany
0.00%
50.00%
50.00%
50.00%
Banking
517
57
229
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
248
PSA Banque France
France
0.00%
50.00%
50.00%
50.00%
Banking
1,068
74
463
PSA Consumer Finance Polska Sp. z o.o.
Poland
0.00%
40.22%
100.00%
100.00%
Finance
company
3
1
0
PSA Finance Belux S.A.
Belgium
0.00%
50.00%
100.00%
50.00%
Finance
company
91
15
52
PSA Finance Polska Sp. z o.o.
Poland
0.00%
40.22%
50.00%
50.00%
Finance
company
33
5
10
PSA Finance UK Limited
United
Kingdom
0.00%
50.00%
100.00%
50.00%
Finance
company
339
65
181
PSA Financial Services Nederland B.V.
Netherlands
0.00%
50.00%
100.00%
50.00%
Finance
company
52
17
32
PSA Financial Services Spain, E.F.C., S.A.
Spain
0.00%
50.00%
50.00%
50.00%
Finance
company
739
53
363
PSA Renting Italia S.p.A.
Italy
0.00%
50.00%
100.00%
100.00%
Renting
9
11
3
PSRT 2019-A
United
States
(b)
Securitization
58
53
0
Punta Lima Wind Farm, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Renewable
energies
44
(1)
43
Punta Lima, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Leasing
44
(1)
43
Retail Company 2021, S.L. Unipersonal
Spain
100.00%
0.00%
100.00%
0.00%
Real estate
262
(3)
262
Retop S.A. (f)
Uruguay
100.00%
0.00%
100.00%
100.00%
Finance
company
14
14
45
Return Capital S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Collection
services
(1)
4
3
Riobank International (Uruguay) SAIFE
(p)
Uruguay
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
249
Roc Aviation One Designated Activity
Company
Ireland
(b)
Renting
(2)
(2)
0
Roc Shipping One Designated Activity
Company
Ireland
(b)
Renting
(4)
0
0
Rojo Entretenimento S.A.
Brazil
0.00%
85.06%
94.60%
94.60%
Services
21
0
17
SAM Asset Management, S.A. de C.V.,
Sociedad Operadora de Fondos de
Inversión
Mexico
0.00%
100.00%
100.00%
100.00%
Fund
management
company
20
21
162
SAM Investment Holdings, S.L.
Spain
92.37%
7.63%
100.00%
100.00%
Management
of funds
1,326
74
1,597
SANB Promotora de Vendas e Cobrança
S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Finance
company
3
(1)
2
Sancap Investimentos e Participações
S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Holding
company
139
39
142
Santander (CF Trustee Property
Nominee) Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Santander (CF Trustee) Limited (d)
United
Kingdom
(b)
Inactive
0
0
0
Santander (UK) Group Pension Schemes
Trustees Limited (d)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Santander Ahorro Inmobiliario 1, S.A.
Spain
98.53%
0.00%
98.53%
98.53%
Real estate
rental
1
0
1
Santander Ahorro Inmobiliario 2, S.A.
Spain
99.91%
0.00%
99.91%
99.91%
Real estate
rental
1
0
1
Santander Asesorías Financieras
Limitada
Chile
0.00%
67.44%
100.00%
100.00%
Securities
company
53
2
37
Santander Asset Finance (December)
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
73
5
0
Santander Asset Finance plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
287
11
173
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
250
Santander Asset Management -
S.G.O.I.C., S.A.
Portugal
0.00%
100.00%
100.00%
100.00%
Fund
management
company
7
5
12
Santander Asset Management Chile S.A.
Chile
0.01%
99.94%
100.00%
100.00%
Securities
investment
(5)
0
0
Santander Asset Management
Luxembourg, S.A.
Luxembourg
0.00%
100.00%
100.00%
100.00%
Fund
management
company
4
4
0
Santander Asset Management S.A.
Administradora General de Fondos
Chile
0.00%
100.00%
100.00%
100.00%
Fund
management
company
13
9
132
Santander Asset Management UK
Holdings Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Holding
company
195
5
186
Santander Asset Management UK
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Management
of funds and
portfolios
41
15
201
Santander Asset Management, LLC (j)
Puerto Rico
0.00%
100.00%
100.00%
100.00%
Management
0
(1)
0
Santander Asset Management, S.A.,
S.G.I.I.C.
Spain
0.00%
100.00%
100.00%
100.00%
Fund
management
company
248
61
393
Santander Back-Offices Globales
Mayoristas, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Services
2
1
1
Santander Banca de Inversión Colombia,
S.A.S.
Colombia
100.00%
0.00%
100.00%
100.00%
Advisory
services
2
0
2
Santander Bank & Trust Ltd.
Bahamas
0.00%
100.00%
100.00%
100.00%
Banking
66
(1)
22
Santander Bank Polska S.A.
Poland
67.41%
0.00%
67.41%
67.41%
Banking
4,984
199
4,270
Santander Bank, National Association
United
States
0.00%
100.00%
100.00%
100.00%
Banking
10,197
444
10,637
Santander Brasil Administradora de
Consórcio Ltda.
Brazil
0.00%
89.91%
100.00%
100.00%
Services
107
53
144
Santander Brasil Gestão de Recursos
Ltda.
Brazil
0.08%
99.92%
100.00%
100.00%
Securities
investment
396
30
470
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
251
Santander Capital Desarrollo, SGEIC,
S.A. Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Management
company of
investment
entities
5
0
3
Santander Capital Structuring, S.A. de
C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
Investment
companies
11
0
0
Santander Capitalização S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Insurance
9
58
60
Santander Cards Ireland Limited
Ireland
0.00%
100.00%
100.00%
100.00%
Cards
(8)
0
0
Santander Cards Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Cards
100
0
100
Santander Cards UK Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
163
0
115
Santander Chile Holding S.A.
Chile
22.11%
77.73%
99.84%
99.84%
Holding
company
1,490
310
1,208
Santander Consulting (Beijing) Co., Ltd.
China
0.00%
100.00%
100.00%
100.00%
Advisory
services
9
0
4
Santander Consumer (UK) plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
853
296
310
Santander Consumer Auto Receivables
Funding 2013-B2 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
(283)
200
0
Santander Consumer Auto Receivables
Funding 2013-B3 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
101
70
0
Santander Consumer Auto Receivables
Funding 2018-L1 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
182
75
0
Santander Consumer Auto Receivables
Funding 2018-L3 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
63
49
0
Santander Consumer Auto Receivables
Funding 2018-L5 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
53
99
0
Santander Consumer Auto Receivables
Funding 2019-B1 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
(140)
190
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
252
Santander Consumer Auto Receivables
Funding 2019-L2 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
58
87
0
Santander Consumer Auto Receivables
Funding 2019-L3 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
32
36
0
Santander Consumer Auto Receivables
Funding 2020-B1 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
(98)
82
0
Santander Consumer Auto Receivables
Funding 2020-L1 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
71
39
0
Santander Consumer Auto Receivables
Funding 2020-L2 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
7
11
0
Santander Consumer Auto Receivables
Funding 2021-B1 LLC
United
States
0.00%
80.22%
100.00%
0.00%
Inactive
0
0
0
Santander Consumer Auto Receivables
Funding 2021-B2 LLC
United
States
0.00%
80.22%
100.00%
0.00%
Inactive
0
0
0
Santander Consumer Auto Receivables
Funding 2021-L1 LLC
United
States
0.00%
80.22%
100.00%
0.00%
Inactive
0
0
0
Santander Consumer Auto Receivables
Grantor Trust 2021-D
United
States
0.00%
80.22%
100.00%
0.00%
Inactive
0
0
0
Santander Consumer Auto Receivables
Trust 2021-D
United
States
0.00%
80.22%
100.00%
0.00%
Inactive
0
0
0
Santander Consumer Bank AG
Germany
0.00%
100.00%
100.00%
100.00%
Banking
3,313
461
5,070
Santander Consumer Bank AS
Norway
0.00%
100.00%
100.00%
100.00%
Banking
2,540
202
2,313
Santander Consumer Bank GmbH
Austria
0.00%
100.00%
100.00%
100.00%
Banking
399
45
363
Santander Consumer Bank S.A.
Poland
0.00%
80.44%
100.00%
100.00%
Banking
743
35
484
Santander Consumer Bank S.p.A.
Italy
0.00%
100.00%
100.00%
100.00%
Banking
824
178
603
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
253
Santander Consumer Banque S.A.
France
0.00%
100.00%
100.00%
100.00%
Banking
544
40
492
Santander Consumer Credit Services
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
(39)
0
0
Santander Consumer Finance Global
Services, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
IT
6
2
5
Santander Consumer Finance Inc.
Canada
96.42%
0.00%
96.42%
96.42%
Holding
company
63
0
94
Santander Consumer Finance Limitada
Chile
49.00%
34.23%
100.00%
100.00%
Finance
company
63
20
41
Santander Consumer Finance Oy
Finland
0.00%
100.00%
100.00%
100.00%
Finance
company
314
54
165
Santander Consumer Finance Schweiz
AG
Switzerland
0.00%
100.00%
100.00%
100.00%
Leasing
50
7
60
Santander Consumer Finance, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Banking
8,807
601
10,022
Santander Consumer Financial Solutions
Sp. z o.o.
Poland
0.00%
80.44%
100.00%
100.00%
Leasing
2
0
2
Santander Consumer Finanse Sp. z o.o.
w likwidacji (j)
Poland
0.00%
80.44%
100.00%
100.00%
Services
16
0
12
Santander Consumer Holding Austria
GmbH
Austria
0.00%
100.00%
100.00%
100.00%
Holding
company
364
20
518
Santander Consumer Holding GmbH
Germany
0.00%
100.00%
100.00%
100.00%
Holding
company
5,564
309
6,077
Santander Consumer Inc.
Canada
0.00%
96.42%
100.00%
100.00%
Finance
company
66
16
46
Santander Consumer International
Puerto Rico LLC
Puerto Rico
0.00%
80.22%
100.00%
100.00%
Services
9
0
7
Santander Consumer Leasing GmbH
Germany
0.00%
100.00%
100.00%
100.00%
Leasing
20
109
101
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
254
Santander Consumer Mobility Services,
S.A.
Spain
0.00%
100.00%
100.00%
100.00%
Renting
12
0
12
Santander Consumer Multirent Sp. z
o.o.
Poland
0.00%
80.44%
100.00%
100.00%
Leasing
27
4
5
Santander Consumer Operations
Services GmbH
Germany
0.00%
100.00%
100.00%
100.00%
Services
11
1
18
Santander Consumer Receivables 10 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
764
286
0
Santander Consumer Receivables 11 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
420
196
0
Santander Consumer Receivables 3 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
315
60
0
Santander Consumer Receivables 7 LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
303
369
0
Santander Consumer Receivables
Funding LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
1
3
0
Santander Consumer Renting, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Leasing
37
1
38
Santander Consumer S.A.
Argentina
0.00%
99.31%
100.00%
100.00%
Finance
company
7
(2)
6
Santander Consumer S.A. Compañía de
Financiamiento
Colombia
79.02%
20.98%
100.00%
0.00%
Finance
company
6
(1)
6
Santander Consumer Services GmbH
Austria
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
Santander Consumer Services, S.A.
Portugal
0.00%
100.00%
100.00%
100.00%
Finance
company
11
2
6
Santander Consumer Spain Auto
2019-1, Fondo de Titulización
Spain
(b)
Securitization
0
0
0
Santander Consumer Spain Auto
2020-1, Fondo de Titulización
Spain
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
255
Santander Consumer Spain Auto
2021-1, Fondo de Titulización
Spain
(b)
Securitization
0
0
0
Santander Consumer Technology
Services GmbH
Germany
0.00%
100.00%
100.00%
100.00%
IT services
21
3
22
Santander Consumer USA Holdings Inc.
United
States
0.00%
80.22%
80.22%
80.24%
Holding
company
4,688
2,871
6,705
Santander Consumer USA Inc.
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
5,257
(917)
3,481
Santander Consumo 4, F.T.
Spain
(b)
Securitization
0
0
0
Santander Consumo, S.A. de C.V.,
S.O.F.O.M., E.R., Grupo Financiero
Santander México
Mexico
0.00%
96.24%
100.00%
100.00%
Cards
1,123
222
1,295
Santander Corredora de Seguros
Limitada
Chile
0.00%
67.20%
100.00%
100.00%
Insurance
brokerage
72
2
50
Santander Corredores de Bolsa Limitada
Chile
0.00%
83.23%
100.00%
100.00%
Securities
company
47
2
40
Santander Corretora de Câmbio e
Valores Mobiliários S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Securities
company
114
13
115
Santander Corretora de Seguros,
Investimentos e Serviços S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Holding
company
567
166
656
Santander Customer Voice, S.A.
Spain
99.50%
0.50%
100.00%
100.00%
Services
2
0
1
Santander de Titulización, S.G.F.T., S.A.
Spain
81.00%
19.00%
100.00%
100.00%
Fund
management
company
5
3
2
Santander Digital Assets, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
IT services
0
2
4
Santander Drive Auto Receivables LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
0
0
0
Santander Drive Auto Receivables Trust
2017-3
United
States
(b)
Securitization
52
29
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
256
Santander Drive Auto Receivables Trust
2018-1
United
States
(b)
Securitization
41
39
0
Santander Drive Auto Receivables Trust
2018-2
United
States
(b)
Securitization
18
37
0
Santander Drive Auto Receivables Trust
2018-3
United
States
(b)
Securitization
1
52
0
Santander Drive Auto Receivables Trust
2018-4
United
States
(b)
Securitization
4
46
0
Santander Drive Auto Receivables Trust
2018-5
United
States
(b)
Securitization
(4)
50
0
Santander Drive Auto Receivables Trust
2019-1
United
States
(b)
Securitization
(15)
58
0
Santander Drive Auto Receivables Trust
2019-2
United
States
(b)
Securitization
(23)
80
0
Santander Drive Auto Receivables Trust
2019-3
United
States
(b)
Securitization
(38)
86
0
Santander Drive Auto Receivables Trust
2020-1
United
States
(b)
Securitization
(111)
134
0
Santander Drive Auto Receivables Trust
2020-2
United
States
(b)
Securitization
(131)
175
0
Santander Drive Auto Receivables Trust
2020-3
United
States
(b)
Securitization
(241)
271
0
Santander Drive Auto Receivables Trust
2020-4
United
States
(b)
Securitization
(242)
233
0
Santander Drive Auto Receivables Trust
2021-1
United
States
(b)
Securitization
0
(43)
0
Santander Drive Auto Receivables Trust
2021-2
United
States
(b)
Securitization
0
(162)
0
Santander Drive Auto Receivables Trust
2021-3
United
States
(b)
Securitization
0
(263)
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
257
Santander Drive Auto Receivables Trust
2021-4
United
States
(b)
Securitization
0
(272)
0
Santander Drive Auto Receivables
Trust 2022-1
United
States
(b)
Inactive
0
0
0
Santander Drive Auto Receivables
Trust 2022-2
United
States
(b)
Inactive
0
0
0
Santander Drive Auto Receivables
Trust 2022-3
United
States
(b)
Inactive
0
0
0
Santander Drive Auto Receivables
Trust 2022-4
United
States
(b)
Inactive
0
0
0
Santander Equity Investments Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
41
(11)
35
Santander España Servicios Legales y de
Cumplimiento, S.L.
Spain
99.97%
0.03%
100.00%
100.00%
Services
9
1
8
Santander Estates Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Real estate
3
(10)
0
Santander European Hospitality
Opportunities
Luxembourg
100.00%
0.00%
100.00%
0.00%
Investment
fund
1
0
1
Santander F24 S.A.
Poland
0.00%
67.41%
100.00%
100.00%
Finance
company
0
0
0
Santander Facility Management España,
S.L. Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Real estate
417
(3)
392
Santander Factoring S.A.
Chile
0.00%
99.84%
100.00%
100.00%
Factoring
37
0
37
Santander Factoring Sp. z o.o.
Poland
0.00%
67.41%
100.00%
100.00%
Financial
services
27
11
1
Santander Factoring y Confirming, S.A.,
E.F.C.
Spain
100.00%
0.00%
100.00%
100.00%
Factoring
208
70
126
Santander Finance 2012-1 LLC
United
States
0.00%
100.00%
100.00%
100.00%
Financial
services
3
0
3
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
258
Santander Financial Exchanges Limited
United
Kingdom
100.00%
0.00%
100.00%
100.00%
Inactive
0
0
0
Santander Financial Services plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Banking
356
32
401
Santander Financial Services, Inc.
Puerto Rico
0.00%
100.00%
100.00%
100.00%
Finance
company
22
(7)
14
Santander Financiamientos S.A.
Peru
100.00%
0.00%
100.00%
0.00%
Finance
company
8
(1)
8
Santander Financing S.A.S.
Colombia
100.00%
0.00%
100.00%
100.00%
Financial
advisory
1
(1)
1
Santander Finanse Sp. z o.o.
Poland
0.00%
67.41%
100.00%
100.00%
Financial
services
60
7
19
Santander Fintech Holdings, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
79
(14)
61
Santander Fintech Limited
United
Kingdom
100.00%
0.00%
100.00%
100.00%
Finance
company
218
(7)
144
Santander Fundo de Investimento
Santillana Multimercado Crédito
Privado Investimento No Exterior (e)
Brazil
(b)
Investment
fund
413
19
432
Santander Fundo de Investimento SBAC
Referenciado di Crédito Privado (h)
Brazil
0.00%
89.91%
100.00%
100.00%
Investment
fund
1,440
11
1,303
Santander Gestión de Recaudación y
Cobranzas Ltda.
Chile
0.00%
99.84%
100.00%
100.00%
Financial
services
6
0
5
Santander Global Cards & Digital
Solutions Brasil S.A.
Brazil
0.00%
100.00%
100.00%
100.00%
IT consulting
0
0
0
Santander Global Consumer Finance
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Finance
company
7
0
7
Santander Global Facilities, S.A. de C.V.
Mexico
100.00%
0.00%
100.00%
100.00%
Real estate
management
125
3
127
Santander Global Facilities, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Real estate
73
2
70
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
259
Santander Global Services S.A. (j)
Uruguay
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
Santander Global Sport, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Sports activity
21
(2)
19
Santander Global Technology and
Operations Brasil Ltda.
Brazil
0.00%
100.00%
100.00%
100.00%
IT services
3
0
1
Santander Global Technology and
Operations Chile Limitada
Chile
0.00%
100.00%
100.00%
100.00%
IT services
22
2
20
Santander Global Technology and
Operations, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
IT services
434
19
370
Santander Green Investment, S.L.
Spain
99.97%
0.03%
100.00%
0.00%
Holding
company
14
0
14
Santander Guarantee Company
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Leasing
5
0
3
Santander Hipotecario 1 Fondo de
Titulización de Activos
Spain
(b)
Securitization
0
0
0
Santander Hipotecario 2 Fondo de
Titulización de Activos
Spain
(b)
Securitization
0
0
0
Santander Hipotecario 3 Fondo de
Titulización de Activos
Spain
(b)
Securitization
0
0
0
Santander Holding Imobiliária S.A.
Brazil
0.00%
89.91%
100.00%
100.00%
Real estate
71
1
65
Santander Holding Internacional, S.A.
Spain
99.95%
0.05%
100.00%
100.00%
Holding
company
4,031
26
2,247
Santander Holdings USA, Inc.
United
States
100.00%
0.00%
100.00%
100.00%
Holding
company
17,120
2,633
12,579
Santander Inclusión Financiera, S.A. de
C.V., S.O.F.O.M., E.R., Grupo Financiero
Santander México
Mexico
0.00%
96.24%
100.00%
100.00%
Finance
company
14
(7)
7
Santander Insurance Agency, U.S., LLC
United
States
0.00%
100.00%
100.00%
100.00%
Insurance
1
0
1
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
260
Santander Insurance Services UK
Limited
United
Kingdom
100.00%
0.00%
100.00%
100.00%
Asset
management
44
0
44
Santander Intermediación Correduría de
Seguros, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Insurance
brokerage
24
2
18
Santander International Products, Plc.
(l)
Ireland
99.99%
0.01%
100.00%
100.00%
Finance
company
1
0
0
Santander Inversiones S.A.
Chile
0.00%
100.00%
100.00%
100.00%
Holding
company
968
201
1,032
Santander Investment Bank Limited
Bahamas
0.00%
100.00%
100.00%
100.00%
Banking
577
15
529
Santander Investment Chile Limitada
Chile
0.00%
100.00%
100.00%
100.00%
Finance
company
473
6
321
Santander Investment Securities Inc.
United
States
0.00%
100.00%
100.00%
100.00%
Securities
company
456
32
488
Santander Investment, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Banking
1,408
77
245
Santander Investments GP 1 S.à.r.l.
Luxembourg
0.00%
100.00%
100.00%
100.00%
Management
of funds
1
0
1
Santander Inwestycje Sp. z o.o.
Poland
0.00%
67.41%
100.00%
100.00%
Securities
company
17
1
7
Santander ISA Managers Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Management
of funds and
portfolios
37
8
6
Santander Lease, S.A., E.F.C.
Spain
100.00%
0.00%
100.00%
100.00%
Leasing
61
11
51
Santander Leasing Poland Securitization
01 Designated Activity Company
Ireland
(b)
Securitization
0
0
0
Santander Leasing S.A.
Poland
0.00%
67.41%
100.00%
100.00%
Leasing
133
9
28
Santander Leasing S.A. Arrendamento
Mercantil
Brazil
0.00%
89.91%
100.00%
100.00%
Leasing
1,709
59
1,590
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
261
Santander Leasing, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Leasing
0
1
2
Santander Lending Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Mortgage
credit
company
243
10
247
Santander Mediación Operador de
Banca-Seguros Vinculado, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Insurance
intermediary
49
1
3
Santander Merchant Platform
Operations, S.A. de C.V.
Mexico
0.00%
98.16%
100.00%
100.00%
Financial
services
1
1
2
Santander Merchant Platform Services,
S.A. de C.V.
Mexico
0.00%
98.16%
100.00%
100.00%
Financial
services
1
0
1
Santander Merchant Platform Solutions
México, S.A. de C.V.
Mexico
0.00%
98.16%
100.00%
100.00%
Holding
company
119
28
134
Santander Merchant Platform Solutions
S.A.
Argentina
0.00%
99.66%
100.00%
100.00%
Payment
methods
15
(6)
10
Santander Merchant Platform Solutions
Uruguay S.A.
Uruguay
0.00%
100.00%
100.00%
100.00%
Payment
methods
5
0
5
Santander Merchant S.A.
Argentina
5.10%
94.90%
100.00%
100.00%
Finance
company
1
0
2
Santander Mortgage Holdings Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Financial
services
(1)
(23)
0
Santander Paraty Qif PLC
Ireland
0.00%
89.91%
100.00%
100.00%
Investment
companies
261
0
235
Santander Pensiones, S.A., E.G.F.P.
Spain
0.00%
100.00%
100.00%
100.00%
Pension fund
management
company
83
16
184
Santander Pensões - Sociedade Gestora
de Fundos de Pensões, S.A.
Portugal
100.00%
0.00%
100.00%
100.00%
Pension fund
management
company
3
0
3
Santander Prime Auto Issuance Notes
2018-A Designated Activity Company
Ireland
(b)
Securitization
(15)
10
0
Santander Prime Auto Issuance Notes
2018-B Designated Activity Company
Ireland
(b)
Securitization
(17)
(12)
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
262
Santander Prime Auto Issuance Notes
2018-C Designated Activity Company
Ireland
(b)
Securitization
(6)
(1)
0
Santander Prime Auto Issuance Notes
2018-D Designated Activity Company
Ireland
(b)
Securitization
(24)
(2)
0
Santander Prime Auto Issuance Notes
2018-E Designated Activity Company
Ireland
(b)
Securitization
(10)
(4)
0
Santander Private Banking Gestión, S.A.,
S.G.I.I.C.
Spain
100.00%
0.00%
100.00%
100.00%
Fund
management
company
52
12
35
Santander Private Banking s.p.a. in
Liquidazione (j)
Italy
100.00%
0.00%
100.00%
100.00%
Finance
company
13
1
7
Santander Private Banking UK Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Holding
company
304
0
414
Santander Private Real Estate Advisory
& Management, S.A.
