SMEs are a strategic segment for the Group

SME GLOBAL STRATEGY

SMEs are a strategic segment for the Group They are the driving force of the economies where we operate: 24 million SMEs in the markets where we operate. Contribute between 30% (e.g. USA) and 60% (e.g. MX) of GDP. Generate 300 million jobs, 66% of total in Europe and 69% in Latin America. Growing presence in international business, up to 40% of exports.

SMEs market share by country 6% 6.5% 11% 30% 8% 11% 18% 20% 9% Spain includes micro companies and SMEs, excludes retailers and the self-employed. UK includes retailers and the self-employed.

SMEs are a strategic segment for the Group They are the driving force of the economies where we operate: 24 million SMEs in the markets where we operate. Contribute between 30% (e.g. USA) and 60% (e.g. MX) of GDP. Generate 300 million jobs, 66% of total in Europe and 69% in Latin America. Growing presence in international business, up to 40% of exports. Significant contribution to Group s results: 3.8 million customers EUR 6.5 billion gross income, 22% of commercial banking. EUR 65 billion in loans. EUR 125 billion of business volume.

SMEs are a strategic segment for the Group We have actively listened to our CUSTOMERS And they tell us that they need much more than financing. At our branches Through surveys Pilot workshops with more than 200 companies Market research Expert reports Education and training for their employees. Access to other markets Constantly updating its technology Means to connect with complementary SMEs Guidelines for management and leadership We looked at the Group s best practices. Breakthrough (UK) Exporta Plan and SME Internship Programme (Spain) International Desk (Latin America) Santandertrade.com Argentina SME training Universities SME Power (Mexico)

Our proposal: Value proposition for SMEs, customers and noncustomers Advance Financing Financing and linkage programme for SMEs Advance Fund SMEs partner of choice for growth Advance Development Recruitment and training International Employment Connectivity

Progressive implementation in the Group s units START MAR-14 2H 14 2015 15% Phase 1: Spain 70% Phase 2: Mexico Brazil UK Phase 3: Other major markets

Advance Financing Linkage and financing programme Outstanding balance (in mn) Growth in balances Dec-13 Dec-14 Santander Market Spain* 26,200 29,100 11% 0% Brazil 8,313 9,727 17% +11%-13% UK 14,029 16,123 15% +2.5% Mexico 2,255 2,900 29% +26% Chile 4,300 4,844 13% 12% * Excluding self-employed and retailers. Advance Fund EUR 250 mn for Spain. Can be expanded and replicated in other markets. Subordinated debt Capital Selected SMEs (operational for at least three years, growing and with a specific investment project). Minimum investment: 1mn; medium / long term financing. New or existing customers.

Advance Development Advance Development Knowledge Institute Development workshops Masterclass 80,000 International International Desk Santander Trade Trade missions Santander Passport (June 2014) 30,000 Jobs and scholarships Scholarships Jobs platform 80,000 Connectivity Santanderadvance.com

Aim of the Advance programme: provide service to 200,000 SMEs in three years 2014 2014* 2016* Spain 20,000 42,000 60,000 Mexico / Brazil / UK 7,500 45,000 90,000 Rest -- 13,000 50,000 27,500 100,000 200,000 * Cumulative figures

Santander, a partner of choice for SMEs We have the capital and liquidity to support SMEs growth. We have the geographic diversification to support their international expansion. We have partnerships to offer (Santander Universities). We have the experience of proven strategies in different countries. We have the necessary teams and tools to help. We are determined to become their partner of choice.

SME GLOBAL STRATEGY SPAIN

dic-12 ene-13 feb-13 mar-13 abr-13 may-13 jun-13 jul-13 ago-13 sep-13 oct-13 nov-13 dic-13 ene-14 We are seeing loan growth and signs of genuine demand SMEs already show credit growth and a rising demand... New loans to SMEs1-25% -9% -7%-6% -13% -20% -19% -12% -16% -1% 4.7% 0% 9.6% 5.0% ECB survey of SMEs Request ed loans Did not seek loans SMEs that needed loans 27% 73% 11% 30% 59% Expected loan to be denied Expected restrictive conditions Did not have sufficient funds of their own 1 New loans to companies of less than 1 million. (Source: Bank of Spain) New loans to SMEs have stopped falling and are growing at 5-10% year-on-year. There is demand from SMEs that only needs a change in the market

