Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of November, 2015

Commission File Number: 001-12518

Banco Santander, S.A.

(Exact name of registrant as specified in its charter)

Ciudad Grupo Santander

28660 Boadilla del Monte (Madrid) Spain

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F x Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ¨ No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ¨ No x

Banco Santander, S.A.

TABLE OF CONTENTS


Item

1		Banco Santander, S.A. and Companies composing Santander Group Interim Condensed Consolidated Financial Statements as at 30 September 2015

This Form 6-K is incorporated by reference into Banco Santander, S.A.’s Registration Statement on Form F-3 (File No. 333-207389) filed with the Securities and Exchange Commission.

Banco Santander, S.A. and Companies composing Santander Group

Interim Condensed Consolidated Financial Statements as at 30 September 2015

Translation of interim condensed consolidated financial statements originally issued in Portuguese and prepared in accordance with the regulatory financial reporting framework applicable to the Group (see Notes 1 and 16). In the event of a discrepancy, the Portuguese-language version prevails.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of euros)


ASSETS	Note	30/09/15		31/12/14 (*)

CASH AND BALANCES WITH CENTRAL BANKS			70,841		69,428

FINANCIAL ASSETS HELD FOR TRADING	5		149,903		148,888

OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS	5		52,110		42,673

AVAILABLE-FOR-SALE FINANCIAL ASSETS	5		117,835		115,250

LOANS AND RECEIVABLES	5		816,666		781,635

HELD-TO-MATURITY INVESTMENTS	5		4,405		—

CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK			1,649		1,782

HEDGING DERIVATIVES			8,323		7,346

NON-CURRENT ASSETS HELD FOR SALE	6		5,568		5,376

INVESTMENTS:			3,278		3,471
Associates			1,724		1,775
Jointly controlled entities			1,554		1,696

INSURANCE CONTRACTS LINKED TO PENSIONS			327		345

REINSURANCE ASSETS			355		340

TANGIBLE ASSETS:	7		24,188		23,256
Property, plant and equipment			18,478		16,889
Investment property			5,710		6,367

INTANGIBLE ASSETS:	8		29,853		30,401
Goodwill			26,777		27,548
Other intangible assets			3,076		2,853

TAX ASSETS:			27,117		27,956
Current			5,591		5,792
Deferred			21,526		22,164

OTHER ASSETS			8,009		8,149


TOTAL ASSETS			1,320,427		1,266,296


LIABILITIES AND EQUITY	Note	30/09/15			31/12/14 (*)

FINANCIAL LIABILITIES HELD FOR TRADING	9		112,460			109,792

OTHER FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS	9		58,601			62,317

FINANCIAL LIABILITIES AT AMORTISED COST	9		1,009,568			961,052

CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK			292			31

HEDGING DERIVATIVES			9,173			7,255

LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE			—			21

LIABILITIES UNDER INSURANCE CONTRACTS			644			713

PROVISIONS	10		13,775			15,376

TAX LIABILITIES:			7,379			9,379
Current			2,277			4,852
Deferred			5,102			4,527

OTHER LIABILITIES			9,848			10,646

TOTAL LIABILITIES			1,221,740			1,176,582


SHAREHOLDERS’ EQUITY:	11		103,307			91,663
Share capital			7,158			6,292
Share premium			45,072			38,611
Reserves			45,835			41,160
Other equity instruments			262			265
Less: Treasury shares			(245	)		(10	)
Profit for the period attributable to the Parent			5,941			5,816
Less: Dividends and remuneration	3		(716	)		(471	)

VALUATION ADJUSTMENTS:	11		(14,988	)		(10,858	)
Available-for-sale financial assets			766			1,560
Cash flow hedges			322			204
Hedges of net investments in foreign operations			(3,221	)		(3,570	)
Exchange differences			(9,441	)		(5,385	)
Non-current assets held for sale			—			—
Entities accounted for using the equity method			(233	)		(85	)
Other valuation adjustments			(3,181	)		(3,582	)

NON-CONTROLLING INTERESTS	11		10,368			8,909
Valuation adjustments			(1,401	)		(655	)
Other			11,769			9,564

EQUITY			98,687			89,714

TOTAL LIABILITIES AND EQUITY			1,320,427			1,266,296


MEMORANDUM ITEMS:
CONTINGENT LIABILITIES			40,572			44,078
CONTINGENT COMMITMENTS			216,384			208,040

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated balance sheet as at 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of reais)