Spain
99.99%
0.01%
100.00%
100.00%
Real estate
4
0
4
Santander Private Real Estate Advisory,
S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Real estate
14
1
15
Santander Real Estate, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Inactive
1
0
1
Santander Retail Auto Lease Funding
LLC
United
States
0.00%
80.22%
100.00%
100.00%
Finance
company
0
0
0
Santander Retail Auto Lease Trust 2019-
A
United
States
(b)
Securitization
67
89
0
Santander Retail Auto Lease Trust 2019-
B
United
States
(b)
Securitization
42
71
0
Santander Retail Auto Lease Trust 2019-
C
United
States
(b)
Securitization
45
59
0
Santander Retail Auto Lease Trust 2020-
A
United
States
(b)
Securitization
48
33
0
Santander Retail Auto Lease Trust 2020-
B
United
States
(b)
Securitization
26
40
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
263
Santander Retail Auto Lease Trust 2021-
A
United
States
(b)
Securitization
0
63
0
Santander Retail Auto Lease Trust 2021-
B
United
States
(b)
Securitization
0
63
0
Santander Retail Auto Lease Trust 2021-
C
United
States
(b)
Securitization
0
88
0
Santander Retail Auto Lease Trust 2022-
A
United
States
(b)
Inactive
0
0
0
Santander Retail Auto Lease Trust 2022-
B
United
States
(b)
Inactive
0
0
0
Santander Retail Auto Lease Trust 2022-
C
United
States
(b)
Inactive
0
0
0
Santander Revolving Auto Loan Trust
2019-A
United
States
(b)
Securitization
(112)
111
0
Santander Revolving Auto Loan Trust
2021-A
United
States
(b)
Inactive
0
0
0
Santander Río Asset Management
Gerente de Fondos Comunes de
Inversión S.A.
Argentina
0.00%
100.00%
100.00%
100.00%
Fund
management
company
6
7
3
Santander Río Trust S.A.
Argentina
0.00%
99.97%
100.00%
100.00%
Services
0
0
0
Santander Río Valores S.A.
Argentina
5.10%
94.25%
100.00%
100.00%
Securities
company
3
1
4
Santander RMBS 6, Fondo de
Titulización
Spain
(b)
Securitization
0
0
0
Santander S.A. Sociedad Securitizadora
Chile
0.00%
67.24%
100.00%
100.00%
Fund
management
company
0
0
0
Santander Secretariat Services Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Santander Securities LLC
United
States
0.00%
100.00%
100.00%
100.00%
Securities
company
39
4
43
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
264
Santander Seguros y Reaseguros,
Compañía Aseguradora, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Insurance
1,434
191
1,188
Santander Servicios Corporativos, S.A.
de C.V.
Mexico
0.00%
96.24%
100.00%
100.00%
Services
11
0
11
Santander Servicios Especializados, S.A.
de C.V.
Mexico
0.00%
96.24%
100.00%
100.00%
Services
3
0
3
Santander Technology USA, LLC
United
States
0.00%
100.00%
100.00%
100.00%
IT services
80
(12)
69
Santander Tecnología Argentina S.A.
Argentina
0.00%
99.35%
100.00%
100.00%
IT services
3
2
4
Santander Tecnología México, S.A. de
C.V.
Mexico
0.00%
96.24%
100.00%
100.00%
IT services
45
1
45
Santander Tecnología y Operaciones
España, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
IT services
46
(4)
37
Santander Totta Seguros, Companhia de
Seguros de Vida, S.A.
Portugal
0.00%
99.91%
100.00%
100.00%
Insurance
117
25
47
Santander Totta, SGPS, S.A.
Portugal
99.91%
0.00%
99.91%
99.91%
Holding
company
3,550
54
5,351
Santander Towarzystwo Funduszy
Inwestycyjnych S.A.
Poland
50.00%
33.70%
100.00%
100.00%
Fund
management
company
4
25
15
Santander Trade Services Limited
Hong Kong
0.00%
100.00%
100.00%
100.00%
Inactive
19
3
16
Santander UK Group Holdings plc
United
Kingdom
77.67%
22.33%
100.00%
100.00%
Finance
company
14,302
1,783
16,444
Santander UK Investments
United
Kingdom
100.00%
0.00%
100.00%
100.00%
Finance
company
53
(2)
48
Santander UK Operations Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Services
27
2
18
Santander UK plc
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Banking
16,029
937
15,741
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
265
Santander UK Technology Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
IT services
39
4
7
Santander Wealth Management
International SA
Switzerland
0.00%
100.00%
100.00%
100.00%
Asset
management
0
0
0
Santusa Holding, S.L.
Spain
69.76%
30.24%
100.00%
100.00%
Holding
company
8,423
637
6,524
SC Austria Finance 2020-1 Designated
Activity Company
Ireland
(b)
Securitization
0
0
0
SC Germany Auto 2014-2 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany Auto 2016-2 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany Auto 2018-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
(1)
0
0
SC Germany Auto 2019-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany Consumer 2014-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany Consumer 2018-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany Mobility 2019-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany S.A.
Luxembourg
(b)
Securitization
0
0
0
SC Germany S.A., Compartment
Consumer 2020-1
Luxembourg
(b)
Securitization
0
0
0
SC Germany S.A., Compartment
Consumer 2021-1
Luxembourg
(b)
Securitization
0
0
0
SC Germany S.A., Compartment
Mobility 2020-1
Luxembourg
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
266
SC Germany Vehicles 2013-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Germany Vehicles 2015-1 UG
(haftungsbeschränkt)
Germany
(b)
Securitization
0
0
0
SC Poland Consumer 15-1 Sp. z.o.o. (j)
Poland
(b)
Securitization
0
0
0
SC Poland Consumer 16-1 Sp. z o.o.
Poland
(b)
Securitization
0
0
0
SCF Ajoneuvohallinto I Limited (j)
Ireland
(b)
Securitization
0
0
0
SCF Ajoneuvohallinto II Limited (j)
Ireland
(b)
Securitization
0
0
0
SCF Ajoneuvohallinto IX Limited
Ireland
(b)
Securitization
0
0
0
SCF Ajoneuvohallinto KIMI VI Limited (j)
Ireland
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A. 1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
267
SCF Ajoneuvohallinto VII Limited
Ireland
(b)
Securitization
0
0
0
SCF Ajoneuvohallinto VIII Limited
Ireland
(b)
Securitization
0
0
0
SCF Ajoneuvohallinto X Limited
Ireland
(b)
Securitization
0
0
0
SCF Eastside Locks GP Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Real estate
management
0
0
0
SCF Rahoituspalvelut I Designated
Activity Company (j)
Ireland
(b)
Securitization
0
0
0
SCF Rahoituspalvelut II Designated
Activity Company (j)
Ireland
(b)
Securitization
0
0
0
SCF Rahoituspalvelut IX DAC
Ireland
(b)
Securitization
1
0
0
SCF Rahoituspalvelut KIMI VI
Designated Activity Company (j)
Ireland
(b)
Securitization
0
0
0
SCF Rahoituspalvelut VII Designated
Activity Company
Ireland
(b)
Securitization
0
0
0
SCF Rahoituspalvelut VIII
Designated Activity Company
Ireland
(b)
Securitization
0
0
0
SCF Rahoituspalvelut X DAC
Ireland
(b)
Securitization
0
0
0
SCM Poland Auto 2019-1 DAC
Ireland
(b)
Securitization
0
0
0
SDMX Superdigital, S.A. de C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
Payment
platform
0
0
2
Secucor Finance 2013-I Designated
Activity Company (i) (j)
Ireland
(b)
Securitization
0
0
0
Subsidiaries of Banco Santander, S.A.1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
268
Secucor Finance 2021-1, DAC
Ireland
(b)
Securitization
0
0
0
Services and Promotions Delaware
Corp.
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
58
2
60
Services and Promotions Miami LLC
United
States
0.00%
100.00%
100.00%
100.00%
Real estate
51
3
53
Servicio de Alarmas Controladas por
Ordenador, S.A.
Spain
99.99%
0.01%
100.00%
100.00%
Security
2
0
1
Servicios de Cobranza, Recuperación
y Seguimiento, S.A. de C.V.
Mexico
0.00%
85.00%
85.00%
85.00%
Finance
company
34
1
32
Sheppards Moneybrokers Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Shiloh III Wind Project, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Renewable
energies
324
1
325
Silk Finance No. 5
Portugal
(b)
Securitization
1
9
0
SMPS Merchant Platform Solutions
México, S.A de C.V
Mexico
0.00%
98.16%
100.00%
100.00%
Payments and
collection
services
112
27
141
Sociedad Integral de Valoraciones
Automatizadas, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Appraisals
1
1
1
Sociedad Operadora de Tarjetas de
Pago Santander Getnet Chile S.A.
Chile
0.00%
67.12%
100.00%
100.00%
Payments and
collection
services
20
-8
8
Socur S.A. (f)
Uruguay
100.00%
0.00%
100.00%
100.00%
Finance
company
43
23
59
Solarlaser Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Solution 4Fleet Consultoria
Empresarial S.A.
Brazil
0.00%
71.93%
80.00%
0.00%
Vehicle rental
3
0
2
Subsidiaries of Banco Santander, S.A.1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
269
Sovereign Community Development
Company
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
38
1
39
Sovereign Delaware Investment
Corporation
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
134
1
135
Sovereign Lease Holdings, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Financial
services
221
1
221
Sovereign REIT Holdings, Inc.
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
7501
74
7575
Sovereign Spirit Limited (n)
Bermudas
0.00%
100.00%
100.00%
100.00%
Leasing
0
0
0
SSA Swiss Advisors AG
Switzerland
0.00%
100.00%
100.00%
0.00%
Asset
management
0
0
3
Sterrebeeck B.V.
Netherlands
100.00%
0.00%
100.00%
100.00%
Holding
company
4058
713
10331
Suleyado 2003, S.L. Unipersonal
Spain
0.00%
100.00%
100.00%
100.00%
Securities
investment
25
0
24
Summer Empreendimentos Ltda.
Brazil
0.00%
89.91%
100.00%
100.00%
Real estate
management
3
0
3
Super Pagamentos e Administração
de Meios Eletrônicos S.A.
Brazil
0.00%
100.00%
100.00%
100.00%
Payment
services
30
-7
79
Superdigital Argentina S.A.U.
Argentina
0.00%
100.00%
100.00%
100.00%
IT services
1
-1
1
Superdigital Colombia S.A.S.
Colombia
0.00%
100.00%
100.00%
99.97%
IT services
0
0
0
Superdigital Holding Company, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
103
3
106
Superdigital Perú S.A.C.
Peru
0.00%
100.00%
100.00%
100.00%
Financial
services
1
0
0
Subsidiaries of Banco Santander, S.A.1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
270
Suzuki Servicios Financieros, S.L.
Spain
0.00%
51.00%
51.00%
51.00%
Intermediation
9
3
0
Svensk Autofinans WH 1 Designated
Activity Company
Ireland
(b)
Securitization
0
0
0
Swesant SA
Switzerland
0.00%
100.00%
100.00%
100.00%
Holding
company
19
42
0
SX Negócios Ltda.
Brazil
0.00%
89.91%
100.00%
100.00%
Telemarketing
10
2
11
Tabasco Energía España, S.L.
Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
6
0
0
Taxagest Sociedade Gestora de
Participações Sociais, S.A.
Portugal
0.00%
99.87%
100.00%
100.00%
Holding
company
56
0
0
Teatinos Siglo XXI Inversiones S.A.
Chile
50.00%
50.00%
100.00%
100.00%
Holding
company
1497
277
2064
Tekutina Private Limited
India
0.00%
100.00%
100.00%
0.00%
Financial
services
1
0
1
The Alliance & Leicester Corporation
Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Real estate
14
0
14
The Best Specialty Coffee, S.L.
Unipersonal
Spain
100.00%
0.00%
100.00%
100.00%
Restaurant
services
3
0
2
Time Retail Finance Limited (j)
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
TIMFin S.p.A.
Italy
0.00%
51.00%
51.00%
51.00%
Finance
company
53
-8
28
Tonopah Solar I, LLC
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
5
0
5
Tornquist Asesores de Seguros S.A.
(j)
Argentina
0.00%
99.99%
99.99%
99.99%
Inactive
0
0
0
Subsidiaries of Banco Santander, S.A.1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
271
Toro Corretora de Títulos e Valores
Mobiliários Ltda.
Brazil
0.00%
53.95%
60.00%
0.00%
Securities
investment
11
-2
5
Toro Investimentos S.A.
Brazil
0.00%
53.95%
100.00%
0.00%
Consulting
services
5
-1
2
Totta (Ireland), PLC (h)
Ireland
0.00%
99.86%
100.00%
100.00%
Finance
company
451
9
450
Totta Urbe - Empresa de
Administração e Construções, S.A.
Portugal
0.00%
99.86%
100.00%
100.00%
Real estate
102
-5
100
Trabajando.com Mexico, S.A. de C.V.
en liquidación (j)
Mexico
0.00%
100.00%
100.00%
100.00%
Services
0
0
0
Trade Maps 3 Hong Kong Limited
Hong-Kong
(b)
Securitization
0
0
0
Trade Maps 3 Ireland Limited (j)
Ireland
(b)
Securitization
0
0
0
Trans Rotor Limited (j)
United
Kingdom
100.00%
0.00%
100.00%
100.00%
Renting
0
0
0
Transolver Finance EFC, S.A.
Spain
0.00%
51.00%
51.00%
51.00%
Leasing
67
4
17
Tresmares Growth Fund Santander,
SCR, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
32
0
32
Tresmares Santander Direct
Lending, SICC, S.A.
Spain
99.60%
0.00%
99.60%
99.60%
Management
of funds
414
6
413
Tuttle and Son Limited
United
Kingdom
0.00%
100.00%
100.00%
100.00%
Inactive
0
0
0
Universia Brasil S.A.
Brazil
0.00%
100.00%
100.00%
100.00%
Internet
0
0
0
Universia Chile S.A.
Chile
0.00%
86.84%
86.84%
86.84%
Internet
0
0
0
Subsidiaries of Banco Santander, S.A.1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
272
Universia Colombia S.A.S.
Colombia
0.00%
100.00%
100.00%
100.00%
Internet
0
0
0
Universia España Red de
Universidades, S.A.
Spain
0.00%
89.45%
89.45%
89.45%
Internet
2
0
2
Universia Holding, S.L.
Spain
100.00%
0.00%
100.00%
100.00%
Holding
company
19
-3
17
Universia México, S.A. de C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
Internet
0
0
0
Universia Perú, S.A.
Peru
0.00%
99.76%
99.76%
100.00%
Internet
0
0
0
Universia Uruguay, S.A.
Uruguay
0.00%
100.00%
100.00%
100.00%
Internet
0
0
0
Uro Property Holdings, SOCIMI, S.A.
(c)
Spain
99.99%
0.00%
99.99%
99.99%
Real estate
investment
163
9
179
Verbena FCVS - Fundo de
Investimentos em Direitos
Creditórios
Brazil
(b)
Investment
fund
-3
3
0
Wallcesa, S.A.
Spain
100.00%
0.00%
100.00%
100.00%
Financial
services
-936
9
0
Wave Holdco, S.L.
Spain
0.00%
100.00%
100.00%
100.00%
Holding
company
0
0
0
Waypoint Insurance Group, Inc.
United
States
0.00%
100.00%
100.00%
100.00%
Holding
company
9
0
9
WIM Servicios Corporativos, S.A. de
C.V.
Mexico
0.00%
100.00%
100.00%
100.00%
Advisory
services
0
0
0
WTW Shipping Designated Activity
Company
Ireland
100.00%
0.00%
100.00%
100.00%
Leasing
15
1
9
Yera Servicer Company 2021, S.L.
Unipersonal
Spain
0.00%
100.00%
100.00%
0.00%
Real estate
management
19
-1
18
Subsidiaries of Banco Santander, S.A.1
% of ownership held
by
Banco Santander
Percentage of voting
power (k)
EUR million (a)
Company
Location
Direct
Indirect
Year 2021
Year 2020
Activity
Capital +
reserves
Net results
Carrying
amount
273
a.Amount according to the provisional books of each company at the date of publication of these annexes generally referring to 31 December 2021
without taking into account, where applicable, interim dividends paid during the year. In the carrying amount (cost net of provision), the Group's
percentage ownership has been applied to the figure for each holding company, disregarding goodwill impairments made in the consolidation process.
The figures for foreign companies are converted into euros at the year-end exchange rate.
b.Companies over which effective control is maintained.
c.Data as at 31 December 2020, latest available accounts.
d.Data as at 31 March 2021, latest accounts available.
e.Data as at 30 June 2021, last accounts available.
f.Data as at 30 September 2021, last accounts available.
g.Data as at 31 July 2021, last accounts available.
h.Data as at 30 November 2021, last accounts available.
i.Data as at 31 January 2021, latest available accounts.
j.Company in liquidation as at 31 December 2021.
k.Pursuant to Article 3 of Royal Decree 1159/ 2010, of 17 September, approving the rules for the preparation of consolidated annual accounts, in order
to determine the voting rights, voting rights held directly by the parent company have been added to those held by companies controlled by the
parent company or by other persons acting in their own name but on behalf of a Group company. For these purposes, the number of votes
corresponding to the parent company, in relation to the companies indirectly dependent on it, is that corresponding to the dependent company that
directly participates in the share capital of the latter.
l.Company resident for tax purposes in Spain.
m.See note 2.b.i.
n.Company resident for tax purposes in the United Kingdom.
o.Data as at 28 February 2021, last accounts available.
p.Companies in liquidation. Pending registration.
(1) Companies issuing preference shares are listed in Annex III, together with other relevant information.
274
Appendix II
Abra 1 Limited (k)
Caymand
Island
(h)
Leasing
Joint
venture
0
0
0
Achmea Tussenholding, B.V. (b)
Netherlands
8.89%
0.00%
8.89%
8.89%
Holding
company
-
356
356
20
Administrador Financiero de
Transantiago S.A.
Chile
0.00%
13.42%
20.00%
20.00%
Payment and
collection
services
Associated
56
18
2
Aegon Santander Portugal Não Vida
- Companhia de Seguros, S.A.
Portugal
0.00%
48.95%
49.00%
49.00%
Insurance
Joint
venture
56
14
9
Aegon Santander Portugal Vida -
Companhia de Seguros Vida, S.A.
Portugal
0.00%
48.95%
49.00%
49.00%
Insurance
Joint
venture
129
23
18
Aeroplan - Sociedade Construtora
de Aeroportos, Lda. (e)
Portugal
0.00%
19.97%
20.00%
20.00%
Inactive
-
0
0
0
Aguas de Fuensanta, S.A. (e) (k)
Spain
36.78%
0.00%
36.78%
36.78%
Food
-
0
0
0
Alcuter 2, S.L. (k)
Spain
37.23%
0.00%
37.23%
37.23%
Technical
services
-
0
0
0
Alma UK Holdings Ltd
United
Kingdom
30.00%
0.00%
30.00%
0.00%
Holding
company
Joint
venture
4
4
-1
Altamira Asset Management, S.A.
(consolidado)
Spain
0.00%
15.00%
15.00%
15.00%
Real estate
-
236
3
-2
Apolo Fundo de Investimento em
Direitos Creditórios
Brazil
0.00%
29.97%
33.33%
33.33%
Investment
fund
Joint
venture
454
421
33
Arena Communications Network,
S.L. (consolidado) (b)
Spain
20.00%
0.00%
20.00%
20.00%
Advertising
Associated
296
99
-6
Attijariwafa Bank Société Anonyme
(consolidado) (b)
Morocco
0.00%
5.10%
5.10%
5.11%
Banking
-
54,011
4,809
352
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
275
Autopistas del Sol S.A. (b)
Argentina
0.00%
14.17%
14.17%
14.17%
Motorway
concession
-
169
82
0
Banco RCI Brasil S.A.
Brazil
0.00%
35.87%
39.89%
39.89%
Banking
Joint
venture
1,699
217
25
Banco S3 Caceis México, S.A.,
Institución de Banca Múltiple
Mexico
0.00%
50.00%
50.00%
50.00%
Banking
Joint
venture
157
67
4
Bank of Beijing Consumer Finance
Company
China
0.00%
20.00%
20.00%
20.00%
Finance
company
Associated
1,369
120
8
Bank of Shanghai Co., Ltd.
(consolidado) (b)
China
6.54%
0.00%
6.54%
6.54%
Banking
-
342,252
23,563
2,903
CACEIS (consolidado)
France
0.00%
30.50%
30.50%
30.50%
Custody
services
Associated
122,132
3,979
187
Câmara Interbancária de
Pagamentos - CIP
Brazil
0.00%
16.07%
17.87%
17.65%
Payment and
collection
services
-
342
235
69
Cantabria Capital, SGEIC, S.A.
Spain
50.00%
0.00%
50.00%
50.00%
Venture capital
Associated
0
0
0
Car10 Tecnologia e Informação S.A.
Brazil
0.00%
41.96%
46.67%
Internet
Joint
venture
8
2
(1)
CCPT - ComprarCasa, Rede Serviços
Imobiliários, S.A.
Portugal
0.00%
49.98%
49.98%
49.98%
Real estate
services
Joint
venture
0
0
0
Centro de Compensación
Automatizado S.A.
Chile
0.00%
22.37%
33.33%
33.33%
Payment and
collection
services
Associated
14
9
3
Centro para el Desarrollo,
Investigación y Aplicación de
Nuevas Tecnologías, S.A. (b)
Spain
0.00%
49.00%
49.00%
49.00%
Technology
Associated
3
2
0
CNP Santander Insurance Europe
Designated Activity Company
Ireland
49.00%
0.00%
49.00%
49.00%
Insurance
brokerage
Associated
1,004
191
42
CNP Santander Insurance Life
Designated Activity Company
Ireland
49.00%
0.00%
49.00%
49.00%
Insurance
brokerage
Associated
1,294
151
43
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
276
CNP Santander Insurance Services
Ireland Limited
Ireland
49.00%
0.00%
49.00%
49.00%
Services
Associated
31
4
1
Comder Contraparte Central S.A
Chile
0.00%
8.37%
12.47%
12.47%
Financial
services
Associated
34
11
1
Companhia Promotora UCI
Brazil
0.00%
25.00%
25.00%
25.00%
Financial
services
Joint
venture
1
-1
0
Compañia Española de Financiación
de Desarrollo, Cofides, S.A., SME (b)
Spain
20.18%
0.00%
20.18%
20.18%
Finance
company
-
153
140
10
Compañía Española de Seguros de
Crédito a la Exportación, S.A.,
Compañía de Seguros y Reaseguros
(consolidado) (b)
Spain
23.33%
0.55%
23.88%
23.88%
Credit
insurance
-
942
385
34
Compañía Española de Viviendas en
Alquiler, S.A.
Spain
24.07%
0.00%
24.07%
24.07%
Real estate
Associated
528
333
14
Compañía para los Desarrollos
Inmobiliarios de la Ciudad de
Hispalis, S.L., en liquidación (l) (e)
Spain
21.98%
0.00%
21.98%
21.98%
Real estate
development
-
38
6
0
Connecting Visions Ecosystems, S.L.
Spain
19.90%
0.00%
19.90%
19.90%
Consulting
services
Joint
venture
2
2
-1
Corkfoc Cortiças, S.A. (c)
Portugal
0.00%
27.55%
27.58%
27.58%
Cork industry
-
3
20
0
Corridor Texas Holdings LLC
(consolidado) (b)
United
States
0.00%
33.40%
33.40%
36.30%
Holding
company
-
190
163
-5
Desarrollo Eólico las Majas VI, S.L.
Spain
45.00%
0.00%
45.00%
0.00%
Renewable
energies
Joint
venture
28
6
0
Ebury Partners Limited
(consolidado) (d) (m)
United
Kingdom
0.00%
44.06%
51.28%
50.41%
Payment
services
Associated
781
55
-69
Energias Renovables de Ormonde
25, S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
0
0
0
Energias Renovables de Ormonde
26, S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
0
0
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
277
Energias Renovables de Ormonde
27, S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
0
0
0
Energias Renovables de Ormonde
30, S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
1
0
0
Energias Renovables de Titania, S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
0
0
0
Energias Renovables Gladiateur 45,
S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
0
0
0
Energias Renovables Prometeo, S.L.
Spain
0.00%
55.00%
55.00%
0.00%
Renewable
energies
Joint
venture
0
0
0
Euro Automatic Cash Entidad de
Pago, S.L.
Spain
50.00%
0.00%
50.00%
50.00%
Payment
services
Associated
57
46
-12
European Hospitality Opportunities
S.à r.l. (o)
Luxembourg
0.00%
49.00%
49.00%
0.00%
Holding
company
Joint
venture
0
0
0
Evolve SPV S.r.l.