SMEs: A strategic segment in Spain and for the bank They are the driving force of the Spanish economy and they make an outstanding contribution to Santander Spain Spain s is an economy based on SMEs They are 1,250,000 90% of corporate Spain They represent > 50% of GDP They generate > 65% of jobs in the private sector They account for 56% of exports 280,000 active customers including companies, SMEs and micro companies > 26 bn loans > 45 bn business volume

We want to be the partner of choice in their growth: Santander Advance Transformation of the business model Financial offer: Products and services centred on the customer. Specialisation, quality, security and agility in loans as an integral part of the business. Areas involved: Business Risks HR Technology Finance The best nonfinancial offer An innovative offer: Unique value offer to help SMEs grow by providing complementary services alongside financing

The pillars of Advance Financing Financing and linkage programme for SMEs Advance Fund Advance Development Recruitment and training International Employment Connectivity

Advance Financing Short-term domestic market financing Advance lending Interest rate discounts depending on linkage Spreads of 3.50%, dependent on linkage and amount Other Advance products to assist with billing and payments Short-term international financing Exporta plan International trade finance: export and import Specialists in international business and support services Discounts for using electronic banking Long-term financing Aim: to be leader in ICO credit lines and EIB funding Competitive products to meet their needs: Mortgage lending Equipment leasing / renting Launch of Bansacar Advance

Advance Financing Advance Fund of 250 million Basic principles Complements traditional financing Independent vehicle, with its own process and risk managements Stated target: SMEs with a record of growth (3 years) Job creation Characteristics Investment: Minimum 1 million Medium- and long-term financing Flexible repayments and guarantees Debt structure: Mainly subordinated debt Eventually, convertible debt or other kind of debt

Advance Development RECRUITMENT AND TRAINING Knowledge Institute Training course (Business management and export training programmes) Online training (languages, other skills) Everything SME leaders need Development workshops/ SME Observatory Workshops in Santander branches with 15-20 SMEs to discuss specific problems Information collected and studied in SME Observatory Business inspiration SME days hosted by regional flagship companies. Business inspiration Themed training videos Testimonials of SME experiences

Advance Development INTERNATIONAL EXPANSION Santander Trade Portal / Club International trade portal. Market research and contact with potential business partners www.santandertrade.com International Desk/ Passport Network of specialists in different countries and regions to support customers in their international growth International Connections Virtual and physical trade missions. We can put SMEs in touch with the different markets where the Santander Group is present. Local events with customers Breakfast: promotional meetings with 15-20 SMEs Talks on international expansion: for 50-75 SMEs

Advance Development EMPLOYMENT Employment Platform to help find employees, including publication of specific vacancies. Capacity for 50,000 job offers from 10,000 SMEs. Santander Scholarships 5,000 scholarships for university students to do internships in SMEs

Advance Development www.santanderadvance.com

What makes Santander Spain s offer different Proximity to SMEs Specialisation Extensive network of universal branches (4,097): Proximity to SMEs Extensive network of corporate branches (224): Largest in Spain Plan to increase number of staff specialising in SMEs from 325 to 600 in the corporate branches In the universal branches we have more than 3,648 sales staff who directly handle SME business Product specialists to support the SME business (353): International and Transactional Banking managers Risk management teams that specialise in SMEs (400): Analysts specialised in managing non-customers Sectorial expertise Commitment to respond to every request: 3 days Risk pre-classification for SMEs to analyse their future needs International presence Presence in 15 countries: Support for SMEs in their international expansion

Advance Financing goals for 2014 Loans New loan production + 24% 30.7 billion Customers Capture 22% Linkage 29%

Advance Development goals for 2014 20,000 SMEs will access various training initiatives, internationalization and employment In addition, 6,000 university students will benefit from Santander scholarships Main goals in 2014 Training International Employment 8,500 trained SMEs 1,500 pymes with international initiatives 10,000 SMEs in job portal/5,000 scholarships Partners for growth 20,000 SMEs will benefit from Advance Development

Conclusions SMEs are a strategic segment for the country and for Santander Spain Banco Santander is launching: A unique programme in the market With a range of products with very competitive financial conditions and Based on entirely new non-financial solutions to support SMEs 2014 ADVANCE PROGRAMME EUR 31 billion available to SMEs 20,000 SMEs in non-financial programme

SME GLOBAL STRATEGY