ASSETS	Note	30/09/15		31/12/14 (*)

CASH AND BALANCES WITH CENTRAL BANKS			317,424		223,607

FINANCIAL ASSETS HELD FOR TRADING	5		671,685		479,524

OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS	5		233,494		137,437

AVAILABLE-FOR-SALE FINANCIAL ASSETS	5		527,995		371,186

LOANS AND RECEIVABLES	5		3,659,317		2,517,411

HELD-TO-MATURITY INVESTMENTS	5		19,738		—

CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK			7,389		5,739

HEDGING DERIVATIVES			37,294		23,659

NON-CURRENT ASSETS HELD FOR SALE	6		24,949		17,314

INVESTMENTS:			14,688		11,179
Associates			7,725		5,717
Jointly controlled entities	2		6,963		5,462

INSURANCE CONTRACTS LINKED TO PENSIONS			1,465		1,111

REINSURANCE ASSETS			1,591		1,095

TANGIBLE ASSETS:	7		108,382		74,900
Property, plant and equipment			82,797		54,394
Investment property			25,585		20,506

INTANGIBLE ASSETS:	8		133,765		97,913
Goodwill			119,982		88,724
Other intangible assets			13,783		9,189

TAX ASSETS:			121,506		90,037
Current			25,052		18,653
Deferred			96,454		71,384

OTHER ASSETS			35,887		26,246


TOTAL ASSETS			5,916,569		4,078,358


LIABILITIES AND EQUITY	Note	30/09/15			31/12/14 (*)

FINANCIAL LIABILITIES HELD FOR TRADING	9		503,910			353,607

OTHER FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS	9		262,580			200,704

FINANCIAL LIABILITIES AT AMORTISED COST	9		4,523,673			3,095,261

CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK			1,308			100

HEDGING DERIVATIVES			41,102			23,366

LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE			—			68

LIABILITIES UNDER INSURANCE CONTRACTS			2,886			2,296

PROVISIONS	10		61,722			49,521

TAX LIABILITIES:			33,064			30,207
Current			10,203			15,627
Deferred			22,861			14,580

OTHER LIABILITIES			44,126			34,288

TOTAL LIABILITIES			5,474,371			3,789,418


SHAREHOLDERS’ EQUITY:	11		260,861			222,664
Share capital			17,776			15,027
Share premium			107,384			86,908
Reserves			117,931			103,480
Other equity instruments			651			613
Less: Treasury shares			(1,100	)		(31	)
Profit for the period attributable to the Parent			20,715			18,135
Less: Dividends and remuneration	3		(2,496	)		(1,468	)

VALUATION ADJUSTMENTS:	11		134,883			37,584
Available-for-sale financial assets			3,432			5,026
Cash flow hedges			1,444			657
Hedges of net investments in foreign operations			(14,431	)		(11,497	)
Exchange differences			159,735			55,206
Non-current assets held for sale			—			—
Entities accounted for using the equity method			(1,044	)		(272	)
Other valuation adjustments			(14,253	)		(11,536	)

NON-CONTROLLING INTERESTS	11		46,454			28,692
Valuation adjustments			16,516			4,936
Other			29,938			23,756

EQUITY			442,198			288,940

TOTAL LIABILITIES AND EQUITY			5,916,569			4,078,358


MEMORANDUM ITEMS:
CONTINGENT LIABILITIES			181,795			141,962
CONTINGENT COMMITMENTS			969,573			670,034

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated balance sheet as at 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Millions of euros)


	Note	(Debit) Credit
	Note	01/07/15 to 30/09/15			01/07/14 to 30/09/14			01/01/15 to 30/09/15			01/01/14 to 30/09/14 (*)