Italy
(h)
Securitizations
Joint
venture
105
0
7
FAFER- Empreendimentos
Urbanísticos e de Construção, S.A.
(b) (e)
Portugal
0.00%
36.57%
36.62%
36.62%
Real estate
-
0
1
0
Federal Reserve Bank of Boston (b)
United
States
0.00%
20.09%
20.09%
25.73%
Banking
-
194,429
1,573
-1
Fondo de Titulización de Activos
UCI 11
Spain
(h)
Securitizations
Joint
venture
133
0
0
Fondo de Titulización de Activos
UCI 14
Spain
(h)
Securitizations
Joint
venture
346
0
0
Fondo de Titulización de Activos
UCI 15
Spain
(h)
Securitizations
Joint
venture
426
0
0
Fondo de Titulización de Activos
UCI 16
Spain
(h)
Securitizations
Joint
venture
597
0
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
278
Fondo de Titulización de Activos
UCI 17
Spain
(h)
Securitizations
Joint
venture
517
0
0
Fondo de Titulización Hipotecaria
UCI 12
Spain
(h)
Securitizations
Joint
venture
189
0
0
Fondo de Titulización, RMBS Prado
III
Spain
(h)
Securitizations
Joint
venture
0
0
0
Fondo de Titulización, RMBS Prado
IV
Spain
(h)
Securitizations
Joint
venture
288
0
0
Fondo de Titulización, RMBS Prado
IX
Spain
(h)
Securitizations
Joint
venture
499
0
0
Fondo de Titulización, RMBS Prado
V
Spain
(h)
Securitizations
Joint
venture
309
0
0
Fondo de Titulización, RMBS Prado
VI
Spain
(h)
Securitizations
Joint
venture
340
0
0
Fondo de Titulización, RMBS Prado
VII
Spain
(h)
Securitizations
Joint
venture
481
0
0
Fondo de Titulización, RMBS Prado
VIII
Spain
(h)
Securitizations
Joint
venture
467
0
0
Fortune Auto Finance Co., Ltd
China
0.00%
50.00%
50.00%
50.00%
Finance
company
Joint
venture
3,181
384
61
Fremman limited
United
Kingdom
33.00%
0.00%
4.99%
4.99%
Finance
company
Associated
2
0
-3
Gestora de Inteligência de Crédito
S.A.
Brazil
0.00%
17.98%
20.00%
20.00%
Collection
Joint
venture
186
21
-10
Gire S.A.
Argentina
0.00%
57.93%
58.33%
58.33%
Payment and
collection
services
Associated
158
25
13
HCUK Auto Funding 2017-2 Ltd
United
Kingdom
(h)
Securitizations
Joint
venture
833
0
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
279
Healthy Neighborhoods Equity
Fund I LP (b)
United
States
0.00%
22.37%
22.37%
22.37%
Real estate
-
14
14
-2
Hyundai Capital UK Limited
United
Kingdom
0.00%
50.01%
50.01%
50.01%
Finance
company
Joint
venture
4,338
323
79
Hyundai Corretora de Seguros Ltda.
Brazil
0.00%
44.96%
50.00%
50.00%
Insurance
brokerage
Joint
venture
1
0
0
Imperial Holding S.C.A. (e) (i)
Luxembourg
0.00%
36.36%
36.36%
36.36%
Securities
investment
-
0
-112
0
Imperial Management S.à r.l. (b) (e)
Luxembourg
0.00%
40.20%
40.20%
40.20%
Holding
company
-
0
0
0
Indice Iberoamericano de
Investigación y Conocimiento, A.I.E.
Spain
0.00%
51.00%
51.00%
51.00%
Information
system
Joint
venture
1
-6
-1
Inmoalemania Gestión de Activos
Inmobiliarios, S.A.
Spain
0.00%
20.00%
20.00%
20.00%
Holding
company
-
0
0
0
Innohub S.A.P.I. de C.V.
Mexico
0.00%
20.00%
20.00%
20.00%
IT services
Associated
1
3
-2
Inverlur Aguilas I, S.L.
Spain
0.00%
50.00%
50.00%
50.00%
Real estate
Joint
venture
0
0
0
Inverlur Aguilas II, S.L.
Spain
0.00%
50.00%
50.00%
50.00%
Real estate
Joint
venture
1
1
0
Inversiones Ibersuizas, S.A. (b)
Spain
25.42%
0.00%
25.42%
25.42%
Venture capital
-
31
19
10
Inversiones ZS América Dos Ltda.
Chile
0.00%
49.00%
49.00%
49.00%
Real estate
and securities
investment
Associated
269
269
34
Inversiones ZS América SpA
Chile
0.00%
49.00%
49.00%
49.00%
Real estate
and securities
investment
Associated
395
396
35
J.C. Flowers I L.P. (b)
United
States
0.00%
11.10%
0.00%
0.00%
Holding
company
-
2
2
-1
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
280
JCF AIV P L.P. (b)
Canada
0.00%
7.67%
4.99%
4.99%
Holding
company
-
5
5
0
LB Oprent, S.A.
Spain
40.00%
0.00%
40.00%
38.33%
Industrial
machinery rent
Associated
4
1
1
Loop Gestão de Pátios S.A.
Brazil
0.00%
32.10%
35.70%
35.70%
Business
services
Joint
venture
7
2
-1
Mapfre Santander Portugal -
Companhia de Seguros, S.A.
Portugal
0.00%
49.94%
49.99%
49.99%
Insurance
Associated
13
8
-3
Massachusetts Business
Development Corp. (consolidado)
(b)
United
States
0.00%
21.61%
21.61%
21.61%
Finance
company
-
55
11
1
MB Capital Fund IV, LLC (b)
United
States
0.00%
21.51%
21.51%
21.51%
Finance
company
-
18
17
1
Merlin Properties, SOCIMI, S.A.
(consolidado) (b)
Spain
19.07%
5.70%
24.77%
24.81%
Real estate
investment
Associated
13,478
6,640
56
Metrovacesa, S.A. (consolidado) (b)
Spain
31.94%
17.50%
49.44%
49.45%
Real estate
development
Associated
2,927
2,343
-164
New PEL S.à r.l. (c) (e)
Luxembourg
0.00%
7.67%
0.00%
0.00%
Holding
company
-
0
0
0
NIB Special Investors IV-A LP (n)
Canada
0.00%
0.00%
0.00%
4.99%
Holding
company
-
0
0
0
NIB Special Investors IV-B LP (n)
Canada
0.00%
0.00%
0.00%
4.99%
Holding
company
-
0
0
0
Niuco 15, S.L. (k)
Spain
37.23%
0.00%
37.23%
37.23%
Technical
services
-
0
0
0
Ocyener 2008, S.L.
Spain
0.00%
45.00%
45.00%
0.00%
Holding
company
Associated
2
1
1
Operadora de Activos Beta, S.A. de
C.V.
Mexico
49.99%
0.00%
49.99%
49.99%
Finance
company
Associated
0
0
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
281
Pag10 Fomento Mercantil Eireli
Brazil
0.00%
41.96%
46.67%
Factoring
Joint
venture
0
0
0
Payever GmbH
Germany
0.00%
10.00%
10.00%
10.00%
Software
Associated
3
2
0
Play Digital S.A.
Argentina
0.00%
15.59%
15.70%
0.00%
Payment
platform
Associated
11
23
-12
POLFUND - Fundusz Poręczeń
Kredytowych S.A.
Poland
0.00%
33.70%
50.00%
50.00%
Management
Associated
28
20
0
Portland SPV S.r.l.
Italy
0.00%
(h)
0.00%
0.00%
Securitizations
Joint
venture
234
0
0
Procapital - Investimentos
Imobiliários, S.A. (c) (e)
Portugal
0.00%
39.96%
40.00%
40.00%
Real estate
-
2
13
0
Project Quasar Investments 2017,
S.L. (consolidado) (b)
Spain
49.00%
0.00%
49.00%
49.00%
Holding
company
-
6,984
2,638
-1,852
Promontoria Manzana, S.A.
(consolidado) (b)
Spain
20.00%
0.00%
20.00%
20.00%
Holding
company
Associated
1,068
319
-38
PSA Corretora de Seguros e
Serviços Ltda.
Brazil
0.00%
44.96%
50.00%
50.00%
Insurance
Joint
venture
0
0
0
PSA Insurance Europe Limited
Malta
0.00%
50.00%
50.00%
50.00%
Insurance
Joint
venture
254
59
26
PSA Life Insurance Europe Limited
Malta
0.00%
50.00%
50.00%
50.00%
Insurance
Joint
venture
110
13
20
Redbanc S.A.
Chile
0.00%
22.44%
33.43%
33.43%
Services
Associated
29
9
1
Redsys Servicios de Procesamiento,
S.L. (consolidado)
Spain
24.90%
0.06%
24.96%
20.06%
Cards
Associated
108
71
4
Relevante e Astuto, S.A.
Portugal
0.00%
70.00%
70.00%
0.00%
Real estate
management
Joint
venture
5
0
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
282
Retama Real Estate, S.A.
Spain
0.00%
50.00%
50.00%
50.00%
Services
Joint
venture
30
-45
-1
Rías Redbanc S.A.
Uruguay
0.00%
25.00%
25.00%
25.00%
Services
-
3
1
0
RMBS Green Belem I
Portugal
(h)
Securitizations
Joint
venture
309
0
0
S3 Caceis Brasil Distribuidora de
Títulos e Valores Mobiliários S.A.
Brazil
0.00%
50.00%
50.00%
50.00%
Securities
investment
Joint
venture
207
143
18
S3 Caceis Brasil Participações S.A.
Brazil
0.00%
50.00%
50.00%
50.00%
Holding
company
Joint
venture
163
145
18
Sancus Green Investments II, S.C.R.,
S.A. (o)
Spain
0.00%
43.29%
43.29%
0.00%
Venture capital
-
0
0
0
Santander Alternatives SICAV RAIF
(c)
Luxembourg
0.00%
48.03%
48.03%
100.00%
Investment
company
-
13
12
0
Santander Assurance Solutions, S.A.
Spain
0.00%
66.67%
66.67%
73.99%
Insurance
intermediary
Joint
venture
10
4
1
Santander Auto S.A.
Brazil
0.00%
44.96%
50.00%
50.00%
Insurance
Associated
25
5
2
Santander Aviva Towarzystwo
Ubezpieczeń na Życie S.A.
Poland
0.00%
33.03%
49.00%
49.00%
Insurance
Associated
299
20
21
Santander Aviva Towarzystwo
Ubezpieczeń S.A.
Poland
0.00%
33.03%
49.00%
49.00%
Insurance
Associated
94
39
12
Santander Caceis Colombia S.A.
Sociedad Fiduciaria
Colombia
0.00%
50.00%
50.00%
50.00%
Finance
company
Joint
venture
7
7
-1
Santander Caceis Latam Holding 1,
S.L.
Spain
0.00%
50.00%
50.00%
50.00%
Holding
company
Joint
venture
722
716
5
Santander Caceis Latam Holding 2,
S.L.
Spain
0.00%
50.00%
50.00%
50.00%
Holding
company
Joint
venture
2
2
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
283
Santander Generales Seguros y
Reaseguros, S.A.
Spain
0.00%
49.00%
49.00%
49.00%
Insurance
Joint
venture
732
206
39
Santander Mapfre Seguros y
Reaseguros, S.A.
Spain
0.00%
49.99%
49.99%
49.99%
Insurance
Associated
90
57
-13
Santander Vida Seguros y
Reaseguros, S.A.
Spain
0.00%
49.00%
49.00%
49.00%
Insurance
Joint
venture
1,036
367
36
Sedesa Seguros de Depósitos S.A.
(b)
Argentina
0.00%
13.47%
13.56%
0.00%
Fund
management
-
2
2
0
Sepacon 31, S.L. (k)
Spain
37.23%
0.00%
37.23%
37.23%
Technical
services
-
0
0
0
Servicios de Infraestructura de
Mercado OTC S.A
Chile
0.00%
8.37%
12.48%
12.48%
Services
Associated
37
13
0
SIBS-SGPS, S.A. (b)
Portugal
0.00%
16.52%
16.55%
16.55%
Portfolio
management
-
365
59
41
Siguler Guff SBIC Fund LP (b)
United
States
0.00%
20.00%
20.00%
20.00%
Investment
fund
-
8
1
0
Sistema de Tarjetas y Medios de
Pago, S.A. (b)
Spain
20.61%
0.00%
20.61%
18.11%
Payment
methods
Associated
673
4
0
Sistemas Técnicos de Encofrados,
S.A. (consolidado) (b)
Spain
27.15%
0.00%
27.15%
27.15%
Building
materials
-
89
14
0
Sociedad Conjunta para la Emisión
y Gestión de Medios de Pago,
E.F.C., S.A.
Spain
45.70%
0.00%
45.70%
45.70%
Payment
services
Joint
venture
107
36
1
Sociedad de Garantía Recíproca de
Santander, S.G.R. (b)
Spain
25.35%
0.25%
25.60%
25.73%
Financial
services
-
17
11
0
Sociedad de Gestión de Activos
Procedentes de la Reestructuración
Bancaria, S.A. (b)
Spain
22.21%
0.00%
22.21%
22.21%
Financial
services
-
27,586
230
-1,073
Sociedad Interbancaria de
Depósitos de Valores S.A.
Chile
0.00%
19.66%
29.29%
29.29%
Securities
deposit
Associated
7
6
1
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
284
Solar Maritime Designated Activity
Company (b)
Ireland
(h)
Leasing
Joint
venture
113
-7
0
Stephens Ranch Wind Energy
Holdco LLC (consolidado) (b)
United
States
0.00%
17.10%
17.10%
19.20%
Renewable
energies
-
218
208
-7
Tbforte Segurança e Transporte de
Valores Ltda.
Brazil
0.00%
17.06%
18.98%
19.81%
Security
Associated
101
62
2
Tbnet Comércio, Locação e
Administração Ltda.
Brazil
0.00%
17.06%
18.98%
19.81%
Telecommunic
ations
Associated
69
66
2
Tecban Serviços Integrados Ltda.
Brazil
0.00%
17.06%
18.98%
0.00%
IT services
Associated
0
0
0
Tecnologia Bancária S.A.
Brazil
0.00%
17.06%
19.81%
19.81%
ATM
Associated
428
115
26
Tikgi Aviation One Designated
Activity Company
Ireland
(h)
Renting
-
224
-2
1
Tonopah Solar Energy Holdings I,
LLC (consolidado) (b)
United
States
0.00%
26.80%
26.80%
26.80%
Holding
company
Joint
venture
0
0
0
Trabajando.com Chile S.A.
Chile
0.00%
33.33%
33.33%
33.33%
Services
Associated
2
-1
1
Transbank S.A.
Chile
0.00%
16.78%
25.00%
25.00%
Cards
Associated
1,366
101
-13
Tresmares Growth Fund II, SCR, S.A.
Spain
40.00%
0.00%
40.00%
40.00%
Holding
company
-
49
45
-2
Tresmares Growth Fund III, SCR,
S.A.
Spain
40.00%
0.00%
40.00%
40.00%
Holding
company
-
38
34
-2
U.C.I., S.A.
Spain
50.00%
0.00%
50.00%
50.00%
Holding
company
Joint
venture
448
127
-6
UCI Hellas Credit and Loan
Receivables Servicing Company S.A.
Greece
0.00%
50.00%
50.00%
50.00%
Financial
services
Joint
venture
1
1
0
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
285
UCI Holding Brasil Ltda.
Brazil
0.00%
50.00%
50.00%
50.00%
Holding
company
Joint
venture
1
0
0
UCI Mediação de Seguros
Unipessoal, Lda.
Portugal
0.00%
50.00%
50.00%
50.00%
Insurance
brokerage
Joint
venture
0
0
0
UCI Servicios para Profesionales
Inmobiliarios, S.A.
Spain
0.00%
50.00%
50.00%
50.00%
Real estate
services
Joint
venture
1
0
0
Unicre-Instituição Financeira de
Crédito, S.A.
Portugal
0.00%
21.83%
21.86%
21.86%
Finance
company
Associated
409
99
20
Unión de Créditos Inmobiliarios,
S.A., EFC
Spain
0.00%
50.00%
50.00%
50.00%
Mortgage
credit
company
Joint
venture
11,294
459
7
VCFS Germany GmbH
Germany
0.00%
50.00%
50.00%
50.00%
Marketing
Joint
venture
1
0
0
Venda de Veículos Fundo de
Investimento em Direitos
Creditórios
Brazil
(h)
Securitizations
Joint
venture
107
103
4
Volvo Car Financial Services UK
Limited
United
Kingdom
0.00%
50.01%
50.01%
50.00%
Leasing
Joint
venture
927
81
-4
Webmotors S.A.
Brazil
0.00%
62.94%
70.00%
70.00%
Services
Joint
venture
54
32
10
Zurich Santander Brasil Seguros e
Previdência S.A.
Brazil
0.00%
48.79%
48.79%
48.79%
Insurance
Associated
11,892
365
106
Zurich Santander Brasil Seguros
S.A.
Brazil
0.00%
48.79%
48.79%
48.79%
Insurance
Associated
156
-2
29
Zurich Santander Holding (Spain),
S.L.
Spain
0.00%
49.00%
49.00%
49.00%
Holding
company
Associated
1,182
936
246
Zurich Santander Holding Dos
(Spain), S.L.
Spain
0.00%
49.00%
49.00%
49.00%
Holding
company
Associated
587
384
204
Zurich Santander Insurance
América, S.L.
Spain
49.00%
0.00%
49.00%
49.00%
Holding
company
Associated
1,996
1,490
475
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
286
Zurich Santander Seguros
Argentina S.A. (j)
Argentina
0.00%
49.00%
49.00%
49.00%
Insurance
Associated
60
18
18
Zurich Santander Seguros de Vida
Chile S.A.
Chile
0.00%
49.00%
49.00%
49.00%
Insurance
Associated
213
23
30
Zurich Santander Seguros
Generales Chile S.A.
Chile
0.00%
49.00%
49.00%
49.00%
Insurance
Associated
249
45
13
Zurich Santander Seguros México,
S.A.
Mexico
0.00%
49.00%
49.00%
49.00%
Insurance
Associated
887
34
88
Zurich Santander Seguros Uruguay
S.A.
Uruguay
0.00%
49.00%
49.00%
49.00%
Insurance
Associated
32
14
7
Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
% of ownership
held by Banco
Santander
Percentage of voting
power (f)
EUR million (a)
Company
Location
Direct
Indirect
Year
2021
Year
2020
Activity
Type of
company
Asset
Capital +
reserves
Net
results
a.Amount according to the provisional books at the date of publication of these annexes of each company generally referring to 31 December 2021, unless
otherwise indicated because the annual accounts have not yet been prepared. Data for foreign companies are converted into euros at the year-end
exchange rate.
b.Data as at 31 December 2020, latest available accounts.
c.Data as at 31 December 2019, latest available accounts.
d.The Group is entitled to receive 51.28% of the dividends distributed by the company.
e.Company in liquidation as at 31 December 2021.
f.Pursuant to Article 3 of Royal Decree 1159/ 2010, of 17 September, approving the rules for the preparation of consolidated annual accounts, in order to
determine the voting rights, voting rights held directly by the parent company have been added to those held by companies controlled by the parent
company or by other persons acting in their own name but on behalf of a group company. For these purposes, the number of votes corresponding to the
parent company, in relation to the companies indirectly dependent on it, is that corresponding to the dependent company that directly participates in the
share capital of the latter.
g.Excluding the Group companies listed in Appendix I, as well as those which are of negligible interest with respect to the true and fair view that the
consolidated financial statements must give (in accordance with articles 48 of the Commercial Code and 260 of the Spanish Companies Act).
h.Companies over which joint control is maintained.
i.Data as at 31 October 2020, latest available accounts.
j.Data as at 30 June 2021, latest available accounts.
k.Company with no financial information available.
l.Data as at 30 November 2018, latest available accounts.
m.Data as at 30 April 2021, latest available accounts.
n.Company in liquidation. Pending registration.
o.Company recently incorporated, no accounts available.
287
Appendix III
Issuing subsidiaries of shares and preference shares
% of ownership held by
Banco Santander
EUR million (a)
Company
Location
Direct
Indirect
Activity
Capital
Reserves
Cost of
preferred
Net results
Emisora Santander España, S.A.
Unipersonal
Spain
100.00%
0.00%
Finance
company
2
Santander UK (Structured Solutions)
Limited
United
Kingdom
0.00%
100.00%
Finance
company
Sovereign Real Estate Investment Trust
United States
0.00%
100.00%
Finance
company
4,931
(3,219)
43
74
a.Amount according to the books of each interim company as at 31 December 2021, converted into euro (in the case of foreign companies) at the year-end
exchange rate.
 
288
Appendix IV
Notifications of acquisitions and disposals of
investments in 2021
Details of the notifications of acquisitions and
disposals of participations for 2021 in accordance with
Article 125 of the Securities Market Law may be found
below:
On 10 May 2021, Banco Santander, S.A. notified to the
CNMV of the increase of its stake in REPSOL above the
3% threshold up to 3.584%, dated as of 4 May 4 2021.
On 25 June 2021, Banco Santander, S.A. notified to the
CNMV of the decrease of its stake in REPSOL, S.A.
below the 3% threshold up to 2.718%, dated as of 21
June 2021.
On 26 November 2021, Banco Santander, S.A. notified
to the CNMV of the increase of its stake in REPSOL
above the 3% threshold up to 3.829%, dated as of 22
November 2021.
In relation to the information required by 155 of the
Corporate Enterprises Act, on the shareholdings in
which Grupo Santander owns more than 10% of the
capital of another company, and the successive
acquisitions of more than 5% of the share capital, see
appendices I, II and III.
289
Appendix V
Deduction for reinvestment of extraordinary
income corresponding to the companies of the
Fiscal Consolidation Group, whose dominant was
Banco Popular Español, S.A.U.
Based on the provisions of the Transitional Provision
24th of Law 27/2014 on income eligible for the
reinvestment of extraordinary profits provided for in
article 42 of the previous Consolidated Text of the
Corporation Income Tax Law, which states that such
income shall be regulated by the provisions of the
aforementioned article 42, and in particular
compliance with paragraph 10 of that provision, which
provides for the obligation to detail the amount of the
income received from the deduction provided for in
that Article, as well as the year in which the
reinvestment took place, all of this as long as the
period for maintaining the investment has not yet
been met provided for in paragraph 8 of the
aforementioned provision, the following information
is collected concerning capital gains generated up to
the financial year 2014, with a reinvestment period
from the year 2014 to 2017.
The detailed information refers to both Banco Popular
and other companies in its Fiscal Consolidated Group
up to 2017, inclusive, which obtained income eligible
for the reinvestment deduction and/or have made
investments in assets referred to in Article 42 (3).
Amount of income received to the 12% deduction in
2017: EUR 21,333,543.67.
Reinvestments made in 2017: EUR 47,546,533.73.
290
Appendix VI
List of Transactions subject to the Special Regime
for Mergers, Divisions, Assets Contributions and
Exchange of Securities in which the company has
acted as an Acquiring Entity or Partner
In compliance with the reporting obligations
established in Article 86 of Law 27/2014, of 27
November, on Corporate Tax (LIS), the following
information is provided on the transactions subject to
the tax regime of mergers, divisions, contributions of
assets and exchange of securities, provided for in
Chapter VII of Title VII of the LIS, in which BANCO
SANTANDER, S.A. has intervened during 2021:
I.  According to Article 86 (1) of the LIS, it is reported
that the company BANCO SANTANDER, S.A. has
intervened as an acquirer in the following
transactions:
Merger by absorption of POPULAR SPAIN HOLDING
DE INVERSIONES S.L.U., SANTANDER INVESTMENT
I S.A.U. and ADMINISTRACIÓN DE BANCOS
LATINOAMERICANOS SANTANDER S.L., by BANCO
SANTANDER, S.A. which owned all the shares of
the absorbed entities, directly or indirectly. This
transaction constitutes a merger as regulated in
Article 76.1.c) of the LIS. The information required
by Article 86.1 of the LIS is included in these notes
to the consolidated financial statements.
II. According to Article 86 (2) of the LIS, it is reported
that BANCO SANTANDER, S.A. has intervened as a
partner in the following operations:
Merger by absorption of SANTANDER GLOBAL
OPERATIONS, S.A., SOCIEDAD UNIPERSONAL by
SANTANDER GLOBAL TECHNOLOGY AND
OPERATIONS, S.L., SOCIEDAD UNIPERSONAL
(formerly SANTANDER GLOBAL TECHNOLOGY, S.L.,
SOCIEDAD UNIPERSONAL). This transaction
constitutes a merger as regulated in article 76.1.a)
of the LIS. BANCO SANTANDER, S.A. had a full
shareholding in the capital of both the absorbed
company and the absorbing company. The book
value of the securities delivered from SANTANDER
GLOBAL OPERATIONS, S.A., SOCIEDAD
UNIPERSONAL was EUR 23,619,104.29. The value
at which BANCO SANTANDER, S.A. has accounted
for the securities received in the entity
SANTANDER GLOBAL TECHNOLOGY AND
OPERATIONS, S.L., SOCIEDAD UNIPERSONAL is
EUR 23,619,104.29.
Segregation of the autonomous economic unit that
integrates the business of management of empty
bank branches, with project of closure or leased to
third parties not linked to the banking activity of
BANCO SANTANDER, S.A. in favor of a newly
created company called RETAILCOMPANY 2021,
S.L.U. This operation constitutes a spin-off of those
regulated in article 76.2.1ºb) of the LIS. The net
value of the assets and liabilities corresponding to
the branch of activity contributed amounts to EUR
262,030,688.77. The value at which BANCO
SANTANDER, S.A. has recorded the securities
received from RETAILCOMPANY 2021, S.L.U. is EUR
262,030,688.77.
Exchange of securities regulated in articles 76.5
and 80 of the LIS by which PAGONxt, S.L. acquires
most of the voting rights (51%) in the entity
GETNET EUROPE, ENTIDAD DE PAGO, S.L.
(formerly called SANTANDER ESPAÑA MERCHANT
SERVICES ENTIDAD DE PAGO S.L.) through the
attribution to its partner BANCO SANTANDER, S.A.,
of securities representing the acquiring entity. The
book value at which BANCO SANTANDER, S.A. had
accounted for the securities delivered from
GETNET EUROPE, ENTIDAD DE PAGO, S.L. was EUR
94,452,410.36. The value at which BANCO
SANTANDER, S.A. has accounted for the securities
received from PAGONxt, S.L. is EUR
110,111,550.00.
Exchange of securities regulated in articles 76.5
and 80 of the LIS by which PAGONxt, S.L. acquires
a greater shareholding (it already held the
majority) of the voting rights in the entity PAGONxt
MERCHANT SOLUTIONS S.L. This transaction is
executed as a contribution to reserves made by the
partners, consisting of a non-monetary
contribution by BANCO SANTANDER, S.A. of the
shares of PAGONxt MERCHANT SOLUTIONS S.L.
(representing a 39.4% share of the share capital of
this company and of its voting rights). The book
value at which BANCO SANTANDER, S.A. had
recorded the securities delivered from PAGONxt
MERCHANT SOLUTIONS S.L. was EUR
295,504,952.66, while their tax value amounted to
EUR 594,734,704.60, the difference corresponding
to a mark-to-market adjustment made in BANCO
SANTANDER, S.A. as a result of the spin-off
operations that gave rise to the acquisition of the
holdings (article 17.4 of the LIS). The value at
which BANCO SANTANDER, S.A. has recorded the
securities received from PAGONxt, S.L. is EUR
295,504,952.66.
291
Non-monetary contribution regulated in article 87
of the LIS by which PAGONxt, S.L. acquires a
participation (49%) in the entity GETNET EUROPE,
ENTIDAD DE PAGO, S.L. (formerly called
SANTANDER ESPAÑA MERCHANT SERVICES
ENTIDAD DE PAGO S.L.) through the attribution to
its partner BANCO SANTANDER, S.A., of securities
representing the acquiring entity. The book value
at which BANCO SANTANDER, S.A. had accounted
for the securities delivered from GETNET EUROPE,
ENTIDAD DE PAGO, S.L. was EUR 90,748,394.22.
The value at which BANCO SANTANDER, S.A. has
accounted for the securities received from
PAGONxt, S.L. is EUR 104,924,000.
Non-monetary contribution of assets by BANCO
SANTANDER, S.A. and ALTAMIRA SANTANDER REAL
ESTATE, S.A. to LANDCOMPANY 2020, S.L. This
transaction constitutes a non-monetary
contribution as regulated in article 87 of the LIS
and did not benefit from the regime provided for in
article 77.1 of said regulation. The net value of the
assets contributed amounts to EUR 20,998,930.00.
The value at which BANCO SANTANDER, S.A. has
accounted for the securities received from
LANDCOMPANY 2020, S.L. is EUR 20,998,930.00.
III. In compliance with Article 86.3 of the LIS, it is noted
that the particulars required by Article 86 (1) and (2)
relating to transactions subject to the tax regime for
mergers, divisions, contributions of assets and
exchange of securities provided for in Chapter VII of
Title VII of the LIS, in which BANCO SANTANDER , S.A.
has intervened as an acquirer or as a partner during
previous years, they are listed in the first annual report
approved after each of the aforementioned
operations.
292
Appendix VII
Information to include in compliance with Article
12.3 of the TRLIS
Regarding the information requested in Article 12.3 of
the Consolidated Text which passes on the Corporate
Income Tax Law as amended by Law 4/2008 of
December 23, 2008, regarding tax periods whisch began
on January 1, 2008, until its repeal by Law 16/2013 of
October 29, 2013, Banco Santander has no deductions
pending to integrate as of year-end 2021.
293
Appendix VIII
Information regarding the merger by absorption
of Popular Spain Holding de Inversiones, S.L.U.,
Santander Investment I, S.A.U. and
Administración de Bancos Latinoamericanos
Santander, S.L., pursuant to Article 86.1 of the
Corporate Income Tax Law 27/2014.
a.  A  year in which the transferring entity acquired the
transferred assets that are liable to amortization.
There are no assets in Santander Global Property,
S.L.U. and BPE Financiaciones, S.A.U. entities that are
subject to amortization.
There are no assets at Popular Spain Holding de
Inversiones, S.L.U., Santander Investment I, S.A.U. and
Administración de Bancos Latinoamericanos
Santander, S.L. that are subject to depreciation.
b. Last balance sheet closed by transmitting entities.
The latest balance sheets of transmitting entities are
contained in note 1.i.
c. A list of assets acquired which have been
incorporated into the accounting books for a value
other than the value listed in the transferring entity
prior to the completion of the transaction, expressing
both values as well as the value corrections made in
the accounting books of the two entities.
The following is a detail of the asset captions in the
balance sheet of the transferring entity that have been
recorded at a different carrying amount in the
acquiring entity:
EUR thousand
Heading
Book value
Santander
Investment I,
S.A.U.
Merge Value
Adjustment
Book value
Banco
Santander
Investments
in
subsidiaries,
joint ventures
and associates
1,857
227
2,084
EUR thousand
Heading
Book value
Administración
de Bancos
Latinoamericanos
Santander, S.L.
Merge
Value
Adjustment
Book value
Banco
Santander
Investments
in
subsidiaries,
joint ventures
and
associates
576
176
752
d. List of tax profits enjoyed by the transferring entity,
for which the acquiring entity must assume
compliance with certain requirements.
There are no tax benefits in the transferring entity over
which Banco Santander, S.A. must assume compliance
with certain requirements. 
294
Appendix IX
Agent network - Collaborating agents, Agents empowered at 31 of December 2021.
NEOBAN SL 
BERCAMLU S.L. 
SALVADOR CEA PEREZ
FRANCISCO JAVIER MARTINEZ
FERNANDEZ
ANTONIO GUILLEN RAMIREZ
MARIA DE LOS ANGELES ESCUDERO
ORTEGA
ALBERTO SANTIAGO LLORENTE
MARTINEZ
JOSE ANTONIO ESCUDERO ORTEGA
JOAQUIN GALVEZ RODRIGUEZ
CRISTOPHER DIAZ MUÑOZ
IVAN PEREZ VARGAS
SIMO CONSULTORIA SL 
ALICIA MATILDE LOPEZ FRANCO
RAFAEL JESUS VILLARREAL ARIZA
SARA GIL LECHADO
FANDILA GARCIA ZAMORA
CARBALLO & CARO 2019, S.L. 
ERNESTO MARTINEZ FERNANDEZ
ISAMAR ORDOÑEZ MUÑOZ
BRIGIDA MARIA ROMERO SALADO
FRANCISCA MARIA LOPEZ PEREZ
GONZALO MARTINEZ-CAÑAVATE
GOMEZ-MILLAN
MAYKA GONZALEZ HEREDIA
LIDIA MONTILLA GONZALEZ
JOSEFA SIMON YEBENES
MANUEL BARRIGA DORADO
FERNANDO GONZALEZ SANCHEZ
CORDOBESA DE INVERSIONES
PUNTAS LEÓN S.L. 
AAFF RUTE S.L. 
FINANTOR 2017, S.L. 
ROLARG SERVICIOS FINANCIEROS,
S.L. 
BURMA AGENTES FINANCIEROS S.L. 
MONICA CARRANZA S.L.U. 
TINTO SANTA ROSA S.L. 
SERSAF S.L. 
BOPECON INVERSIONES S.L. 
CHARUMA S.L. 
CETINVE, S.L. 
TREZAVILLA SLU 
SANPIBO SL 
NUBARPOL S.L. 
SERVICIOS FINANCIEROS SANLO,
S.L. 
GRANDERSAN SLU 
VINUESA & MOCHON 2014, S.L.L. 
ISAMER FINANCIEROS S.L. 
ABU ROAD, S.L. 
RODRIGUEZ CALS FINANCIERA S.L. 
GESTIÓN FINANCIERA MALACITANA
2007 S.L. 
RC 2007 FINANCIEROS SL 
ESTEPONA FINANCIEROS, S.L. 
MIGUEL ANGEL CASASOLA
CASASOLA
AGUEDA MARTIN RAMIREZ
FRANCISCO JOSE LOPEZ SILVENTE
SOLEDAD LAMBERTO GARCIA
GESTIONES MORENO E HIJOS S.L. 
ANTONIO MARIN VALIENTE
ANTONIO ALFONSO HERRERA
RAMIREZ
ANTONIO  CEREZUELA RUIZ
FRANCISCO JOSE GARCIA MORA
MULTIALGAIDA, S.L. 
MARIA LUISA PEREZ GUILLEN
CRISTINA NADALES PEREZ
NATALIA FERNANDEZ SANCHEZ
SERVICIOS FINANCIEROS PEDRO
ABAD, S.L. 
JOSE MARIN PEREZ
295
JUAN CARLOS GOMEZ GARCIA
ANGEL LOPEZ RODRIGUEZ
JOSE MANUEL GUEVARA GONZALEZ
SERVICIOS FINANCIEROS DEL
CONDADO S.L.U. 
ASESORIA GESTION GLOBAL S.L. 
ANA MARIA DIAZ SANTANA
NURIA MONTERO GONZALEZ
MARIA ISABEL GARCIA GONZALEZ
FRANCISCO JAVIER ORTIZ CASTILLO
MARIA ANTONIA POZA GARCIA
NURIA  FERNANDEZ REYES
MARIA DEL PILAR PLAZA MUÑOZ
MARIA JOSE CHARNECO HERRERO
ANTONIO ESCUDERO VILLAREJO
CARMEN PINTO DIAZ
LOURDES ROMERO LOPEZ
REQUERTILLO, S.L. 
JUAN LEON NAVARRETE
SERVICIOS INTEGRALES DOÑANA
S.L. 
MARIA DOLORES MORIANA
RODRIGUEZ
RICARDO PIÑERO GARCIA
FRANCISCO CASTILLO CONTRERAS
MARIA VICTORIA POVEDA DIOS
MARIA JESUS MARTIN RODRIGUEZ
JOSE CABRERA COSANO
JOMICACE, S.L. 
MANUEL DOMINGUEZ BEATO
SEBASTIAN PAVON CAMPOY
JUAN PEDRO BENITEZ GARCIA
MARIA BELEN GONZALEZ RAMIREZ
MARIA CONCEPCION TELLEZ RUIZ
GRUPO ALMARES 2015 S.L. 
SERGIO MUÑOZ  RAMIREZ
ROCIO BELTRAN  ZAFRA
FERNANDO POLO MATEOS
PLAZA SERVICIOS FINANCIEROS SL 
CARLOS GAVIN LORIENTE
JOSE ANTONIO GARCIA
CHINCHETRU
MARIA PILAR UROZ PASCUAL
HECTOR EDO ALEGRE
ALCARRAZ PERALTA, S.L. 
ANA BELEN PAMPLONA
CALAHORRA
JAVIER GURIDI EZQUERRO
MARIA ELENA TREMPS ALDEA
LIDYA FERNANDEZ AMURRIO
MAXIMO PLUMED LUCAS
NAVARRETE GESTION 2018 SL 
JOAN FELIU PUIGVERT
MARIA DEL CARMEN NIEVES
MARTINEZ
MARIA DEL PILAR RAMIREZ DIEZ
MARIA HERNANDEZ ALONSO
LANZA MENDOZA GESTION
FINANCIERA, S.L. 
LOURDES GIMENO TIRADO
GEMMA ARRUFAT RAFALES
JOSE GABRIEL PASTOR MANZANO
DIEGO CARCAS SANCHEZ
ELSA TORRES MOLINA
IRENE ABIZANDA VAL
MARIA JOSE AUSEJO MARTINEZ
MARIA AURORA TORRES GARCIA
LAURA MARTINEZ ZUBIRI
ALVARO MOLINER ABADIA
SERGIO URDANIZ GARBAYO
IGNACIO SAGÜETA URTASUN
ANA ISABEL MONTULL CACHO
OSCAR MANUEL MATA VIDAL
MIRIAM GARCIA ALFARO
SARA MORALES ECHEVERRIA
MANUEL GARCIA MONTOLIO
296
BELEN PALACIO TORRES
MARIA EUGENIA GONZALEZ
SANCHEZ
MARIA DANIELA URUÑUELA NAJERA
JOSE JAVIER MAZUELA CREGO
VICTOR JIMENEZ VERANO
Oliver Labarta S.L. 
ANA MARIA RUBIO PALACIOS
ROSA MARIA POBLADOR ASENSIO
LAURA ALTABA ASENJO
FINANZAS ALLOZA S.L 
JOSE DANIEL GARCES VIRGOS
ADRIAN MILIAN GONZALEZ
INTERMEDIACION NASARRE S.L. 
JESUS QUINTANA MAULEON
PASCUAL HIGINIO DOMINGO PEÑA
CLARA URGEL CASEDAS
LAURA COMENGE HIGUERAS
MARIA MERCEDES SALAS BAENA
MARIA ESTHER FERRANDEZ
PARDOS
PRISCILA CRISTOBAL MALO
SERGIO BUIL GARCIA
ALEJANDRO IBAÑEZ LERA
JOSE JAVIER SALAVERRI MARTINEZ
BEATRIZ SERRANO SAN PEDRO
RAUL RIVAS VAL
SAIORA ELISABET GARCIA
URZAINQUI
OLAIA SAN MIGUEL MICHELENA
SHEILA DEL BARRIO SAENZ
ANGELA FIGAROLA TARDIU
JUAN ROSSELLO AMENGUAL
MARMA MALLORCA, S.L. 
MARIA JOSE DE LA DUEÑA FUSTER
ERNESTO DOMINGUEZ SLU 
MARIA ANTONIA BARCELO
AMENGUAL
ANGEL MOLLEDA VELEZ
MIGUEL SUAREZ RODRIGUEZ
LIDIA RIVAS JODAR
MARIA DE LOS ANGELES RODRIGO
GUTIERREZ
MARIA FERNANDEZ DE LA UZ
PEDRO CONDE DIEZ
PATRICIA RODRIGUEZ ALONSO
RAQUEL RIVERA PALACIO
JAVIER COBO GARCIA
CARLA SANJULIAN MENDEZ
BUSINESS AND PERSONAL SERVICE
S.A. 
LAP ASTURIAS S.L. 
GONZALEZ Y NAVES, S.L. 
ALVARO DIAZ ASTARLOA
RAMON ARENAS NUÑEZ
ALMUDENA GONZALEZ GALLEGO
VICTOR GONZALEZ CABO
NOELIA MARTIN BOLIVAR
FRANCISCO JOSE VIEJO GONZALEZ
JAVIER TERAN CAMUS
DAVID GONZALEZ SANZ
OLGA LLORENTE DA COSTA
HELLEN JANETH MENDEZ MURCIA
OSCAR MANUEL ALFAGEME
MARTIN
HECTOR DIAZ DIEZ
MARIA VISITACION BECARES
MARTINEZ
LUIS MIGUEL VEGA JANILLO
EMILIO MARTIN LANCHAS
MARIA SASTRE GONZALEZ
0880 SANTANDER SANTIBAÑEZ,
S.L. 
PABLO HERRERO ALONSO
MARIA MANUELA SANCHEZ
CASTAÑO
DAVID LOPEZ-GAVALO GAGO
ALBERTO RIAÑO MOROCHO
ARCADIO SAEZ SANZ
297
RAUL DE PABLO DEL OLMO
FRANCISCO ALBARRÁN PELAYO
RAQUEL BARBA ARRANZ
JAIME RIVERO CALVO
1321 SANTANDER LA ALBERCA S.L. 
MARIA VICTORIA IGLESIAS MATEOS
RAQUEL GAVELA SANCHEZ
JUAN MANUEL CASTRO FANEGO
ÓRDAS CASADO S.L. 
MARTA ISABEL MARTINEZ ESCOBAR
FERNANDO ENRIQUE RODRIGUEZ
PEREZ
MARIA TERESA SALGADO
RODRIGUEZ
MARIA VICTORIA DURAN ALVEZ
MADRIGAL FINANCIERO SL 
BEATRIZ GALLEGO MARTIN
JESUS CANTON GONZALEZ
VANESA VEGA BLANCO
CRISTINA GONZALEZ MARTIN
MARIA SALOME DE LA ROSA DIEZ
SONSOLES RIVERO HERNANDEZ
FERNANDO AREVALO GOMEZ
JORGE ALONSO ARRIBAS
MARIA TERESA FRUTOS BERNAL
ASUNCION MATEOS PASCUAL
MARIA ELENA BRAVO SAN
INOCENTE
2927 GESTION SANTANDER SL 
40165 AGENTE COLABORADOR
PRADENA, S.L. 
ALBA SANCHEZ MATEOS
MARIA INES VALCUENDE GARMON
AGUSTINA AGUDO FRANCIA
IGNACIO MARIA ANTOLIN
FERNANDEZ
JULIANA BERLANA DEL POZO
MARIA VICTORIA SAN ROMAN
FERNANDEZ
NOELIA SANZ VILLARREAL
JORGE APARICIO GONZALEZ
ANGELA MAGDALENO GONZALEZ
ALBERTO MORAN PEREZ
EDUARDO GONZALEZ MARTIN
ALBARRAN FIGAL S.L. 
GONZALO PEREZ JOSE
MARIA ELISA ROSON FERRERO
MARTA HERNANDEZ PEREZ
ANA MARIA SIERRA HERNANDEZ
JONATAN PEREZ DE DIOS
A.C. SANTOVENIA DE PISUERGA SL. 
PABLO ALVAREZ CORTIÑAS
BEATRIZ GARRIDO SANTANDER S.L. 
24198 SANTANDER LA VIRGEN DEL
CAMINO, S.L. 
JOSE MARIA CABERO MATA
GESBANCYL, S.L. 
JOSE  BERZAL MIGUEL
4079 SANTANDER-SACRAMENIA
S.L. 
PEDRO CUESTA BAUTISTA
6155 SANTANDER LEDESMA, S.L. 
SUSANA CASADO FERRERO
CLARA HERNANDEZ NOVOA
MARCIAL SANTOS SANCHEZ
6395 Poyales del Hoyo Agente
Colaborador S.L. 
JOANA LOPEZ  ROZAS
ANA MARIA SAN MILLAN COBO
IGNACIO ARROYO RODRIGUEZ
SANTOS BOL GARCIA
NURIA COBELO DE ANDRES
MARIA DEL CARMEN CAMUS SAN
EMETERIO
MIGUEL ANGEL PRIETO CORDERO
A.C. LAGUNA DE NEGRILLOS S.L. 
MERINO LOBATO S.L. 
MARIA MERCEDES GUZON LIEBANA
JACINTO MANUEL PALOMERO
PALOMERO
298
MARIA DEL SOCORRO BENAVIDES
SANCHEZ
GESTION SANTANDER CARBAJOSA,
S.L. 
MIKEL ANDRES SANCHEZ CASTILLO
BENEDICTO GUTIERREZ BERNAL
MARIA AUXILIADORA PEREZ
SERRADA
ANNA LOURDES MATEOS SANCHEZ
ARACELI GONZALEZ MEJIAS
JUAN ANTONIO ARRIBAS
CRISTOBAL
ANA MARIA MARTIN LOBO
MARCOS ASENJO HERNANDO
AREVALO Y MONGE, S.L. 
EDUARDO LERONES AGUADO
MIRIAM CARRO HERNANDO
JUAN ANTONIO SALGADO
HERNANDEZ
ALICIA FADRIQUE PICO
MARTA MARIA GARCINUÑO
CASELLES
GESTION INTEGRAL SANTANDER,
S.L. 
ENRIQUE Y SINDE ASOCIADOS SL 
MARIA TERESA RODRIGUEZ
FUENTES
LORENA HERNANDEZ ATIENZA
CARLOS GARCIA RODRIGUEZ
ANGEL ARMENTEROS CUESTA
JESUS BERZAL MIGUEL
JOSE GARDUÑO CALVO
MARIA ANTONIA ROVIROSA PIÑOL
MIGUEL JOSE MALAVE FERNANDEZ
GERENCIA & DESARROLLO DE
SUCURSALES S.L. 
OLGA MARIA SANCHO ARASA
SERGIO LORENZO RODRIGUEZ
MARIA DOLORES MORERA SOLA
ANTONI MONSO BONET
MANUELA BUERA GILABERT
MATEU & SANTANDER, S.L. 
MARIA AFRICA CARDIEL COLL
MONTSERRAT  SABATE  BORRELL
ERIC NADAL GRIFOL
ALEXANDRE COLL QUINTANA
ISABEL OLMO VIBORAS
PABLO GODAYOL RUIZ
DAVID RIDER JIMENEZ
MARIA PILAR  ALMARAZ
FERNANDEZ
AGUSTI MONTANE DELCOR
MARIA ROSA BERTRAN CASALS
AMALIA GEMMA AGUILAR CASAS
OSCAR BLANCO CID
ESTEVE UTSET BADIELLA
EDUARD RAMON NADEU ABENOZA
VIRGINIA LEDESMA ARCOS
JIA AGENTS SL 
MARIA DOLORES ROCA BLANCH
DAMIÁ RIERA ALBAREDA
DIPTOS, S.L. 
PILAR UREÑA QUEROL
GESTION INVERGARA S.L. 
MARTI FORTUNY PLANAS
FINANZAS SAN ANDRÉS S.L. 
ALBALATE SERVICIOS FINANCIEROS
Y DE GESTION 
EVA CASAHUGA FUSET
SISMOINT, S.L. 
EMA VILATORRADA 2007, S.L. 
MATARÓ ASESORES LEGALES Y
TRIBUTARIOS, S.L. 
BANEST BLANES, S.L. 
Glinkgo Biloba Properties S.L. 
SERVEIS FINANCERS DE BANYOLES,
S.L. 
PUNT FINANCER GESTIO I
ASSESSORAMENT, S.L. 
DAVID OLMO FORTE
ANA MARIA JIMENEZ AGUAYO
CRISTINA HUERTOS CABEZA
INVERSIONES TERRA FERMA, S.L. 
299
FINANCERES ARO, S.L. 
FRANQUICIES FINANCERES LLEIDA
S.L. 
GRUP BBR GESTIO PRIVADA, S.L. 
ALEIX SUBIRA SOLER
PAU FONT RODES
MONTSERRAT OLIVA MANDAÑA
INMACULADA SAHUN JOVE
INVERSIONS RIBAGORÇA S.L. 
TANIA GELPI ESCANDIL
JORDI BRULL MARGALEF
BBR BATEA GROUP S.L. 
AAFF OLESA 2019,S.L. 