INTEREST AND SIMILAR INCOME			14,087			13,954			43,269			40,534
INTEREST EXPENSE AND SIMILAR CHARGES			(6,105	)		(6,482	)		(18,345	)		(18,700	)
NET INTEREST INCOME			7,982			7,472			24,924			21,834
INCOME FROM EQUITY INSTRUMENTS			74			72			347			323
SHARE OF RESULTS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD			93			72			293			180
FEE AND COMMISSION INCOME			3,219			3,178			9,825			9,212
FEE AND COMMISSION EXPENSE			(746	)		(740	)		(2,241	)		(2,040	)
GAINS/LOSSES ON FINANCIAL ASSETS AND LIABILITIES (net)			(266	)		1,378			(564	)		2,706
EXCHANGE DIFFERENCES (net)			933			(427	)		2,266			(477	)
OTHER OPERATING INCOME			1,056			1,242			2,900			4,186
OTHER OPERATING EXPENSES			(998	)		(1,286	)		(2,751	)		(4,352	)
GROSS INCOME			11,347			10,961			34,999			31,572
ADMINISTRATIVE EXPENSES			(4,731	)		(4,511	)		(14,342	)		(13,232	)
Staff costs			(2,717	)		(2,572	)		(8,308	)		(7,571	)
Other general administrative expenses			(2,014	)		(1,939	)		(6,034	)		(5,661	)
DEPRECIATION AND AMORTISATION CHARGE			(611	)		(561	)		(1,806	)		(1,726	)
PROVISIONS (net)			(621	)		(496	)		(2,181	)		(2,002	)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (net)	5		(2,553	)		(2,789	)		(7,848	)		(8,158	)
IMPAIRMENT LOSSES ON OTHER ASSETS (net)			(68	)		(52	)		(355	)		(883	)
GAINS/(LOSSES) ON DISPOSAL OF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE			44			59			237			2,361
GAINS FROM BARGAIN PURCHASES ARISING IN BUSINESS COMBINATIONS			—			—			—			—
GAINS/(LOSSES) ON NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS	6		(29	)		(52	)		(85	)		(137	)
PROFIT BEFORE TAX	12		2,778			2,559			8,619			7,795
INCOME TAX			(787	)		(650	)		(1,552	)		(2,598	)
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS			1,991			1,909			7,067			5,197
LOSS FROM DISCONTINUED OPERATIONS (net)			—			(7	)		—			(7	)
CONSOLIDATED PROFIT FOR THE PERIOD			1,991			1,902			7,067			5,190
Profit attributable to the Parent			1,680			1,605			5,941			4,361
Profit attributable to non-controlling interests			311			297			1,126			829
EARNINGS PER SHARE:
From continuing and discontinued operations:
Basic earnings per share (euros)	3		0,11			0,13			0,41			0,37
Diluted earnings per share (euros)	3		0,11			0,13			0,41			0,37

From continuing operations:
Basic earnings per share (euros)	3		0,11			0,13			0,41			0,37
Diluted earnings per share (euros)	3		0,11			0,13			0,41			0,37

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated income statement

for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Millions of reais)


	Note		(Debit) Credit
	Note		01/07/15 to 30/09/15			01/07/14 to 30/09/14 (*)			01/01/15 to 30/09/15			01/01/14 to 30/09/14 (*)

INTEREST AND SIMILAR INCOME				54,484			41,995			150,868			125,626
INTEREST EXPENSE AND SIMILAR CHARGES				(23,538	)		(19,514	)		(63,965	)		(57,956	)
NET INTEREST INCOME				30,946			22,481			86,903			67,670
INCOME FROM EQUITY INSTRUMENTS				308			211			1,210			1,001
SHARE OF RESULTS OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD				361			219			1,022			558
FEE AND COMMISSION INCOME				12,438			9,566			34,257			28,550
FEE AND COMMISSION EXPENSE				(2,876	)		(2,232	)		(7,814	)		(6,323	)
GAINS/LOSSES ON FINANCIAL ASSETS AND LIABILITIES (net)				(981	)		4,208			(1,966	)		8,386
EXCHANGE DIFFERENCES (net)				3,498			(1,320	)		7,901			(1,478	)
OTHER OPERATING INCOME				4,020			3,707			10,111			12,973
OTHER OPERATING EXPENSES				(3,802	)		(3,842	)		(9,592	)		(13,488	)
GROSS INCOME				43,912			32,998			122,032			97,849
ADMINISTRATIVE EXPENSES				(18,264	)		(13,568	)		(50,007	)		(41,010	)
Staff costs				(10,502	)		(7,737	)		(28,968	)		(23,465	)
Other general administrative expenses				(7,762	)		(5,831	)		(21,039	)		(17,545	)
DEPRECIATION AND AMORTISATION CHARGE				(2,350	)		(1,682	)		(6,297	)		(5,349	)
PROVISIONS (net)				(2,452	)		(1,468	)		(7,604	)		(6,205	)
IMPAIRMENT LOSSES ON FINANCIAL ASSETS (net)		5		(9,875	)		(8,392	)		(27,364	)		(25,284	)
IMPAIRMENT LOSSES ON OTHER ASSETS (net)				(289	)		(119	)		(1,237	)		(2,734	)
GAINS/(LOSSES) ON DISPOSAL OF ASSETS NOT CLASSIFIED AS NON-CURRENT ASSETS HELD FOR SALE				189			73			826			7,317
GAINS FROM BARGAIN PURCHASES ARISING IN BUSINESS COMBINATIONS				—			—			—			—
GAINS/(LOSSES) ON NON-CURRENT ASSETS HELD FOR SALE NOT CLASSIFIED AS DISCONTINUED OPERATIONS		6		(111	)		(159	)		(296	)		(425	)
PROFIT BEFORE TAX		12		10,760			7,683			30,053			24,159
INCOME TAX				(2,884	)		(1,922	)		(5,411	)		(8,052	)
PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS				7,876			5,761			24,642			16,107
LOSS FROM DISCONTINUED OPERATIONS (net)				—			(21	)		—			(22	)
CONSOLIDATED PROFIT FOR THE PERIOD				7,876			5,740			24,642			16,085
Profit attributable to the Parent				6,641			4,845			20,715			13,516
Profit attributable to non-controlling interests				1,235			895			3,927			2,569
EARNINGS PER SHARE:
From continuing and discontinued operations:
Basic earnings per share (reais)		3		0,44			0,40			1,42			1,14
Diluted earnings per share (reais)		3		0,44			0,39			1,42			1,14