SUSANA MARIA JOVANI BELTRAN
INGRID QUILES SANCHEZ
ELISABET PUGA JODAR
ELOY HARO ROMERO
MYRIAM ALPAÑEZ PINO
FELIPE PARRA CARRERA
JAUME VEGAS BAUTISTA
MANUEL MOLINA ESTEBAN
ROSA MARIA  PADROS  ANGUITA
DANIEL TORRES MUIXI
DANIEL LIENAS GRANDE
OSCAR PLANES NOVAU
ANTONIO DE PADUA BELLAUBI
MIRO
MARC MAYORAL SERRET
JOSE MARIA FONT VILASECA
ANNA SANS GARDEÑES
SONIA ROIGE VIDAL
ANTONIO FORNOS ISERN
PALMIRA RODRIGUEZ PEREZ
ANTONIO  VICO  ARCE
ABEL ISERN ROIG
GUADALUPE FORNE TENA
JOAQUIN SERRA BERTRAN
MARIA BELEN GARCIA  BLANCO
JORDI ALUJA OSSO
OFICINA 6788, S.L. 
ENRIC PUJOL ROVIRA
CRISTINA PURROY CASTELLO
OSCAR MUSTE ROIG
MARIA LUISA VALIENTE LORENZO
ROBERTO MARTIN RIVERO
SAUL ANTONIO TOVAR ASENSIO
PATRICIA FRIERO BRAGADO
MONICA  LIBERAL  CAMISÓN
ANABEL SANCHEZ MARTIN
CECILIO ALVARADO GARCIA
ANA MARIA LOPEZ OVEJERO
MARIA CARMEN CIUDAD MORENO
JOSE IGNACIO BORDALLO MEDINA
PATRICIA GUIJO LOZANO
OSCAR RODRIGUEZ ROMERO
MERCEDES GARCIA DURAN
MARIA PILAR FERNANDEZ
CARRASCO
LOURDES IGLESIAS ALONSO
RAFAEL SALGUERO VARGAS
ALBERTO VAZQUEZ OLMEDA
MARIA ROSA AMPARO BLAZQUEZ
FRAILE
JUAN MIGUEL ALFARO GONZALEZ
FELIX ALFONSO TORRADO DIAZ
VICTOR MANUEL DIAZ MARRON
VICTOR TOME LLANOS
ALICIA ESTEBAN GARRIDO
ANGELICA MONTERO ASENSIO
VIRGINIA CASTAÑO GONZALEZ
ALEJANDRO GOMEZ CORRALES
MARIA ANGELICA RODRIGUEZ
OLIVEROS
CARLOS MIGUEL GIJON MELENDEZ
300
SERVICIOS FINANCIEROS CERES SL 
MARIA MERCEDES GARCIA
SANTANA
JUAN MANUEL MARTIN DURAN
REYES MARTIN MORENO
ANA MARIA GARCIA  DOMINGUEZ
FELIX CARPINTERO DELEITO
MARIA DEL CARMEN LEDESMA
COUTO
JULIAN HERNANDEZ RANZ
JOSE CARLOS VENERO TANCO
MIGUEL  RODRIGUEZ GARCIA
ARCADIO PAREDES ROMERO
PEDRO MANUEL BALSERA GARCIA
JOSE CARLOS GARCIA SANCHEZ
ELENA LAJA MONTES
ELENA DIAZ FERNANDEZ
ANA MARIA MORALES NUÑEZ
ANGEL LUIS GIL PEÑA
NOEMI VIVAS SANCHEZ
ALMUDENA GARCIA SANCHEZ
PATRICIA ACOSTA SERRADILLA
JUAN HERNANDEZ DE TORRES
MARTA ESPINAR SANCHEZ
MARIA SAZO SALGUERO
LAURA MARTIN PALOMO
OLMO JULIAN PUERTO FERNANDEZ
SERVICIOS FINANCIEROS AHIGAL,
S.L. 
CARLOS RUIZ BURDALO
VIRGINIA VELASCO MAJADA
LAURA FERNANDEZ TORIBIO
AMBROSIO TORNAVACAS VINAGRE
BELEN GONZALEZ BERMEJO
DAMIAN CEBALLOS SORIA
MARIA TRINIDAD BRIEVA
DOMINGUEZ
MARIA MARTIN  SANCHEZ
CRISTINA SANCHEZ MARTIN
VALENZUELA MARTIN ASESORES
S.L. 
ANSELMO HERNANDEZ RANZ
JOSE GAMERO MUÑIZ
ASEVAL ASESORES S.L 
JOAQUIN SANCHEZ GRANDE TOVAR
VERONICA GOMEZ MONTERO
MARIA JOSE SALGADO ALVAREZ
OSCAR SOTELO SALINAS
MONICA ALVAREZ ALVAREZ
CESAR RODRIGUEZ SOTELO
JUAN MIGUEL GOMEZ LOPEZ
MARIA LUZ IMIA RIVERA
JOSE LUIS EXPOSITO PITA
PAULA EIRIZ OTERO
CONCEPCION ISOLINA SOMOZA
CALVIÑO
PATRICIA SOUTO LOPEZ
OSCAR PARDAL ANIDO
JOSE LUIS COUCEIRO DORELLE
SERBAN AGUIÑO S.L. 
JOSE ALFONSO FUENTE PARGA
NATALIA DIOS OUTEDA
ARACELI GONZALEZ GONZALEZ
ALEX BEMBIBRE ALVAREZ
MARIA DEL CARMEN CARBALLO
GOMEZ
MARTA MARIA COPA PEREZ
HECTOR PIÑEIRO MARTIN
JOSE RAMON DOMONTE
RODRIGUEZ
SONIA LANDROVE MARTINEZ
MARIA PRAXEDES FRANCISCO
FERNANDEZ
CARLOTA  RODRIGUEZ VARELA
MARIA CARMEN GONZALEZ BARRAL
ANXO VAZQUEZ BLANCO
JOSE MANUEL AMEAL MAS
MARIA LUISA VALIÑO IGLESIAS
301
MARTA GARRIDO FERNANDEZ
GAGO Y SOUTO FINANCIAL
SERVICES S.L. 
JAVIER PONTANILLA MARTINEZ
AGENCIA FINANCIERA ULLOA S.L. 
SERCOM ASFICO AGENTES
FINANCIEROS, S.L. 
MEDA FINANCIERA, S.L. 
INTERMEDIACION FINANCIERA RIAS
BAIXAS, SLL 
MARIA MARTINA GONZALEZ
ANDRADE
ÓSCAR NÚÑEZ PUGA
PILAR VILA AYERBE
DAVID GONZALEZ BECEIRO
JOSE MANUEL FURELOS FERREIRA
ANGELINA CUESTA BERAMENDI
TANIA ARAUJO SOTO
BORJA MENDEZ VAZQUEZ
BARBARA FARIÑA REBOREDO
SERVICIOS FINANCIEROS FORCAREI,
S.L. 
DANIEL VIEIROS  CAMPOS
LUCIA MARTIN GRANDE
ROBERTO QUIROGA LOPEZ
ANGEL LUIS GONZALEZ CASTRO
ASESORES FINANCIEROS VIANA SL 
MARIA ROCIO LOPEZ TABOADA
MARIA CRISTINA SANCHEZ UZAL
OFILAR 2020 S.L. 
CELIA MONICA MARTINEZ OTERO
MARIA ELISA CAMBEIRO CAAMAÑO
MONICA GARCIA CAAMAÑO
JOSE LUIS FARIÑAS PEREZ
MANUEL MARIA GARCIA
FERNANDEZ
MANUEL ARTURO DOVALE
VAZQUEZ
IVAN GONZALEZ MARTINEZ
ADRIAN TELLA VILLAMARIN
MARTA FEIJOO ARIAS
LUCIA ALVAREZ GONZALEZ
QUIRINO MASCITTI
JOSE BENITO SAMPEDRO FEIJOO
ESTHER LOPEZ GONZALEZ
JOSE LUIS PRIETO PARADA
JUAN SOTELO LORENZO
CANDIDO JUNCAL RUA
CELAVEDRA S.L 
NIEVES NUÑEZ PUGA
BLANCA FERNANDEZ MURAS
MIRIAM SAMPAYO IGLESIAS
RICARDO CORREA FOLGAR
GHG COPERNICO, S.L.L. 
SERVIBAN OURENSE, S.L. 
ANA BELEN DUARTE FIGUEIRAS
SERVICIOS FINANCIEROS SOUTELO
SL 
PABLO SEIJO NOVOA
ANDREA SAYANS RIVEIRO
FABIAN MANTEIGA VARELA
JOSE MANUEL SOBREDO SIGUEIRO
JOSE MANUEL VAZQUEZ BERTOA
ANABEL PALLAS FUENTES
NATALIA LOPEZ LOPEZ
JAVIER NOVIO MIDON
MARIA JIMENEZ GONZALEZ
RAFAEL ROMERO RODRIGUEZ
ANTONIO SANCHEZ ARGÜELLES
EQUITY CONSULTING FINANCIERO,
S.L. 
ELVIRA DE CASTRO FERNANDEZ
LUIS ALFONSO MARTINEZ JIMENEZ
FRANCISCO JAVIER ARTEAGA LOPEZ
JOSE ANTONIO LOPEZ LOPEZ
MARIA ANGELICA CORTES CORTES
FRANCISCO FLORES ROMERO
ARREAZA SERVICIOS FINANCIEROS,
S.L. 
302
JUAN JOSE TAMUREJO CARDOSO
CARLOS ARCAS CHECA
ANA MARIA RODRIGUEZ MORENO
MARIA ANGELES GONZÁLEZ IBÁÑEZ
RUBEN LOPEZ CARMONA
ROSA ARCE LANDETE
TERESA ROLDAN QUINQUER
FELIPE CHILLARON CASTILLO
MONICA CANO CANO
BEATRIZ BLANES RUIZ
ASIS DE FEREZ S.L. 
VILLASEQUILLA AP SL 
CARLOS MORENO LOPEZ
SOLORZANO
YEBEGEST S.L. 
ARANCHA LOPEZ SANTOS
ANA MARIA RODRIGUEZ VARGAS
CRISTOBAL NAVARRO DE VEGA
BNT 2008 AGENTES FINANCIEROS
SL 
ASESORAMIENTOS FINANCIEROS
TEM 2012, S.L.L. 
EVA LEON BELINCHON
TANIA BOGALO ROMERO
IVAN QUINTANA ROJAS
PEDRO CARO CANO
JOSE LUIS HERNANDEZ-SONSECA
MIRANDA
LETICIA MARÍA MARTINEZ ABAD
JOSE CARLOS LOZANO CANO
LUIS JAVIER NAVARRO SIMON
MARIA TRINIDAD SORIANO
RAMIREZ
JUAN MONTERO RODENAS
SANDRA ORTEGA QUILON
MARIA PAZ CULEBRAS RAMOS
LUCIA PEREZ CUELLAR
DAVID MOYA LUCAS
AROA GOMEZ LOZANO
MARTA TRIGUERO RUIZ
DIEGO GALLEGO VALVERDE
ANGELA ZURITA MARTINEZ
MARIA DEL PILAR MUÑOZ
GONZALEZ
MARTA LUJAN FERNANDEZ
MARIA EUGENIA DE LA CRUZ DE LA
ROSA
SARA PULIDO PANADERO
JESUS ALVARADO CAMARA
MIGUEL MORENO ALONSO
MARIA LUISA SANGUINO
GUTIERREZ
MIGUEL GARCIA TAPIA
JESUS MATEO HIDALGO MARTIN
JOSE LUIS BLAZQUEZ FERNANDEZ
VICENTE CANO CAMARA
LUCIA CARO  ESPARCIA
JUAN FRANCISCO GARCIA JUNCOS
JESSICA MARIA SEGADOR RISCO
BRAULIO ALMENA AMARO
MIGUEL ANGEL RUIZ LOPEZ
MARIA JOSE PACHECO GALLEGO
EMPRESA GESTORA JUAN JOSE
MUÑOZ S.L. 
ESTHER PEIRO ORTEGA
ANA CRISTINA MUÑOZ ALVAREZ
ANTONIO MOTOS RECUENCO
PATRICIA MONTERO DURAN
MARIA TERESA OLMEDA PICAZO
JAVIER MONGE LOPEZ
JUAN CARLOS LAZARO BERDEJO
BARRIOS DE LA CRUZ, S.L. 
AGUADO Y ORTEGA ASESORES S L 
JAIME VALDES BRAVO
LORENZO CANDELAS MIRANDA
GARCIA CARO
ROSA ISABEL BENEITEZ SALINERO
ALFONSO RODRIGUEZ MADROÑAL
MARIA CARMEN SANCHEZ PEÑA
303
SANDRA COFRADES SANCHEZ
FERNANDO GARCIA BARATAS
MARIA DEL CARMEN PALMERO
MORENO CID
RAQUEL MAQUEDA MUÑOZ
SONIA MELGUIZO BEJAR
CARMEN CARLA PEREZ CUESTA
SAGRARIO MAQUEDA RUIZ
JOSE MARIA FERNANDEZ RAMIREZ
MARCOS GARCIA-DIES PASTRANA
MIGUEL ANGEL ORTIZ DE MIGUEL
ALEJANDRA SANCHEZ JUAN
DAVID RUIZ MARCHESE
ALBERTO ANDION ACEDOS
LUIS CARLOS SEPULVEDA SANCHEZ
RAUL VEGA ROMERO
MARIA LETICIA GUTIERREZ SANZ
CARLOS ALBERTO PALACIOS
MARTIN
AYZA FINANZAS S.L. 
ANTONIO BERNAL MERINO
DANIEL NAVAS ALONSO
LASTRAS AGENTE FINANCIERO SLP 
FINANZAS NUEVA ERA S.L. 
ZONA 4 SERVICIOS FINANCIEROS
S.R.L. 
BUZABRIN, S.L. 
DE-TWO Y MAS INVESTMENT
SERVICES S.L. 
COFARESA SERVICIOS FINANCIEROS
COMPLEMENTARIOS, S.A.U. 
G.S.G. GRUPO CORPORATIVO DE
SERVICIOS S.L. 
BANFORTUNIA S.L. 
SOLUCIONES DE PATRIMONIO E
INVERSIÓN, S.L. 
TABULA AGO,S.L. 
OFISFIN S.L. 
ALMA 812 S.L 
MARIA FERNANDEZ RUFO
MARIA DE LAS NIEVES CALDERON
IZQUIERDO
PAOLA GARCIA NUÑEZ
ANGELA MARTIN PUENTES
FINANCIAL ADVANTAGES SL. 
EDUARDO GOMES HORCAJUELO
MARIA PILAR PEREZ NAVARRO
ROBERTO BLANCO GARCIA
JESSICA LIMA BLANCO
ANPADU INVERSIONES, S.L. 
MARIA-TERESA JIMENEZ  PACIOS
BEATRIZ TORREÑO NIETO
ALFONSOCRIADO SL 
DIEGO CAÑAMERO NAVARRO
RUBEN BERNALDO DE QUIROS DE
DOMPABLO
PATRICIA CONDE GARCIA BLANCO
LUCIA DIAZ PRUDENCIO
JOSE MANUEL TORRES MIGUEL
PALOMA MILAGROS BLANCO
GONZALEZ
MAIALEN SAEZ SEGUROLA
MIGUEL LLANO ABAITUA
AGURTZANE ITZIAR AGUIRRE
COLECHA
AINARA GONZALEZ ANGULO
IÑIGO MARTINEZ GARCIA
BRUNO MARTIN GARCIA
OSCAR CAÑIBANO ALVAREZ
OSCAR CAUDELI BOLO
MANSANET RIPOLL SL 
ENRIQUE CHACON FERNANDEZ
RUBEN MARTI CALATAYUD
VICENTE MANUEL MARTI SEGARRA
JOSE IGNACIO CANTO PEREZ
RAFAEL BELLMUNT BELLMUNT
CONCEPCION MORATA HOMBRIA
FERNANDO DONET ALBEROLA
MARIA JOSE CABALLERO GRAU
YOLANDA CASTILLO VILA
304
MARIA TERESA BROCH RUBERT
SILVANA JAIME GARCES
LIDIA CARRASCO MARIN
MIRIAM PEREZ SORIA
MARIA MERCEDES RIERA RIERA
SONIA BELLMUNT SAURA
JOAN ANDREU GABARRI LLOP
JUANA MARTINEZ MARTINEZ
ALBERO PAYA FINANCIEROS, S.L. 
DRIMTY S.L. 
VERIS SERVICIOS FINANCIEROS S.L. 
TRAMYGEST FINANCIERA S.L. 
SAVINGS ELX 2014, S.L. 
ERNESTO DAIMAN MARQUES
ASENSIO
ASEMAR FINANCIERA, S.L. 
GESTIONES FINANCIERAS FERRER Y
GARCIA 2015, S.L. 
AGENTES XIRIVELLA, S.L. 
AGENCIA FINANCIERA ANNA
FRANCO, S.L. 
HOTRARESCON SL 
VIMAGARMA A.F. SL 
CAROLINA GARCIA BELMONTE
JOSE SANTAMARIA CABRERA
VANESA GONZALEZ VILA
SUSANA DONAT DE LA CRUZ
JOSE JOAQUIN APARISI GRAU
ISABEL CARMEN DOMINGUEZ
ZANON
CARLES ROYO DELPOZO
MIGUEL ANGEL FERNANDEZ
MENDEZ
MIREYA GARCIA MARTINEZ
ALEJANDRO SANCHEZ BERMUDEZ
ANA MARIA LOPEZ MARTINEZ
DIEGO MARTINEZ OTON
MARIA DELS DESAMPARATS
ROSELLO MORELL
MIGUEL ANGEL VIDAL JOVER
VEGUILLAS Y VEGUILLAS SL 
JOSE ALFONSO TARI ESCLAPEZ
MAGDALENA JOVER SELLER
PAULA GRACIA CABRERA
COLONQUES
GESFINPRO, S.L 
BEATRIZ PEREZ GARCIA
MIGUEL ALCALDE PITARCH
ANTONIO LUIS CASTELLO APARISI
MARTA FAUS BLANES
JUAN ANTONIO ALCAIDE NAVARRO
MIGUEL GARCIA ABAD
VICENTE MOSCARDO TORRES
JUAN JOSE MONTEAGUDO
MARTINEZ
SEMAGERA, S.L.L. 
ALESA CAPITAL, S.L. 
AYALA MARTINEZ MELERO, SLL 
INMACULADA FERRUS AZNAR
ALEJANDRO SANTAELLA FERRER
JOSE JUAN FERRANDEZ SANCHEZ
BEATRIZ SALA GARCIA
ARANTXA CARDENAL FERNANDEZ
MARTA HERREROS LOPEZ
MARÍA CRUZ GARCÍA-ESTELLER
TORRES
SILVIA GARCIA SENDRA
FRANCISCO  MUÑOZ PUERTO
ANGEL EDUARDO  RODRIGUEZ REY
HOPE FINANCE SL 
JESUS MARTINEZ CAÑAVATE
GOMEZ MILLAN
MARIA ISABEL RAMIREZ
RODRIGUEZ
ALBERTO LOPEZ CARDENAS
JUAN CARLOS MALDONADO HODAR
JULUM FINANZAS, S.L.U. 
FRANCISCO JIMENEZ PERALVAREZ
AM SERVICIOS FINANCIEROS SL 
MARIA PAZ IBARRA RECHE
305
JUCAR ASESORES, S.L. 
ALVARO FABREGAS SANTAMARIA
ASESORAMIENTO Y COACHING
FINANCIERO S.L. 
EFEROR ASOCIADOS S.L. 
JOSE PABLO CASTELLANO GARCIA-
DONAS
FINANSANDO S.L 
FRANCISCA MARQUEZ CONTRERAS
NUÑEZ MONTES FINANCIEROS S.L. 
JOLUANCA 2006 S.L. 
BERNABE JOSE VALLECILLO MUÑOZ
ASESORAMIENTO FINANCIERO Y
ANALISIS DE MERCADOS SLU 
JUAN RAMON BENITEZ GOMEZ
JOSE MANUEL MARTINEZ MILLAN
PEDRO ANGEL LUPIAÑEZ
RODRIGUEZ
CASTOR INVERYSER S.L 
MARTA DOLORES CASTRO HIDALGO
MANUEL GUERRERO VERDEJA
IGNACIO IÑARETA MARQUEZ
JESUS RAMOS NIETO
ALVARO DELGADO DE MENDOZA
CORTES
VC SERVICIOS FINANCIEROS SL 
SEFIAL 2021, S.L. 
SERVICIOS BANCARIOS BERJA SL 
ONUBA FINANCIEROS SL 
DANIEL MARTI RODRIGUEZ
SANPUEBLA SL 
GABRIEL MENENDEZ NOTARIO
MILAGROSA ESTUDILLO CEPILLO
MARIA DEL MAR CARRETERO
FERNANDEZ
JORGE BARRERA PEREZ
JUAN MANUEL MAYORGA BELLOSO
MARIA DEL CARMEN ZAMBRANO
MONGE
FATIMA DEL PINO ARIZA
JUAN DAVID PEREZ VALENZUELA
MARIA ASUNCION PALOMARES
RUIZ
JUAN MANUEL PEREZ PRADO
FINANCIACIONES LAS CABEZAS SL 
MARIA ESCRIBANO PAVON
MARIA MORATALLA RUIZ
MIGUEL ANGEL MARTIN ISERTE
MARIA EUGENIA BOZAL HUGUET
JAVIER DOMINGO PASCUAL
JIMENEZ
LUIS FERNANDO ANDRES VILLALBA
JULIA MARIA SEGURA VICENTE
ROSA ANA FATAS LAPLANA
MARIA TERESA MARTIN MUNIESA
MARIA DOLORES FOLLA-CISNEROS
GARCIA
JOSE JIMENEZ OVEJAS
MARIA GEMA GARCIA BUIL
VERONICA PUEY MUÑOZ
JOSE GABRIEL BALLESTERO
FERNANDEZ
USTARIZ ZUBIRI ASOCIADOS SL 
FEDERICO SOROLLA LLAQUET
VERONICA REMIRO BASANTA
RAUL LANGA GOMEZ
OIHANE AICUA RODRIGUEZ
JAVIER ROYO HERRANZ
FLORENTINO LARA NOTIVOLI
OSCAR ADAN CABEZON
CRISTINA ZABALA USTARIZ
ANDONI ABRIL GOICOECHEA
FERNANDEZ DEL VALLE NOE
046869184C S L N E 
GUILLERMO FOS ALZAMORA
JORDI JUAN RIBAS
ALBERTO BARTOLOME DE BLAS
GUASP
GUILLEM GENOVARD CALDENTEY
CECILIA MARIA ROSSELLO FLORIT
DAMIAN DAVID PONCELL OLIVER
ELISENDA ARIMANY BALLART
306
ADELA GALLEGO BERMUDEZ
JUAN CARBONELL SOCIAS S.L. 
JUAN MANUEL ALARCON GARCIA
LUIS DA COSTA FERNANDEZ
MALULA SERVICIOS FINANCIEROS
SL 
TEROR VP INVERSION SL 
OMAR PEREZ GARCIA
LUIS FERRERAS GRANADO
LETICIA INES MARTIN SANGUINO
ANA ISABEL GARCIA RODRIGUEZ
FRANCISCO JAVIER SANTIAGO
ALEMAN
PEDRO JAVIER SANCHEZ
RODRIGUEZ
JOSE MANUEL PERERA QUINTANA
FRANCISCO JAVIER CABRERA
LLAMAS
EDUARDO HERNANDEZ
HERNANDEZ
PEDRO ROMAN SANMARTI
RUBEN TORIJANO BUENO
JOSE ANDRES HERNANDEZ FALCON
GORKA PEREZ DIAGO
JON DIEZ DE DIEGO
SARA SANCHEZ GONZALEZ
ENRIQUE MARCOS ORTEGA
AGUSTIN RUIZ SAIZ
ALEJANDRO FERNANDEZ GARCIA
ALEJANDRO MARTIN KARLSSON
CARLOS  MESA DIEZ
JESUS ARDUENGO CUADRADO
LUCAS RIVAS PORTILLO
EMMANUEL GRANDA TARRAZO
POSADA GESTION FINANCIERA SLU 
DAVID GARCIA-ARCICOLLAR
RODRIGUEZ
SERFISAN SERVICIOS FINANCIEROS
S.L. 
DAVID INCHAUSPE PEÑA
TAMARA CANTERO SANCHEZ
ENRIQUE ARAUJO IRUSTA
IGNACIO SORDO AGÜERO
JOSE IGNACIO UBILLA BOLADO
ENRIQUE FOMPEROSA RUIZ
SERVICIOS FINANCIEROS MAZA Y
VILAR SL 
CLARA POO GARCIA
JESUS ANTONIO AMO FERNANDEZ
SERGIO GONZALEZ PALACIO
YOLANDA ALVAREZ RODRIGUEZ
AOMAR NUÑEZ APARICIO
JONATHAN AGUSTIN COLODRO
DIAZ
JUAN MARIA VALDES MARTIN
JOSE MARIA ANTON GARCIA
MONICA CUBAS HERNANDEZ
A C CARRIZO DE LA RIBERA SL 
ALBERTO GONZALEZ MONTES
MARIA ELISA SAEZ JIMENEZ
MARIA JESUS MONROY CARNERO
PEDRO MARIA MARINA MEDRANO
JOSE ANGEL TIERNO ARANDA
JESUS ANGEL GUTIERREZ
QUINTANILLA
MANUEL JAVIER DELBOY
RODRIGUEZ
A.C. PAREDES DE NAVA S.L. 
SERGIO SANCHEZ RODRIGUEZ
A.C. CIGUEÑA SL 
A.C. VILLARCAYO S.L. 
JUAN BAUTISTA HIDALGO IÑIGO
JUAN ANTONIO YUBERO MORENO
JOSE ENRIQUE ARBONAS MAS
MARIA SOLE RIBERA
ROGER BELLET SANJUAN
JORDI RIBALTA ARIAS
CARLOS DE PABLO LOPEZ
VICENT MORE CAMPS
MARTA CORTES MARISTANY
307
ROSA MARIA HOMEDES PERIS
JORGE TORTA BELBIS
GROUP CLOP INVERSIO SL 
JUAN JOSE GISBERT FERRERES
ALEJANDRO LLERA FERNANDEZ
JORDI ROSA ARIZA
MARC OLIVA VIDAL
ANNA  BATALLA  FARRE
AINOA LORAS COLL
ELISA SANS VIDAL
BERTA RIERA FERRAN
IVAN GUIU FARRE
MARIA TERESA BORRELL MICOLA
DANIEL MASSA I RAMIREZ
SAUSOLUCIONS SL 
NESTOR GALIMANY SANROMA
ISIDRE CALBO PELLICER
POL  MIR  MARTINEZ
ENRIQUE SANCHEZ CASADEVALL
ENRIC CORTADA GUTIERREZ
ALEXANDRE UTSET BADIELLA
ALFONSO ROMERO IDIGORA
MARC TARRES MALE
FINANCIAL VALUE INVESTMENT, SL 
LORENZO BARREIRA VIA
AA FF NV FINANCERA 2018 SL 
EDUARD MAS POMES
JOSE MARIA BALTASAR TOMAS
INVERSORA TUCKERTON SLU 
ESTHER NOGUES FERNANDEZ
LUIS LOPEZ SIRER
LARA & RAUL ASOCIADOS S.L. 
SOLEDAD GALAN FREJO
JUAN JOSE SANCHEZ ACEDO
CARMEN MARIA MARTINEZ
BOHORQUEZ
BARBARA FERNANDES DIAS
MARIA EVA NUÑEZ GONZALEZ
RAQUEL BARRERO GORDILLO
JUAN MARIA DOMINGUEZ GARCIA
SATURNINO QUIÑONES GARCIA
ISMAEL PALACIOS AGUDO
ELENA PUERTO GALVEZ
JOSE MARIA MANZANO CIDONCHA
ROBERTO CABALLERO MARTIN
ALEJANDRO PIÑOL PEREZ
LAURA MACIA GONZALEZ
INTERMEDIACION FINANCIERA DEL
NOROESTE SL 
SUSANA FARIÑA FERNANDEZ
JOSE MANUEL CAPON FERNANDEZ
SILVA&RUA ASOCIADOS SLU 
ANGELA MUÑIZ ARROJO
SOLFIN CONSULTORIA DE
MERCADOS SL 
SONIA LOPEZ AZNAR
ALEJANDRO GIADANES TORREIRA
MARIA CARMEN CEREIJO VARGAS
JOSE MARTINEZ PARDO
MIGUEL ANGEL  FUENTE  REGO
CARLOS GONZALEZ FERNANDEZ
DAVID VALIN ANTON
ADRIÁN MONTERO VARELA
BRAIS MIDON LOPEZ
GREGORIO LEAL MORALEDA
PEDRO JESUS ROLDAN PRIETO
CRISTINA GOMEZ GUTIERREZ
MARIA DE RUS MONTERO ORTEGA
JOSE LUIS BECERRA QUIROS
SERGIO GONZALEZ RUISECO
DIEGO FERNANDEZ MARCOTE
CECILIO PARRO CORTES
308
JUAN ANGEL ALCAZAR VERGARA
GEMMA GUTIERREZ BAJO
ALFONSO ILLAN GARCIA ROJAS
MARIA LOPEZ MARTINEZ
JAVIER GUTIERREZ ARAGON
MIGUEL ANGEL GARCIA RODRIGUEZ
ARACELI CARAVANTES CASTILLO
CARMELO PACHECO MARIN
BEATRIZ ARROYO AVILA
NURIA DEL AMO LETON
INMACULADA TORRES BERMUDEZ
DIANA DIAZ ANGELINA
CRISTINA TORIJA PRIETO
SONIA ARNAO VILLANUEVA
FRANCISCO DAVID SAIZ CANO
ALEJANDRO MATESANZ FLORENCIO
FRANCISCO JAVIER MARTIN
ROMERO
BEATRIZ LOPEZ MONTEJO
LUIS ALBERTO MASEDO DEL
CASTILLO
ALEJANDRO GARCIA GUERRERO
TAGOAN JUAREZ SL 
MARIA DEL PILAR MARTIN SANCHEZ
ALVARO FERNANDEZ ROCAMORA
JUAN CARLOS FUSTER DE CACERES
FERNANDO DOMINGUEZ RUIZ
MARTA ZAMBRANO PEREZ
MARIA TERESA PEREZ PEREZ DE LAS
VACAS
ANDREA PRATS SEGURA
CRISTINA HIDALGO GARCIA
JESUS MAILLO NIETO
FRANCISCO JAVIER RIVAS
VALENZUELA
MARIA TERESA GUTIERREZ
GALERON
MARIA ALMUDENA MORENO
NAVARRO
IEA SERVICIOS FINANCIEROS S.L.U. 
IMANOL IPARRAGUIRRE JAUREGUI
MKS GESTION FINANCIERA S.L. 
UNAI LEKUBE ARAMBERRI
ALFREDO ROLDAN FERNANDEZ
MARIA MANUELA GONZALEZ
CUESTA
JUAN JOSE ARAGONESES
MARTINEZ
JESUS RAMON HERNANDEZ GARCIA
NEREA SOBRADILLO TRUEBA
JOSE MANUEL MUÑOZ EZQUERRO
CRISTINA NAVARRO MACHIN
ELENA EGAÑA ALZAGA
EDER SERVICIOS FINANCIEROS SL 
FRANCISCO JAVIER MORALES
MURCIA
ANTONIO IGLESIAS SANCHEZ
ENRIQUE SATURNINO MORENO
BASKY INVERSIONES FINANCIERAS
SL 
FORUM 20 S.L. 
ALEXANDRA FRANCH CANALDA
CASTEL GANDOLFO S.L 
MILAGROS FLORES LEAL
FINANZAS E INVERSIONES ALBAL
S.L. 
ROSA CARRERES LUCAS
ELOISA ESPUIG IBORRA
ALICANTE VALLEY SERVICIOS
FINACIEROS S.L. 
TRAKZIONA INVEST SL 
ENRIQUE MARTINEZ MORENO
JOSE ANTONIO SANCHEZ NAVARRO
PIC LLOCH MONTGO SOCIEDAD
LIMITADA 
RUBEN TRAVER SALES
ANDRES RIVERO JIMENEZ
JUAN ANTONIO CANTERO SANCHEZ
JOSE MANUEL AYALA ARNALDOS
JAVIER GONZALVEZ BOTELLA
SONIA ZAPLANA VERGARA
MOR FINANCE SL 
309
INMACULADA LATORRE CANA
ALBERTO SAEZ CLEMENTE
MISTERA BUSINESS SOLUTIONS S.L. 
SAMAI FINANZAS S.L.U. 
LUIS ALBERTO SALA GARCIA
VANESSA SORO GINER
ROSA MARIA BLAY PASCUAL
SANDRA CHOVER GOMEZ
NURIA MANUEL CERVERA
JOSE FERMIN MOMPO VIDAL
MARGARITA LUZ BOLINCHES
IBAÑEZ
C M FINANCIAL SERVICES S.L. 
EUGENIA DURAN HERNANDEZ
ISIDRO VIVANCOS ROS
ROCIO NAVARRETE MARTÍNEZ
JOSE LUIS MATA RIBELLES
MIGUEL ANGEL RIOS MUT
RAMON DANIEL MUNUERA SANZ
MARIA MERCEDES SABATER
JIMENEZ
SANMAFRAILES SL 
GRATIANA TORRES ROSA
SERGIO VIVANCOS ALVARO
IVÁN LÓPEZ DURÁ
IVAN GODINEZ GUERRERO
MUNICH FINANZ S.L 
CARMEN RODRIGUEZ-BUSTELO
GONZALEZ
BEATRIZ GARCIA ESTELLER TORRES
ISABEL CARBONELL SERNA
310
Directors’ report
Banco Santander, S.A.
1. Introduction
Banco Santander, S.A. ('the Bank' or 'Banco Santander')
is a Spanish bank, incorporated as a sociedad anónima in
Spain and is the parent company of Grupo Santander or
Santander. Banco Santander, S.A. operates under the
commercial name Santander.
Banco Santander operates through a branch network
distributed in Spain and abroad.
On 7 June 2017, Banco Santander acquired the entire
share capital of Banco Popular Español, S.A.U. (‘Banco
Popular’) in an auction in connection with a resolution
plan adopted by the European Single Resolution Board
(the European banking resolution authority) and
executed by the FROB (the Spanish banking resolution
authority) following a determination by the European
Central Bank that Banco Popular was failing or likely to
fail, in accordance with Regulation (EU) 806/2014
establishing a framework for the recovery and resolution
of credit institutions and investment firms. On 24 April
2018, Banco Santander announced that the boards of
directors of Banco Santander, S.A. and Banco Popular
Español, S.A.U. had agreed to an absorption of Banco
Popular by Banco Santander. The legal absorption was
effective on 28 September 2018.
The directors’ report has been prepared based on the
accounting and Management records of Banco
Santander, S.A.
The financial information included in this directors’
report has been prepared in conformity with the Bank of
Spain Circular 4/2017 of 27 November on Public and
Reserved Financial Information Regulations and
Financial Statements Forms, and subsequent
modifications.
2. Situation of Banco Santander
Santander is one of the largest banks in the eurozone. As
of December 2021, we had EUR 1,595,835 million of
assets and EUR 1,153,656 million of total funds. Our
market capitalization reached EUR 50,990 million.
Our purpose is to help people and businesses prosper in
a way that is Simple, Personal and Fair. We do not
merely meet our legal and regulatory obligations, but
also aspire to exceed expectations. We focus on areas
where our activity can have the greatest impact,
supporting economic growth in an inclusive and
sustainable way.
We engage in all types of typical banking activities,
operations and services. Our track record, business
model and strategic execution drive our aim to be the
best open digital financial services platform, acting
responsibly and earning the lasting loyalty of our
stakeholders (customers, shareholders, people and
communities).
Therefore, in 2021, a year in which the global economy
and society were still affected by the covid-19 pandemic,
we continued to play an active role in the the economic
recovery and continued to support our 153 million
customers and society.
With regard to our 197,070 employees, our priority
remains safeguarding their health and safety in line with
local government recommendations and based on three
pillars:  (i) development and implementation of health
and safety protocols; (ii) remote working where
necessary; and (iii) track and tracing (diagnostic tests,
health apps and even vaccination centres in our
corporate buildings for employees and the general
public).
We are living in an increasingly digital world, and the
covid-19 pandemic has contributed largely to this
transformation. As such, more than ever, our aim is to
continue to offer our customers digital products and
services that meet their needs, and support them in their
digital learning.
We interact with our customers through a wide variety
of channels. We have a network of 9,879 branches. In
recent years, significant effort and investment has been
put in to ensuring our branches meet our customers'
needs.
Our offices include universal offices and specialist
centres for certain customer segments, such as
businesses and universities. We are also promoting new
collaborative spaces with excellent digital capabilities
(Work Café, SmartBank and Ágil branches). Additionally,
our contact centres, which provide model service quality,
continue to serve our customers.
311
Through this process, in addition to improving our
branches, we are continuously investing in our digital
capabilities and technological infrastructure to optimize
our product and service offerings, reducing our cost to
serve while being among the top banks in customer
satisfaction in almost all of our main markets.
As a result, the number of digital and loyal customers as
well as digital activity continued to increase. We have
more than 25 million loyal customers (+11% year-on-
year), with growth in both individuals and companies.
Digital customers rose 12% in the year, exceeding 47
million. Similarly, digital sales accounted for 54% of
total sales (44% in 2020 and 36% in 2019).
The world is also increasingly aware of the different
environmental, social and corporate governance factors
(most commonly known as ESG).
In this regard, we are focused on delivering profitable
growth responsibly and creating value for our 3.9 million
shareholders.
Our strategic priorities and their execution are essential
to improving the profitability of our core businesses by
offering simple, fair and innovative products.
Grupo Santander has a balanced diversification in three
geographical between mature and emerging markets,
and operates mainly in 10 core units, where it has
significant market shares.
3. Financial performance
3.1 Economic outlook:
In 2021, Santander developed its activity in an
environment marked by (i) the implementation of fiscal
and monetary policies in response to the adverse effects
of the covid-19 pandemic (ii) the ongoing recovery from
this pandemic, uneven across countries and sectors, (iii)
new variants of covid-19 and significant outbreaks (iv)
the overall upturn in inflation in the second half of the
year, which, in the case of mature markets, reached a
three-decade high.
Inflationary pressures have intensified as a results of a
number of factors, including the revitalization of demand
for consumer goods, labour shortages, tensions in the
supply chains of microchips and other key items, 
transportation problems and the increase in the price of
energy, certain raw materials and food.
Under these circumstances, the expansionary fiscal and
monetary policies implemented in response to the
covid-19 pandemic began to reverse, especially in the
last quarter of 2021, particularly in countries with the
greatest pressure on prices.
Economic performance in the Eurozone and Spain was as
follows:
Eurozone (GDP: 5.2% estimated in 2021). GDP growth
driven by the lifting of lockdown measures and
expansionary monetary and fiscal policies. The ECB
kept interest rates stable despite the 5% rise in
inflation in December, on the expectation that this
rebound is transitory. However, in December the ECB
announced a reduction in its asset purchases starting
on spring 2022.
Spain (GDP: 5.0% in 2021). Economic recovery
continued in 2021, likely to reach pre-pandemic GDP
levels in 2022. Improvement in the labour market
accelerated, with employment exceeding pre-
pandemic levels. Inflation reached 6.7% in December,
largely due to energy prices.
To complete the information with the performance
indicators of the rest of geographies where the Group
is present, see the Consolidated Directors’ Report.
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3.2 Balance sheet and results:
Banco Santander, S.A. is the Parent Bank of a financial
group that operates in different countries through
different businesses therefore its financial statements
not only reflect its commercial activity in Spain, but also
the activity derived from being the head of the Group.
This last aspect makes it difficult to analyse its evolution
without distinguishing the results obtained from the
commercial activity from those more directly related to
its holding nature.
Strong pick up of activity in individuals in 2021,
especially in residential mortgages, where we reached
record highs in new lending, and in consumer credit,
which recovered to pre-pandemic levels in Q2. As a
result, we gained market share in both products.
In corporates, signs of recovery started to show in H2'21,
with growth in working capital management (+15%
year-on-year). However, there was an overall slowdown
in the demand for loans due to the extensions of grace
periods in ICO funding and expectations regarding the
European Next Generation EU funds.
In transactional products, we continued to grow in PoS
with significant market share gains and customer base
expansion, which was reflected in a 44% increase in
turnover compared to the previous year. Card turnover
rose 17% year-on-year, both credit and debit.
Regarding the balance sheet, as of 31 December 2021,
the total assets of Banco Santander stood at EUR
657,950 million, with an increase of 4.54% over the
previous year.
Loans and advances to customers at the end of the year
stood at EUR 308,367 million, with an increase of 4.24%
over the previous year driven by the growth of
mortgages and consumer loans.
Customer deposits, at the end of the year, stood at EUR
308,603 million with an increase of 7.65% over the
previous year. Demand deposits increased by 9.02%,
offsetting the fall in time deposits (-0.04%), with growth
in both corporates and households.
Net interest income in 2021 stood at EUR 3,620 million,
7.48% higher than the previous year due to the higher
income derived from the TLTRO and the greater volume
of credit, which offset the lower interest rates.
Income from equity instruments amounted to EUR
5,489 million in 2021. This line includes dividends
received from the Group subsidiaries.
Net fee income increased by 11.26% compared to 2020
to 2,578 million euros, highlighting the strong growth in
commissions from investment funds, insurance and
those from wholesale banking.
Gains/losses on financial transactions (including
exchange differences) reflected gains of EUR 253 million
as compared to 645 million in the previous year.
General administrative expenses (personnel and other
administrative expenses) were EUR 4,673 million,
increasing 1.54% as compared to the previous year.
Impairment losses on financial assets (net) in 2021
accounted for EUR 2,287 million, 0.6% of financial assets
at fair value with changes in other comprehensive
income plus financial assets at amortized cost.
On the other hand, the reversal of impairment of
investments in subsidiaries, joint ventures or
associates in 2021 amounted to EUR 800 million and
losses of non-current assets held for sale amounted to
EUR 50 million.
Distribution proposal of the Bank’s profit
ECB Recommendation of 15 December 2020, which
asked banks not to pay out dividends charged against
2021 results (ECB Recommendation III), was in force for
over half of 2021.
On 23 July 2021, the ECB believed the reasons
underpinning ECB Recommendation III to limit dividend
payouts were no longer valid and, thus, repealed it
effectively on 30 September 2021.
On 28 September 2021, the board announced its 2021
shareholder remuneration policy to pay out an interim
distribution from approximately 40% of the Group's
underlying profit (half through a cash dividend and half
through a shares buyback).
Interim remuneration.  Accordingly, it authorized the
payment of an interim dividend of 4.85 euro cents
per share (i.e. 20% of the Group's underlying profit
for H1'21), in cash and charged against 2021 profits;
it was paid on 2 November 2021. The board also
voted to launch the First Buyback Programme worth
841 million euros (20% of the Group's underlying
profit for H1'21) once the ECB approved it on 28
September 2021.
Final remuneration. On 24 February 2022, within the
2021 shareholder remuneration policy, the board of
directors voted to:
submit a resolution at the 2022 AGM to approve a
final cash dividend in the gross amount of 5.15
euro cents per share, worth approximately 865
million euros (approximately 20% of the Group’s
underlying profit for H2 2021). If approved at the
AGM, the dividend would be payable from 2 May
2022. The estimate of 865 million euros is based
on the assumption that, once the Second Buyback
Programme has taken place, the number of
outstanding shares entitled to receiving dividends
will be 16,804,353,202. Therefore, the total
dividend may be higher if fewer shares than
anticipated are acquired in the Second Buyback
Programme; otherwise, it will be lower.
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implement a Second Buyback Programme worth
865 million euros (approximately 20% of the
Group’s underlying profit for H2 2021), once the
necessary regulatory authorization has been
obtained.
If shareholders approve the dividend payout resolution
and the ECB authorizes the Second Buyback Programme,
it will result in a payout of approximately 40% of the
Group’s underlying attributable profit for 2021. If the
buyback reaches the maximum within the programme
period, remuneration will be split equally between cash
dividends and shares buybacks. This final remuneration
will enable Santander to meet the target set in the
shareholder remuneration policy disclosed to the market
on 28 September 2021.
See more information in section 9.2 Dividend policy.
4. Trend information
This director’s report contains certain prospective
information on the directors’ plans, forecasts and
estimates, based on what they consider to be reasonable
assumptions.
Readers of this report should take into account that such
prospective information must not be considered a
guarantee of our future performance. As the plans,
forecasts and estimates are subject to numerous risks
and uncertainties, our future performance may not
match initial expectations. These risks and uncertainties
are described in note 49 of the  financial statements.
The economic outlook for 2022 is subject to considerable
uncertainty due to the spread of new covid-19 variants in
Europe and the US in the final stretch of 2021 - and the
risk of it spreading to other areas - and doubts as to the
more or less temporary nature of the 2021 inflation hike.
The impact of the Omicron variant and any future
variants or outbreaks and their effect on activity is
difficult to gauge. It will depend to a large extent on the
pressure they generate on hospital capacity, which is not
easy to foresee given, on the one hand, the varying
capacity for contagion and virulence of each variant of
the covid-19. Inflation will have an adverse impact on
consumption and on financial conditions.
In our baseline scenario, we assume that covid-19
control measures will have a moderate effect on activity,
that inflation will ease and return to the target from
spring onwards and that, with some exceptions, the
withdrawal of monetary stimuli will be very gradual. In
this environment, among the most relevant economies
for the bank, the European economies and the United
States are expected to maintain strong growth, while in
Latin America the evolution may be more uneven. 
The macroeconomic forecast for 2022 by country/region
is as follows:
Euro area
Growth recorded in 2021 is expected to continue in
2022, although the start of the year could be somewhat
hesitant, supported by financial conditions that will
continue to be openly expansionary, fiscal conditions
that will not yet be restrictive, a greater weight of
European Next Generation EU funds, an improvement in
the pandemic and a gradual decline in inflation.
The elections to be held in several countries in the area
and the reforms and credibility of the countries' fiscal
consolidation plans will be relevant, in a year in which
the reestablishment of the Stability and Growth Pact
may be announced and the monetary and prudential
measures used to face the pandemic will be gradually
withdrawn.
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Spain
In Europe, the deployment of European funds (especially
relevant for the country), the potential improvement of
international tourism, the time left for household
consumption to recover and the expected reactivation of
residential construction suggest remarkable growth that
could drive GPD close to pre-pandemic levels.
The success of ongoing structural reforms, partly related
to European funds, will be fundamental in the short and
medium term.
The priority for Europe is the integration of all European
businesses within a common operating model that
allows us to continue capturing cost efficiencies and
improving service quality. To this end, the main action
lines in 2022 are:
To continue to expand our digital capabilities in the
region, accelerating customer-to-digital conversion to
improve service quality and thus customer satisfaction,
while reducing the cost base.
Deliver on our EUR 1 billion cost savings commitment.
Leverage our global businesses (SCIB and WM&I) and
the connection with PagoNxt to accelerate efficient
allocation of capital to the most profitable segments and
thereby improve the overall profitability of the business.
Excel in risk management, maintaining and reinforcing
our balance sheet strength.
The cornerstone of our strategy in Spain is customer
service:
Grow the customer base through excellence service
quality and seamless interaction with both customers
and non-customers through digital channels.
Increase customer loyalty by improving customer
experience when acquiring products through simple,
digital processes.
Achieve operational excellence and improve NPS.
Develop low capital-intensive revenue streams (funds
and insurance) .
Continue to review the cost structure, as the new
model will be more efficient.
See more information in the Consolidated Directors’
Report.
5. Non-financial information
This Statement of Non-Financial Disclosures of Banco
Santander, S.A., which is part of the Separate Directors'
Report, contains the non-financial disclosures set out in
the Consolidated Directors' Report of Grupo Santander
together with other material useful comparative
information for Banco Santander, S.A. that is appropriate
for an understanding of the trends, results, status and
impact of the activities of Banco Santander, S.A.,
including information on matters of the environment,
society, human rights, the fight against corruption and
bribery, and personnel.
When drawing up the non-financial information
contained in this Separate Statement Of Non-Financial
Disclosures, Banco Santander performed a materiality
analysis, in line with the international reporting
framework developed by the Global Reporting Initiative
(GRI), which enabled it to identify the most important
aspects about which to inform its stakeholders in
accordance with the GRI standards.
General information
The purpose of Santander Group is to help people and
businesses prosper. To achieve this, it has a distinctive
business model that seeks to satisfy the needs of all
kinds of customer: private individuals with varying
income levels; companies of any size and sector; private
corporations and public institutions.
Long-term personal relationships with its customers are
the basis of the business. Through innovation, Banco
Santander is transforming its commercial model to
capture a greater number of loyal and digital customers,
thereby driving a more profitable and sustainable
business.