From continuing operations:
Basic earnings per share (reais)		3		0,44			0,40			1,42			1,13
Diluted earnings per share (reais)		3		0,44			0,39			1,42			1,13

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated income statement

for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE

(Millions of euros)


	Note	01/07/15 to 30/09/15			01/07/14 to 30/09/14 (*)			01/01/15 to 30/09/15			01/01/14 to 30/09/14 (*)

CONSOLIDATED PROFIT FOR THE PERIOD			1,991			1,902			7,067			5,190

OTHER RECOGNISED INCOME AND EXPENSE:			(5,335	)		1,291			(4,876	)		4,119
Items that will not be reclassified to profit or loss			606			(122	)		438			(215	)
Actuarial gains and losses on defined benefit pension plans	11		847			(161	)		659			(287	)
Non-current assets held for sale			—			—			—			—
Income tax relating to items that will not be reclassified to profit or loss			(241	)		39			(221	)		72
Items that may be reclassified subsequently to profit or loss for the period			(5941	)		1,413			(5,314	)		4,334
Available-for-sale financial assets:	11		(25	)		142			(1,298	)		1,592
Revaluation gains/(losses)			(48	)		869			(845	)		2,979
Amounts transferred to income statement			(23	)		(727	)		(453	)		(1,387	)
Other reclassifications			—			—			—			—
Cash flow hedges:			285			217			112			413
Revaluation gains/(losses)			520			326			712			687
Amounts transferred to income statement			(235	)		(109	)		(600	)		(274	)
Amounts transferred to initial carrying amount of hedged items			—			—			—			—
Other reclassifications			—			—			—			—
Hedges of net investments in foreign operations:	11		1,463			(698	)		349			(1,785	)
Revaluation gains/(losses)			1,463			(698	)		349			(1,785	)
Amounts transferred to income statement			—			—			—			—
Other reclassifications			—			—			—			—
Exchange differences:	11		(7,544	)		1,835			(4,726	)		4,464
Revaluation gains/(losses)			(7,544	)		1,835			(4,726	)		4,460
Amounts transferred to income statement			—			—			—			4
Other reclassifications			—			—			—			—
Non-current assets held for sale:			—			—			—			—
Revaluation gains/(losses)			—			—			—			—
Amounts transferred to income statement			—			—			—			—
Other reclassifications			—			—			—			—
Entities accounted for using the equity method:			(106	)		11			(148	)		236
Revaluation gains/(losses)			(97	)		12			(142	)		236
Amounts transferred to income statement			9			(1	)		(6	)		—
Other reclassifications			—			—			—			—
Income tax			(14	)		(94	)		397			(586	)
TOTAL RECOGNISED INCOME AND EXPENSE			(3,344	)		3,193			2,191			9,309

Attributable to the Parent			(2,901	)		2,895			1,811			7,946
Attributable to non-controlling interests			(443	)		298			380			1,363