Banco Santander considers the proper integration of
environmental, social and governance (ESG) criteria in its
financial activity to be critical.
To achieve this, and in compliance with the international
best practices regarding sustainability and responsible
banking, Banco Santander has a sound corporate
governance structure, with the board of directors as the
maximum decision-making body of the Banco
Santander, with the exclusive power to approve Grupo
and Banco Santander general policies and strategies,
including those regarding sustainability.
It also has a general sustainability policy that defines our
general sustainability principles and our voluntary
commitments with the aim of generating long-term
value for our stakeholders, and with a new
environmental and social risk management policy that
governs the Groups's financial activity in sectors such as
energy, mining/metals and soft commodities (e.g. palm
oil, soya and timber). It also has a defence sector policy
outlining the criteria for the group's operations with
companies that perform defence-related activities.
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Likewise, the Bank has a sensitive sector policy that sets
down guidelines for assessment and decision making
about Banco Santander's participation in certain sectors,
whose potential impact could lead to reputational risks.
These policies are reviewed annually.
Banco Santander's responsible banking strategy is also
underpinned by other internal regulations such as the
general code of conduct, the corporate culture policy
(which includes principles of diversity and inclusion
governing the Group), the human rights policy, the
consumer protection policy, the cybersecurity policy, or
the Third-party certification policy (which includes the
principles on the responsible behaviour of suppliers).
Moreover, Banco Santander redesigned and
strengthened its corporate governance, both to ensure it
is compliant and to help address the challenges that
were identified.
The responsible banking, sustainability and culture
committee (RBSCC) has been created which will help the
board of directors to comply with its responsibilities
regarding the definition and supervision of the
responsible banking, sustainability and culture strategy.
The committee is supported by the Responsible banking
forum, which meets at least six times a year. It executes
the responsible banking agenda across the Group, drives
decision-making on responsible banking issues and,
ensures the execution of any mandates from the RBSCC,
other Board committees and the board of directors. It
also ensures alignment on key issues, including the
review and escalation of reports to the RBSCC.
The corporate Responsible Banking unit coordinates and
drives the responsible banking agenda. Supporting this
unit, Santander has a Senior Advisor on Responsible
Business Practices, who reports directly to the executive
chairman.
In addition, in 2019 metrics and medium and long-term
public commitments have been established to drive
Santander´s and embed Responsible Banking agenda
into the heart of Group Santander's business strategy
(these public commitments are carved out throughout
the report).
The identification of non-financial risks associated with
its activity is a priority for Banco Santander.
Banco Santander has procedures in place for their
identification, analysis and assessment in transactions
subject to Group policies and to external commitments
such as the criteria of the Equator Principles, an initiative
the Bank joined in 2009.
In this sense, Banco Santander recognises the right of
communities to a clean and healthy environment and
undertakes to minimise the environmental impact of its
operations, which means:
Assuming, in line with the bank's commitment to the
Equator Principles, the obligation to analyse, identify
and correct, during the analysis of the risks of financing
activities and consistently with the guidelines
approved by the International Finance Corporation, the
negative social and environmental impacts, including
those affecting local communities.
During due diligence prior to signing agreements for
financing or of any other kind and complying with the
Equator Principles and social and environmental risk
management policies, Santander undertakes, as part
of its analysis, to assess the human rights policies and
practices of its counterparties.
Establish specific policies governing the requirements
for offering financing to those sectors, activities or
potential customers that present a special risk in
respect of social, environmental or human rights
issues.
Banco Santander is part of the main initiatives at
international level regarding sustainability (United
Nations World Agreement, Banking Environment
Initiative, World Business Council for sustainable
Development, UNEP FI, Equator Principles, Responsible
Banking Principles, CEO Partnership for Financial
Inclusion, etc.). In addition, we are one of the founding
signatories of the United Nations Principles of
Responsible Banking. The aim is to contribute to the fight
against climate change and the achievement of the
United Nations' Sustainable Development Goals.
In 2021 we joined the we joined the Glasgow Financial
Alliance for Net Zero, Net Zero Asset Management and
were co-founders to the Net Zero Banking Alliance.
Within GFANZ, we co-led the Net Zero Public Policy and
their call to action launched in October.
In Spain, we are member of Foretica, of the Green
Growth Spanish Group as well as Fundación SERES.
In addition, Banco Santander  forms part of the main
stock market indices that analyse and evaluate
companies' actions on sustainability.
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We are member of Dow Jones Sustainability Index for
the 21st year in a row, with top marks in financial
inclusion, environmental reporting, operational eco-
efficiency and social reporting. Santander was also
included in the S&P Sustainability Yearbook, receiving a
silver class award.
MSCI increased our rating from BBB (2020) to AA (2021),
CDP rating category up from B to A-, putting us among
leading financial institutions.
Sustainalytics also recognized our progress, raising our
score from 27.1 to 23.9
We are members of the FTSE4GOOD Index, and
improved from 4.3 in 2020 to 4.5 out of 5 in 2021.
We increased our score in the Bloomberg Gender-
Equality Index (BGEI) from 85 to 90 and were the
highest-ranked bank and second highest company.
Information about environmental issues
At Santander, we want to play our part in supporting our
customers and the global economy to be zero by 2050.
We are offering our customers decarbonization solutions
to help them fulfil their climate goals. We are aligning
our portfolios with the Paris Agreement Goals and
keeping our operations carbon-neutral. Integrating
climate within our risk management is key to tracking
our plan’s robustness.
We have a four-pronged climate strategy and public
commitments to:
1) align our portfolio with the Paris Agreement Goals
and set sectorportfolio alignment targets in line with the
NZBA and with the NZAMi: to ensure projected carbon
emissions will contribute to limiting warming to a 1.5ºC
rise above pre-industrial levels.
2) help customers transition to a low-carbon economy,
with the commitment to raise EUR 120bn in green
finance between 2019 and 2025 and EUR 220bn by
2030; offer our customers guidance, advice and specific
business solutions; and enable them to invest in a wide-
ranging ESG proposition according to their sustainability
preferences.
Some environmental products and services delivered by
Banco Santander in Spain are:
• Funding renewable energy projects: In 2021 Banco
Santander helped to finance new renewable energy
projects in Spain with an installed capacity of 3.212 MW.
• Management of credit lines in relation to energy
efficiency in collaboration with multilateral institutions
such as the European Investment Bank (EIB) and the
European Bank for Reconstruction and Development
(EBRD).
Financing of low-emission vehicles, Banco Santander
offers Ecological Car loans for the purchase of hybrid or
electric cars with reduced interest rates.
3) reduce our impact on the environment by remaining
carbon neutral and sourcing all our electricity from
renewable energy by 2025.
In 2021, Banco Santander S.A.. has continued reducing
its CO2 emissions by 56.7% compared to 2020.
Additionally, 100% of the electricity used by Banco
Santander S.A. comes from green energy sources.
Banco Santander continues to hold the ISO 14001
environmental certificate for the Santander Group City in
Boadilla, the bank's headquarters. It has also obtained
the LEED GOLD certificate for the new headquarters of
Santander España (Luca de Tena), the Abelias building
and the DPC in Santander.
4) embed climate in risk management; understand and
manage the sources of climate change risks in our
portfolios.
Banco Santander considers social and environmental
aspects to be crucial in risk analysis and decision making
within its financing operations in accordance with its
general and sector policies in respect of sustainability, as
mentioned above.
In this regard, the bank has established procedures for
the analysis and assessment of these risks in operations
subject to Banco Santander policies and to external
commitments such as the Equator Principles.
Santander Asset Management is operating in 10
countries and aims to have net zero greenhouse gas
emissions from the assets we manage by 2050, and it
was the first asset manager in Spain and Latam (ex
Brazil) to join the initiative. This is consistent with
Santander’s push for leadership in sustainability and the
Group commitment to be net zero in CO2 emissions by
2050.
We continued to make progress in meeting the public
commitments set out in 2019.
Financing or facilitating the mobilisation of EUR 120
billion up to 2025 and EUR 220 billion up to 2030.
Since 2019 we have already mobilised €61 billion.
Since 2020 we are carbon neutral in our own
operations.
That 100% of the electricity we use comes from
renewable sources by 2025. At the end of 2021, 77%
of the energy consumed in the Group (10 main
geographies) came from renewable sources. In Spain
it is 100%.
Eliminate the use of unnecessary single-use plastic
in all our offices and buildings.  By the end of 2021
we have completely eliminated unnecessary single-
use plastic.
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Information about labour questions and employees
Banco Santander aims to be one of the best banks to
work for, able to attract and retain the best global talent,
enabling it to accelerate the transformation and helping
people and society prosper.
Human resources strategy is based on having the best
team of professionals: a diverse and committed team
with a common culture (based on corporate behaviour
and a way of making things simple, personal and fair)
ready to give customers a distinctive and quality service.
a) Employment
At 31 December 2021, Banco Santander, SA, in Spain,
had a headcount of 21,848 employees, 1.8% less than in
2020, with an average age of 45, of whom 50% were
women and 50% men.
Some 99.9% of labour contracts are permanent full-
time.
In 2021, we began to reduce our workforce on
organizational, production-based and economic grounds.
Following informal discussions with workers’ legal
representatives to explain our reasons, we entered into
formal negotiations that ended with an agreement with
most trade unions. All of the measures agreed with the
European Works Council to align workforce restructuring
with socially responsible practices were in the
restructuring agreement.  The alternative measures we
proposed included geographic and in-company
relocations to lower the number of potential lay-offs. On
top of considering employees in vulnerable situations to
protect their jobs. In total there were 3,541 dismissals.
The gender pay gap at Banco Santander S.A. in Spain  is
13.1% (in median) and the difference in compensation
for identical positions is 5.1%. The difference in
comparison with the Group (1%) is due mainly to the
legacy of the mergers carried out in recent years and to
changes in functions or the fact that some positions are
not equivalent.
Employees with a disability account for 1.4% of the total
(+0.2 vs 2020).
b) Work organisation
At Santander  we believe our diverse organization must
adapt to the  needs and characteristics of its teams.
We redesigned our global flexiworking framework to
address where, when and how much we work:
'Where': Possibility of home/remote working.
'When': Intensive day, flexible start/end and break
times and alternative shifts.
'How much': Part-time working, special leave, flexible
holidays, job sharing and other measures.
Because we enabled managers to take charge of
deciding where their people can work, each area and
business has implemented new ways of working based
on the characteristics of the team and its needs.
The corporate FlexiWorking policy, applicable to
Santander S.A. and the entire Group, encompasses a
wide range of measures so that employees can benefit
according to their personal needs and professional
situation. These measures refer mainly to:
In addition, the Banco Santander has measures aimed at
facilitating the work-life balance of its employees
through the different agreements signed with the
relevant unions´ representatives. Santander has
committed to promoting a rational management of
working time and its flexible application, as well as the
use of technologies that allow a better organisation of
the work of our professionals, specifically addressing the
employees´ right to digital disconnection.
c) Health and safety
The health of its employees is a priority for the bank.
In 2021, we appointed a global head of health and well-
being to help draw up a strategy and implement it across
our footprint.
We drafted our Global health and well-being policy,
which will be available to the public in 2022. We also
began work on global guides that will set standards on
mental and emotional health, digital balance and other
priority areas to be implemented by subsidiaries
The BeHealthy initiative aims to make Banco Santander
one of the healthiest companies in the world and to offer
employees health and wellbeing benefits.
As part of our Covid-19 response, we continued to
enforce these prevention measures to make sure our
employees stayed healthy.
Banco Santander has a plan for the prevention of
workplace risks that is available to all employees on the
corporate intranet.
Banco Santander also promotes a healthy work/life
balance through flexible work policies and services to
satisfy employees' personal and family needs. The
general code of conduct highlights our ethical principles,
including the importance of encouraging a working
environment that is compatible with employees'
personal and family life.
Also, as part of the "Our way of working" initiative, the
bank has assessed its new work spaces and equipment,
both from an ergonomic and safety perspective.
d) Labour relations
Banco Santander has made a formal commitment to
foster workforce labour relations in its code of conduct.
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The code of conduct stablishes the obligation to respect
the internationally recognised rights of unionisation,
association and collective bargaining, and the activities
carried out by the unions that represent employees, in
accordance with the functions and areas of responsibility
legally attributed to them.
In addition, the human rights policy describes Banco
Santander's principles and commitments with respect to
relations with the Bank's employees. These
commitments are fostered through social dialogue and
include:
Preventing discrimination and practices that are
harmful to people's dignity.
Rejecting forced and child labour.
Respecting freedom of association and collective
bargaining.
Protecting employees' health.
Offering decent work
Also, in meetings of the European Works Committee,
various declarations have been signed together with
legal representatives of employees in the main European
countries in which the Group Santander operates (Spain,
Portugal, Germany, the UK, Italy, Poland and Nordics).
2008: equal treatment in Santander Group companies.
2009: basic labour principles and rights that should
govern the framework of labour relations in Santander
within the scope of the European Union.
2011: framework of labour relations for the provision
of financial services.
2016: joint declaration on the restructuring of
workforces in the European area.
In addition, the collective labour agreement for the
banking sector, negotiated and signed by the bank,
contains various declarations about promoting labour
dialogue.
The dialogue with employees' representatives is
maintained through numerous bilateral meetings and
specific committees, including:
The Health and Safety Committee
The Employment Committee
The Training Committee
The Pension Plan Oversight Committee
The Equal Opportunities Committee
The Committee for the Solidarity and Social Assistance
Fund
Bilateral meetings with Santander Group companies,
such as Openbank and Santander Consumer
These specific meetings with the unions are held to
inform them about significant Banco Santander projects
and to obtain their feedback, in the understanding that
their support is necessary and is directly related to the
satisfactory implementation of these projects.
In Spain, practically 100% of the workforce is covered by
a collective labour agreement.
In 2021, we began to reduce our workforce on
organizational, production-based and economic grounds.
Following informal discussions with workers’ legal
representatives to explain our reasons, we entered into
formal negotiations that ended with an agreement with
most trade unions. All of the measures agreed with the
European Works Council to align workforce restructuring
with socially responsible practices were in the
restructuring agreement.  The alternative measures we
proposed included geographic and in-company
relocations to lower the number of potential lay-offs. On
top of considering employees in vulnerable situations to
protect their jobs
e) Training
We value continuous learning so our employees can
adapt to an ever-changing environment and help
accelerate our transformation.
Our global learning and development policy sets the
standards for designing, reviewing, launching,
overseeing and enhancing training and development
programmes to:
support our business and cultural transformation in
accordance with Santander’s governance standards;
and,
foster innovation, knowledge sharing and transfer, and
the skills employees need to perform their duties
successfully as part of global talent management.
The three pillars of our employee upskilling and
reskilling are strategic workforce planning (SWP), our
current skill model and a single skills catalogue to meet
strategic business needs. 
We put training modules on our digital ecosystem, Dojo,
which turns them into study plans and “roadmaps” for
learning. Dojo facilitates informal, interactive and
structured ways of learning, combining many formats,
settings and tools so every employee can choose what,
when, how and how much to learn.
Furthermore, each subsidiary’s Learning and
Development team pinpoints specific learning needs
relating to its geography and designs training courses
consistent with Dojo’s standards.
f) Accessibility
Improving access to our products and services is a key
aspect of Banco Santander's commitment to be a bank
that is Simple, Personal and Fair.
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The corporate works manual includes minimum
accessibility criteria based on Design for All (DfA)
principles. These criteria, which refer to office
architecture, furniture, lighting, signage and the
functional allocation of spaces, are applied by default in
new offices and in those upgrades in which this is
technically possible.
Banco Santander also wants to provide maximum
accessibility for all the users of its various websites. In
this respect, both in the development and maintenance
of its websites, the bank applies the accessibility
guidelines established by the Web Accessibility Initiative
(WAI) working group of the World Wide Web
Consortium (W3C), at level AA.
g) Equality
Banco Santander believes that diversity enriches human
capital, resulting in an inclusive and diverse work
environment that achieves better solutions and offers
added value.
The board of directors of Banco Santander is a clear
example of diversity in all its aspects. It has diversity of
gender (40% of board members are women) and
nationality (Spanish, British, American and Mexican) and
a broad industry representation (finance, retail,
technology, infrastructure and academia).
In managing employee talent, Santander considers all
existing sources of diversity, including gender, race, age,
national origin, disability, culture, education, and
professional and life experience.
In 2017, Banco Santander approved principles for
promoting diversity that act as a benchmark for all the
initiatives that are developed in this area. These
principles, which are included in the corporate culture
policy, envisage all the aforementioned sources of
diversity, and they are applicable to all stages of talent
management in the bank (recruitment, training,
professional development, compensation, etc.).
Our commitment to a diverse and inclusive work
environment is a cornerstone of our corporate strategy.
Our global D&I executive working group and D&I expert
network of local representatives perform a vital role in
driving and cascading the importance of diversity and
inclusion across Grupo Santander.
To recruit, manage and develop talent that reflects
broader society, we developed a diversity and inclusion
(D&I) strategy in 2020. It sets out to consolidate an
inclusive workforce in terms of gender, LGBTI, people
with disabilities, and cultural diversity (age, ethnicity and
race, nationality, educational and professional
background, and international experience) by:
encouraging leaders to get involved: their commitment
to being open and inclusive and to promoting diversity
will help consolidate our diverse and inclusive culture.
increasing awareness: promoting diversity and shaping
our culture through global standards and actions such
as FlexiWorking, parental leave, training, employee
networks and the celebration of international days.
promoting balance: special focus on increasing the
number of women in management and in
development programmes.
In 2019, the bank has established various commitments
with the objective of achieving equality between men
and women.
To have between 40% - 60% women members on our
Group Board by 2021. We have closed 2021 with 40%
women on the board.
To have 30% women in senior leadership positions by
2025. We have closed 2021 with 26,3% women on
senior leadership positions.
Banco Santander is one of the leading companies in the
Bloomberg Gender-Equality Index 2021, We are the first 
bank, and the second highest rated company.
Information about Human Rights
In line with its corporate culture, Banco Santander
undertakes to respect and promote human rights in its
sphere of operations, and to prevent or minimise any
violation directly caused by its activity.
Banco Santander has a specific policy that includes
commitment to human rights, in accordance with the
strictest international standards, especially the UN's
Guiding Principles on Business and Human Rights of
2011.
This policy, driven by the Board of Directors, is applicable
to Grupo and Banco Santander and is available at
www.santander.com
Banco Santander's policy on human rights is in line with
Banco Santander's General Code of Conduct and its other
policies in respect of sustainability.
Information about the fight against corruption
Banco Santander is staunchly committed to fighting any
kind of corruption in the public and private sectors alike.
In order to comply with this pledge, Banco Santander has
drawn up this Anti-Corruption Policy which lays down all
the anti-corruption elements which the Grupo Santander
must comply with.
Banco Santander considers it a strategic objective to
have a system for the prevention of money-laundering
and terrorist financing that is advanced and effective,
permanently adapted to the latest international
regulations and able to deal with new techniques
employed by criminal organisations.
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It also has a corporate framework that lays down
principles for acting in this respect and sets minimum
standards applicable to local units. The latter are
responsible for directing and co-ordinating procedures
for the prevention of money-laundering and terrorist
financing, and for investigating and issuing alerts about
suspicious transactions and responding to requests for
information from the supervisors.
As a signatory of the ten principles of the UN's Global
Compact, Banco Santander undertakes to work against
corruption in all its forms, including extortion and
bribery.
In addition, Banco Santander has whistle-blowers'
channels for employees, which form part of the general
code of conduct, and for suppliers, designed for
reporting inappropriate behaviour by bank employees in
matters regarding corruption and bribery that are
contrary to internal regulations, to the compliance
function.
In 2021, the main concerns were related to corporate
values (SPF) and behaviours and to labour regulations,
followed by internal fraud, workplace harassment,
marketing of products and services, privacy and data
protection.
In 2021, 79 equal opportunity and non-discrimination
complaints were received in the Group, 6 of which
resulted in disciplinary action, including 2 dismissals.
Information about society
a) The bank's commitments to sustainable development
Banco Santander contributes to economic and social
development through initiatives and programmes that
promote education, entrepreneurship, employability and
social wellbeing.
Banco Santander has, as one of its priority lines of action
to contribute to sustainable development, the financial
empowerment of people. We help people to access
financing, to create or develop micro-enterprises, and
we provide them with the necessary skills to manage
their finances through financial education. Our goal is to
include and financially empower 10 million people by
2025. Three main focuses of action:
We help unbanked, underbanked and vulnerable
people to access and use basic financial services.
We offer specific products and services to low-
income people, people with financial problems, and
vulnerable groups.
We promote financial education programs
Through Santander Universities, a unique initiative in the
world, we focus our efforts on supporting education,
entrepreneurship and employment. Banco Santander
developed the largest scholarship programme ever
launched by a private entity.
Grupo Santander has over 1,400 agreements with
universities and academic institutions in 31 countries.
Banco Santander SA has agreements with 100 academic
institutions.
During 2021 Banco Santander invested a total of EUR
106 million to support higher education. Of which 69
million was disbursed by Santander Spain and the
Corporate Centre, and which supported more than
43,000 students and university professors.
The bank also supports the communities where it
operates through numerous local programmes,
encouraging the participation of bank employees as a
way of promoting solidarity, motivation and pride in
belonging, maintaining proximity and ties with their
surroundings.
In total, in 2021, Banco Santander invested more than
EUR 46 million, EUR 13 million in social programs in
Spain, helping more than 500,000 people.
Also, through the Banco Santander Foundation, the bank
carries out important work in cultural patronage and the
protection and recovery of natural spaces.
b) Outsourcing and suppliers
Banco Santander has a supplier management model and
policy that establishes a common methodology for all
units about the selection, certification and assessment of
suppliers. In addition to price, quality of service and
other traditional criteria, it includes ESG factors, such as
diversity and inclusion, human rights and sustainability.
These include:
Whether the supplier has obtained official
certifications related to quality, environmental
management, labour relations, the prevention of
workplace risks, corporate social responsibility and
similar.
Whether they have subscribed to the Global Compact
or have their own principles in respect of ethical,
social and environmental questions and report about
these on a regular basis.
Or whether they have frameworks, policies,
procedures, records of indicators and/or initiatives
related to environmental and social matters.
The third-party certification policy include the
responsible behaviour principles for suppliers.  These
principles lay down the minimum conditions that Banco
Santander expects of its suppliers around ethics (ethics
and conduct), labour matters (human rights, health and
safety, and diversity and inclusion) and the environment.
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Similarly, Banco Santander has a whistle-blowers'
channel for suppliers through which suppliers who
provide services to the Bank or any of its subsidiaries in
Spain can report inappropriate conduct by Group
Santander employees which does not conform to the
framework of the contractual relationship between the
supplier and the general principles of conduct of the
Banco Santander.
c) Consumers
For Banco Santander a key characteristic of a responsible
bank is that it manages and oversees the marketing and
commercialization of products and services and
consumer protection appropriately.
By placing our customers at the heart of what we do, we
aim to win and keep their loyalty. To achieve that, we
use a range of interactive channels to listen to and
understand them better.
Our product, service and consumer protection
framework sets out the principles that promote a strong
SPF relationship with customers and establishes the
basics for managing and mitigating conduct risk in
design, sales, post-sales and services.
Our Product Governance & Consumer Protection
function, is responsible for ensuring appropriate
management and control in relation to products and
services and consumer protection.
Within this function, the Product Governance Forum
protects the customers by validating products and
services and preventing the launch of inappropriate
ones.
In addition, the corporate consumer protection policy
establishes the criteria for the identification,
organisation and implementation of consumer
protection principles and the mechanism for the
overseeing and supervising compliance.
In 2021, we worked on an instruction manual about our
vulnerable customer and special case management
model, and set a roadmap for its roll-out among
subsidiaries, therefore ensuring a consistent, group-wide
approach to identifying and managing vulnerable
customers in such high-impact procedures as collections
and fraud management. We offered monthly training
courses and we ran an awareness campaign at the
Corporate Centre and shared the manual across our
footprint. 
Appropriate management of complaints is another
important aspect of a responsible banking strategy.
Banco Santander has a procedure for complaint
management and root cause analysis whose objective is
to issue standards to all the units for proper complaint
management, ensuring compliance with the local and
industry-wide regulations applicable in each case, and
offering the best possible service to customers. In 2021
Banco Santander received a total of 120,953 complaints,
19.3% lower than in 2020..
Banco Santander also constantly monitors its customers'
opinions and their experiences. This information reveals
how the range of services offered can be improved and
helps to measure customer loyalty. To measure
customer loyalty and satisfaction, Banco Santander uses
the Net Promoter Score (NPS). In 2021 we have
performed well, maintaining our 2nd position in Spain,
and being top 3 in 8 of the main markets in which we
operate at a group level..
d) Tax information
Banco Santander pays its fair share in taxes in every
jurisdiction where we operate. Our tax strategy, which
has been approved by the Board, sets out the principles
by which the entire Group Santander operates. It is
published on our website.
Banco Santander contributes economically and socially
to the countries in which it operates by paying all taxes
borne directly by the Grupo Santander (taxes paid by the
Group4) and collecting or withholding taxes from third
parties generated through business activity, cooperating
as required with the local tax authorities (taxes from
third parties5).
The total taxes collected and paid by Banco Santander in
Spain in 2021 amounted to EUR 3,048 million, of which
1,707 million were the bank's own taxes and EUR 1,341
million were third-party taxes.
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4 Including net corporation tax payments, VAT and other non-recoverable indirect taxes, employer's social security contributions and other withholding taxes, as
well as other charges and tariffs.
5 Including net payments for salary withholdings and employees' social security contributions, recoverable VAT, tax deducted at source on capital, non-resident
taxes and others.
6. Research, development and
innovation
Research, development and innovation activities
Innovation and technological development are strategic
pillars of Grupo Santander. We aim to respond to fresh
challenges that emanate from digital transformation,
focusing on operational excellence and customer
experience.
Moreover, the information from our new technological
platforms will help us better understand our customers'
journey and enable us to design a more accurate digital
profile to generate more confidence and increase
customer loyalty.
As well as competition from other banks, financial
entities must watch out for new financial system
entrants, whose differentiating factor and competitive
advantage is their use of new technology.
Developing a competent strategic technology plan must
provide:
greater capacity to adapt to customers’ needs
(customized products and services, full availability and
excellent service across all channels).
enhanced processes for Grupo Santander’s
professionals to ensure greater reliability and
productivity; and
proper risk management, supplying teams with the
necessary infrastructures to support the identification
and assessment of all business, operational
reputational, regulatory and compliance risks.
As a global systemically important bank, Santander and
its  subsidiaries face increasing regulatory demands that
impact system models and their underlying technology.
This requires additional investments to guarantee
compliance and legal security.
As in previous years, the latest European Commission
ranking (2021 EU Industrial R&D Investment Scoreboard,
based on 2020 data) ranked our technological effort first
among Spanish companies and we are the second global
bank for investment in R&D.
The equivalent investment in R&D&I to that considered
in this ranking amounted to EUR 1,325 million.
Technological strategy
To meet business and customer needs, we must
integrate new digital capabilities such as agile
methodologies, public- and private-Cloud-based
products and core systems development. We must also
broaden our data and technological capabilities (APIs -
Application Programming Interface, artificial
intelligence, robotics, blockchain, etc.).
Our technological strategy aligns with the three pillars
of the group's strategy: One Santander, PagoNxt and
Digital Consumer Bank. Our technological pillars (Cloud,
Agile, Data, Core evolution and Deep tech skills), a
flexible and common architecture and a global operating
model, as well as better management of risk and
associated costs, help us achieve this.
In order to ensure the alignment of the technology
strategy in all Group units, the SARB (Santander
Architecture Review Board) holds monthly meetings that
bring together the Chief Technology Officers (CTOs) of
the different units and businesses to actively participate
in key architecture decisions. The SARB oversees
everything, the analysis of potential assets, the
migration to cloud or the review of datalake reference
architectures.
The use of a single technology stack and reference
architectures are key to achieving Santander Common
Architecture. Based on simplification, the recycling of
components and the principle of Composable
Architecture, the SARB also guarantees  the use of
technologies that matches the business of the future.
Our  implementation of this strategy is based on our set
of rules, a committed and experienced organization in
relationships with our country units, and a governance
model that articulates projects and initiatives that help
crystallize the strategy in all our markets.
The development of our technology and operations
(T&O) model will help us cultivate new business,
focusing on global products and digital services. Almost
5,000 Santander Global Tech professionals in Spain, the
UK, Portugal, Poland, the US, Mexico, Brazil and Chile are
gradually incorporating the global product portfolio
agreed by the country units, our global businesses and
the T&O division, guaranteeing the quality of digital
services and products, and also their security.
Technological infrastructure
Grupo Santander has a network of high-quality data
centres (CPDs) interconnected by a redundant
communications system. The CPDs are spread across
strategic countries to support and develop Grupo
Santander’s activity and combine traditional information
technology (IT) systems with the capabilities supplied by
an on-premise private Cloud, which thanks to its swift
adoption enables integrated management of the
business areas’ technology, accelerates the digital
transformation and allows significant cost savings.
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Santander has currently migrated more than 75% of its
technology infrastructure to the cloud and expects to
complete the roll-out by 2023. Our Cloud strategy
enables us to improve processes, swiftly innovate and
improve service quality. Thanks to the Local Cloud
Centres of Excellence (local CCoEs), coordinated under
the Global CCoE, we can guarantee consistent and
rigorous adoption of the Cloud across our entities. This
minimizes risks in accordance with the Public Cloud
policy. This process is also expected to reduce the energy
consumption of the Bank's technology infrastructure by
70%, which contributes to Santander's responsible
banking goals.
Cybersecurity
Cybersecurity is one of Grupo Santander’s main priorities
and a crucial element in supporting our mission of
‘helping people and businesses prosper’, as well as
offering excellent digital services to our customers.
New cyber services and capabilities created during the
Cybersecurity Transformation 3-year Plan have been
completed in 2020 and moved to business as usual
(BAU) operation in line with the Group’s Cybersecurity
Framework. This has allowed us to set the
organisational foundations and governance for cyber
security globally, establish global cyber services within
the group, strengthen defences in line with existing best
practices and latest technology tools, and help drive a
security aware culture for employees and clients. During
the transformation, Santander established a Global
Cybersecurity Centre in Madrid which provides services
to protect all Group entities, systems and customers by
taking a proactive approach to identifying, monitoring
and responding to cyber threats 24/7.
At the same time, as cyber threats and attack techniques
continue to develop, continuous evolution of cyber
defences is essential. In 2021, the following key
strategic cyber security pillars and initiatives were
established to help Santander evolve its cyber defences
in line with emerging threats and technologies:
Level the “battlefield”: The current threat landscape is
increasingly challenging with new vulnerabilities,
techniques and procedures reported on a daily basis. It
is crucial to take actions that make attacks more
difficult through deterrence, deception and
automation techniques.
Defend the (hyper-connected) Bank of the Future: The
banking ecosystem (platforms, cloud and supply
chain) is increasingly hyper-connected and
interdependent. Cybersecurity teams have been
working on implementing new defence paradigms
such as “Zero Trust” and other innovative solutions.
Generate Value & Trust: Helping customers stay safe
online is key to continue building trust and helping
everyone prosper in the digital world. Additionally,
promoting public-private partnerships and
collaborating to tackle cyber crime is key to protect
customers and society as a whole.
See more information in the Consolidated Directors’
Report.
7. Customer service and
customer defence
Customer Service Annual Report
In accordance with article 17 of order ECO / 734/2004 of
March 11 of the Ministry of Economy on the
departments and services of Customer Service and the
Customer Ombudsman of Financial Institutions, the
directors’ report summarizes the Annual Report to be
presented by the holder of the Service on the Board of
Directors in March 2021.
Customer service and customer defence service
In compliance with Law 44/2002 on Measures for the
Reform of the Financial System of the 734/2004 Order of
the Ministry of Economy on Departments and Services of
Customer Service and the Customer Ombudsman of
Financial Institutions and in accordance with Article 37
Of the Regulations of the Customer Claims and Attention
and Defence Service in Grupo Santander, below is a
summary of the activity developed by the said Service
during 2021, in relation to the management of
complaints and claims.
This complaint and customer service department has
managed during 2021 the claims of 18 companies of
Grupo Santander in Spain, three less than in 2020 after
the liquidation of Santander Brasil at the end of 2020,
the adhesion of Caceis Bank to its own customer service
and the sale of the Popular Vida 2020 business to
Santander Generales Seguros y Reaseguros, S.A., a
company not adhered to this service.
Also, note the name change from Santander Spain
Merchant Services to Getnet Europe.
Global evolution of complaints and claims received by
Banco Santander in 2021
In 2021, 131,029 claims were accepted in the complaint
and customer service department. Of these, 2,071 came
through the Customer Ombudsman, 2,814 through the
Bank of Spain, 216 through the National Securities
Market Commission (CNMV) and 125 through the
General Directorate of Insurance and Pension Funds
(DGSFP).
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Analysis of claims by affected products
Complaints and claims
The following is the classification of complaints received
in 2021 according to the type of product:
Number of complaints
2021
2020
Assets
47,442
47,806
Liabilities
31,314
33,948
Services
18,063
18,967
Insurances
2,178
1,901
Funds and Plans
1,407
1,922
Payment methods
23,503
24,024
Securities / Capital Markets /
Treasury
5,326
25,384
Others
1,736
1,916
131,029
155,868
Resolution of claims and complaints
As of 31 December 2021, 95% of the complaints and
claims received had been resolved.
The average resolution time in 2020 was 34 calendar
days. 67% of the complaints and claims resolved have
required a processing time of more than 15 calendar
days.
In 23% of cases, the resolutions have been favourable to
customers.
Entities
The following are the companies adhering to the
Regulation of the Customer Service of Complaints, Care
and Defence of Grupo Santander and their corresponding
number of complaints and claims received.
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Entities
Admitted to processing
Non-admitted to processing
BANCO SANTANDER, S.A.
114,353
5,922
SANTANDER CONSUMER FINANCE, S.A.
10,076
417
OPEN BANK, S.A.
2,784
25
SANTANDER SEGUROS Y REASEGUROS CÍA. ASEGURADORA,SA
2,115
116
SANTANDER PENSIONES, S.A., E.G.F.P.
767
41
SANTANDER ASSET MANAGEMENT, S.A., S.G.I.I.C.
393
36
GETNET EUROPE, EP, SL
337
13
ALTAMIRA SANTANDER REAL ESTATE, S.A.
137
25
SANTANDER FACTORING Y CONFIRMING, S.A., E.F.C.
31
EURO AUTOMATIC CASH
24
SANTANDER LEASE, S.A., E.F.C.
12
TRANSOLVER FINANCE, E.F.C., S.A.
SANTANDER REAL ESTATE, S.A.
SANTANDER INTERMEDIACIÓN CORREIDURÍA DE SEGUROS, S.A.
LURI 6, S.A.U.
CACEIS BANK SPAIN, S.A.
SANTANDER INVESTMENT, S.A.
SANTANDER BRASIL E.F.C., S.A.
SANTANDER PRIVATE BANKING GESTIÓN, S.A., S.G.I.I.C
SANTANDER CAPITAL DESARROLLO, S.G.E.I.C., S.A.U.
Total
131,029
6,595
The network of branches and the different channels of
relationship solve, in the first instance, the requests,
disconformities or incidents that the clients
communicate to Banco Santander, trying to avoid that
they become complaints to other instances.
8. Risk management, solvency
and capital
See notes 49 and 1.e) on risk and capital to the Bank
Annual Accounts. See more information in the
Consolidated Directors’ Report.
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9. Other relevant information
9.1 Treasury shares:
See note 30 to the Bank Annual Accounts.
The acquisition of treasury shares was last authorized at
our April 2020 AGM, for five years and subject to the
following provisions: 
Treasury shares held at any time cannot exceed 10%
of Banco Santander's share capital, which is the legal
limit set under the Ley de Sociedades de Capital
(Spanish Companies Act). 
The purchase price cannot be lower than the nominal
value of the shares nor exceed 3% of the last trading
price in the Spanish market for any trades in which
Banco Santander does not act on its own behalf.
The board may establish the purposes for and the
procedures through which the authorization may
apply.
On 27 October 2020, the board approved the current
treasury shares policy, which dictates that treasury share
transactions may be carried out for these purposes:
Provide liquidity or supply of securities in the market
for Banco Santander shares, which gives this market
depth and minimizes any temporary imbalances in
supply and demand.
Take advantage for the benefit of all shareholders of
weakness in the share price in relation to its
medium-term outlook.
Meet our obligations to deliver shares to our
employees and directors.
Serve any other purpose authorized by the board
within the limits set at the general meeting.
Among other things, the policy also provides for:
The principles to uphold in treasury share trades,
which include protecting financial markets' integrity
and prohibiting market manipulation and insider
trading.
The operating rules on how treasury share trades
must be carried out, unless in exceptional
circumstances as per the policy. These rules include: 
Responsibility for execution of these trades,
which falls on the Investments and Holdings
department, kept separate from the rest of
Santander.
Venues and types of trades. Trades must
generally be carried out in the orders market of
the mercado continuo (continuous market) of
Spanish stock exchanges.
Volume limits, which in general must not exceed
15% of the average daily trading volume for
Banco Santander shares in the previous 30
sessions in the mercado continuo.
Price limits. In general, (a) buy orders should not
exceed the greater of the price of the last trade in
the market between independent parties or the
highest price in a buy order in the order book and
(b) sell orders should not be lower than the
lesser of the price of the last trade in the market
by independent parties and the lowest price in a
sell order in the order book.
Time limits, including a 15-day black-out period
that applies before each quarterly results
presentation.
Disclosure to the markets of treasury shares trading.
The policy applies to the discretionary trading of treasury
shares. It does not apply to transactions in Banco
Santander shares carried out to hedge market risks or
provide brokerage or hedging for customers.
The full treasury shares policy is at Banco Santander's
corporate website.
On 28 September 2021, the board resolved to execute a
treasury shares buyback programme (First Buyback
Programme) worth up to 841 million euros (20% of the
Group’s underlying profit for H1 2021) according to the
Treasury shares policy and 2021 Shareholder
remuneration policy. It had based its decision on
authorization by the ECB, and by shareholders at the
April 2020 AGM.
In the First Buyback Programme (from 6 October to 25
November 2021), we acquired 259,930,273 treasury
shares —1.499% of Banco Santander’s share capital— at
a weighted average price per share of 3.2355 euros.
The purpose of the First Buyback Programme was to
reduce Banco Santander’s share capital by cancelling the
repurchased shares, which the board put to a vote at the
2022 AGM.
Under the same AGM approval, on 24 February 2022 the
board of directors resolved to execute another shares
repurchase programme at a maximum of 865 million
euros (approximately 20% of the Group’s underlying
profit for H2 2021) as part of shareholder remuneration
charged against 2021 results (Second Buyback
Programme).
The purpose of the Second Buyback Programme is to
reduce Banco Santander’s share capital by cancelling
purchased shares (up to the agreed maximum), for
which the board submitted a resolution for a vote at the
2022 AGM.
The Bank’s shares owned by the consolidated companies
accounted for 1.60% of issued share capital at 31
December 2021.
327
9.2 Dividend policy:
As required in Banco Santander’s by-laws, each year the
shareholder remuneration policy is submitted for
approval by the AGM.
Distribution charged against 2021 results
ECB Recommendation of 15 December 2020, which
asked banks not to pay out dividends charged against
2021 results (ECB Recommendation III), was in force for
over half of 2021.
On 23 July 2021, the ECB believed the reasons
underpinning ECB Recommendation III to limit dividend
payouts were no longer valid and, thus, repealed it
effectively on 30 September 2021.
On 28 September 2021, the board announced its 2021
shareholder remuneration policy to pay out an interim
distribution from approximately 40% of the Group's
underlying profit (half through a cash dividend and half
through a shares buyback).
Interim remuneration.  Accordingly, it authorized the
payment of an interim dividend of 4.85 euro cents
per share (i.e. 20% of the Group's underlying profit
for H1'21), in cash and charged against 2021 profits;
it was paid on 2 November 2021. The board also
voted to launch the First Buyback Programme worth
841 million euros (20% of the Group's underlying
profit for H1'21) once the ECB approved it on 28
September 2021.
Final remuneration. On 24 February 2022, within the
2021 shareholder remuneration policy, the board of
directors voted to:
submit a resolution at the 2022 AGM to approve a
final cash dividend in the gross amount of 5.15
euro cents per share, worth approximately 865
million euros (approximately 20% of the Group’s
underlying profit for H2 2021). If approved at the
AGM, the dividend would be payable from 2 May
2022. The estimate of 865 million euros is based
on the assumption that, once the Second Buyback
Programme has taken place, the number of
outstanding shares entitled to receiving dividends
will be 16,804,353,202. Therefore, the total
dividend may be higher if fewer shares than
anticipated are acquired in the Second Buyback
Programme; otherwise, it will be lower.
implement a Second Buyback Programme worth
865 million euros (approximately 20% of the
Group’s underlying profit for H2 2021), once the
necessary regulatory authorization has been
obtained.
If shareholders approve the dividend payout resolution
and the ECB authorizes the Second Buyback Programme,
it will result in a payout of approximately 40% of the
Group’s underlying attributable profit for 2021. If the
buyback reaches the maximum within the programme
period, remuneration will be split equally between cash
dividends and shares buybacks. This final remuneration
will enable Santander to meet the target set in the
shareholder remuneration policy disclosed to the market
on 28 September 2021.
9.3 Stock market information:
Banco Santander shares are listed on Spanish stock
exchanges (Madrid, Barcelona, Bilbao and Valencia,
under the trading symbol 'SAN'), the New York Stock
Exchange (NYSE) as American Depositary Shares (ADS)
under the trading symbol 'SAN' (each ADS represents
one Banco Santander share), the London Stock Exchange
as Crest Depositary Interests (CDI) under trading symbol
'BNC' (each CDI represents one Banco Santander share),
the Mexican Stock Exchange under the trading symbol
'SAN', and the Warsaw Stock Exchange under the trading
symbol 'SAN'.
The global economy came back strong. Vaccination
programmes enabled a return to economic activity and
mobility amid excess liquidity and expansionary fiscal
policies. Despite uncertainties due to the surge of new
covid-19 variants, positive trends drove a rise in
commodity prices and inflationary pressures, which
rebounded to the highest levels in a decade in the US and
the eurozone.
Central banks in developed economies began a
widespread withdrawal of monetary stimulus. The Bank
of England raised interest rates to 0.25% on the back of
a strong jobs market and high inflation. The US Federal
Reserve announced its intention to start raising rates no
later than mid-2022. The ECB is limiting the withdrawal
of stimulus to liquidity by scaling back its  purchase
programmes.
Major global equity indices ended 2021 with significant
aggregate gains. The banking industry registered better
performance owing to the lifting of restrictions on
dividend payments, favourable results of US bank stress
tests, and better outlooks for most European banks.
The IBEX 35 in Spain increased 7.9%; the DJ Stoxx 50 in
Europe by 22.8%; DJ Banks by 34.0%; and the MSCI
World Banks by 22.7%.
By 31 December 2021, Santander’s market capitalization
of EUR 50,990 million was the second largest in the
eurozone and 24th largest in the world among the
financial institutions.
13,484 million shares traded in the year for an effective
value of EUR 41,195 million and a liquidity ratio of 78%.
The Santander share closed 2021 at 2.941 euros.
At 31 December 2021 the total number of Santander
shareholders was 3,936,922.
328
9.4 Average period of payment to suppliers:
The average period of payment to suppliers during 2021
is 10 days, term which is below the maximum
established in applicable regulations.
10. Events after the reporting
period
No significant events occurred from 1 January 2022 to
the date on which these financial statements were
authorized for issue, other than those described in these
annual accounts.
11. Annual corporate
governance report and Annual
report on directors’
remuneration
According to articles 540 and 541 of the Spanish
Companies Act, Banco Santander, S.A. has prepared the
annual corporate governance report and the annual
report on directors’ remuneration for the year ended 31
December 2021 (that are part of the directors’ report of
that financial year) with the contents determined by
Order ECC/461/2013, of 20 March, and by Circular
3/2021, of 28 September, of the National Securities
Market Commission (CNMV), that modifies Circular
5/2013, of 12 June, that defines the annual corporate
governance report model for listed companies, and
Circular 4/2013, of 12 June, that defines the annual
report on directors’ remuneration model for listed
companies.
The annual corporate governance report includes a
section that refers to the compliance of the corporate
governance recommendations in Spain.
The annual corporate governance report and the annual
report on directors’ remuneration are included, as a
separate section, in the individual directors’ report in
accordance with the provisions of article 538 of the
Corporate Enterprise Act. The aforementioned reports
are sent individually, as other relevant information, to
the CNMV, and are included in the consolidated
directors’ report as a separate section. They are available
on the Bank's corporate website (www.santander.com)
and on the CNMV website (www.cnmv.es).
329
Pursuant to Article 253, section 1 of the revised Spanish Companies Act (Ley de Sociedades de Capital), the
board of directors of Banco Santander, S.A. draws up the individual financial statements (comprising the
balance sheet, the income statement, the statement of recognized income and expense, the statement of
changes in total equity, the statement of cash flows and the notes to the individual financial statements) and
the individual directors’ report for the 2021 fiscal year in eXtensible HyperText Markup Language (XHTML)
format, which conforms to the single electronic reporting format required under Directive 2004/109/EC and
Delegated Regulation (EU) 2019/815.
The directors of Banco Santander, S.A., listed below with an indication of their respective positions, declare
that, to the best of their knowledge, the company's individual financial statements for the 2021 financial year
were drawn up in accordance with the applicable accounting principles and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the company, and that the directors’ report includes a
fair review of the development, performance and position of the company, together with a description of the
principal risks and uncertainties that it faces.
Boadilla del Monte (Madrid), 24 February 2022
ANA PATRICIA BOTÍN-SANZ DE SAUTUOLA Y O’SHEA
Chair
BRUCE CARNEGIE-BROWN                                              JOSÉ ANTONIO ÁLVAREZ ÁLVAREZ
Vice Chair                                                                          Vice Chair and Chief Executive Officer
330
MEMBERS:
HOMAIRA AKBARI
LUIS ISASI FERNÁNDEZ DE BOBADILLA
FRANCISCO JAVIER BOTÍN-SANZ DE
SAUTUOLA Y O’SHEA
HENRIQUE MANUEL DRUMMOND BORGES
CIRNE DE CASTRO
SOL DAURELLA COMADRÁN
SERGIO AGAPITO LIRES RIAL
GINA DÍEZ BARROSO
R. MARTÍN CHÁVEZ MÁRQUEZ
RAMIRO MATO GARCÍA-ANSORENA
BELÉN ROMANA GARCÍA
ÁLVARO ANTONIO CARDOSO DE SOUZA
PAMELA ANN WALKDEN
Pursuant to Article 253, section 1 of the revised Spanish Companies Act (Ley de Sociedades de Capital), the
board of directors of Banco Santander, S.A. draws up the individual financial statements (comprising the
balance sheet, the income statement, the statement of recognized income and expense, the statement of
changes in total equity, the statement of cash flows and the notes to the individual financial statements) and
the individual directors’ report for the 2021 fiscal year in eXtensible HyperText Markup Language (XHTML)
format, which conforms to the single electronic reporting format required under Directive 2004/109/EC and
Delegated Regulation (EU) 2019/815.
The directors of Banco Santander, S.A., listed below with an indication of their respective positions, declare
that, to the best of their knowledge, the company's individual financial statements for the 2021 financial year
were drawn up in accordance with the applicable accounting principles and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the company, and that the directors’ report includes a
fair review of the development, performance and position of the company, together with a description of the
principal risks and uncertainties that it faces.
Boadilla del Monte (Madrid), 24 February 2022
ANA PATRICIA BOTÍN-SANZ DE SAUTUOLA Y O’SHEA
Chair
BRUCE CARNEGIE-BROWN                                                JOSÉ ANTONIO ÁLVAREZ ÁLVAREZ
Vice Chair                                                                          Vice Chair and Chief Executive Officer
MEMBERS:
HOMAIRA AKBARI
LUIS ISASI FERNÁNDEZ DE BOBADILLA
FRANCISCO JAVIER BOTÍN-SANZ DE
SAUTUOLA Y O’SHEA
HENRIQUE MANUEL DRUMMOND BORGES
CIRNE DE CASTRO
SOL DAURELLA COMADRÁN
SERGIO AGAPITO LIRES RIAL
GINA DÍEZ BARROSO
R. MARTÍN CHÁVEZ MÁRQUEZ
RAMIRO MATO GARCÍA-ANSORENA
BELÉN ROMANA GARCÍA
ÁLVARO ANTONIO CARDOSO DE SOUZA
PAMELA ANN WALKDEN
331