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of recognised income and expense for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE

(Millions of reais)


	Note	01/07/15 to 30/09/15			01/07/14 to 30/09/14 (*)			01/01/15 to 30/09/15			01/01/14 to 30/09/14 (*)

CONSOLIDATED PROFIT FOR THE PERIOD			7,876			5,740			24,642			16,085

OTHER RECOGNISED INCOME AND EXPENSE:			80,817			11,113			108,879			(1,301	)
Items that will not be reclassified to profit or loss			2,082			(377	)		1,527			(666	)
Actuarial gains and losses on defined benefit pension plans	11		2,919			(496	)		2,298			(889	)
Non-current assets held for sale			—			—			—			—
Income tax relating to items that will not be reclassified to profit or loss			(837	)		119			(771	)		223
Items that may be reclassified subsequently to profit or loss for the period			78,735			11,490			107,352			(635	)
Available-for-sale financial assets:	11		(321	)		374			(4,526	)		4,934
Revaluation gains/(losses)			(314	)		2,597			(2,947	)		9,233
Amounts transferred to income statement			(7	)		(2,223	)		(1,579	)		(4,299	)
Other reclassifications			—			—			—			—
Cash flow hedges:			962			663			391			1,280
Revaluation gains/(losses)			1,848			993			2,483			2,129
Amounts transferred to income statement			(886	)		(330	)		(2,092	)		(849	)
Amounts transferred to initial carrying amount of hedged items			—			—			—			—
Other reclassifications			—			—			—			—
Hedges of net investments in foreign operations:	11		4,896			(2,112	)		1,217			(5,532	)
Revaluation gains/(losses)			4,896			(2,112	)		1,217			(5,532	)
Amounts transferred to income statement			—			—			—			—
Other reclassifications			—			—			—			—
Exchange differences:	11		73,548			12,804			109,402			(232	)
Revaluation gains/(losses)			73,548			12,805			109,402			(244	)
Amounts transferred to income statement			—			(1	)		—			12
Other reclassifications			—			—			—			—
Non-current assets held for sale:			—			—			—			—
Revaluation gains/(losses)			—			—			—			—
Amounts transferred to income statement			—			—			—			—
Other reclassifications			—			—			—			—
Entities accounted for using the equity method:			(377	)		26			(516	)		731
Revaluation gains/(losses)			(346	)		29			(495	)		731
Amounts transferred to income statement			(31	)		(3	)		(21	)		—
Other reclassifications			—			—			—			—
Income tax			27			(265	)		1,384			(1,816	)
TOTAL RECOGNISED INCOME AND EXPENSE			88,693			16,853			133,521			14,784

Attributable to the Parent			79,632			15,091			118,014			11,914
Attributable to non-controlling interests			9,061			1,762			15,507			2,870

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of recognised income and expense for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY

(Millions of euros)


	Equity attributable to the Parent
	Shareholders’ equity
	Share capital		Share premium and reserves less dividends and remuneration			Other equity instruments			Less: Treasury shares			Profit for the period attributable to the Parent			Valuation adjustments			Non-controlling interests			Total equity
*Balance as at 31/12/14 ()**		6,292		79,300			265			(10	)		5,816			(10,858	)		8,909			89,714
Adjustments due to changes in accounting policies		—		—			—			—			—			—			—			—
Adjustments due to errors		—		—			—			—			—			—			—			—
*Adjusted beginning balance ()**		6,292		79,300			265			(10	)		5,816			(10,858	)		8,909			89,714

Total recognised income and expense		—		—			—			—			5,941			(4,130	)		380			2,191

Other changes in equity		866		10,891			(3	)		(235	)		(5,816	)		—			1,079			6,782
Capital increases/(reductions)		866		6,573			—			—			—			—			317			7,756
Conversion of financial liabilities into equity		—		—			—			—			—			—			—			—
Increases in other equity instruments		—		—			85			—			—			—			873			958
Reclassification from/to financial liabilities		—		—			—			—			—			—			—			—
Distribution of dividends		—		(1,389	)		—			—			—			—			(325	)		(1,714	)
Transactions involving own equity instruments (net)		—		19			—			(235	)		—			—			—			(216	)
Transfers between equity items		—		5,816			—			—			(5,816	)		—			—			—
Increases/(decreases) due to business combinations		—		—			—			—			—			—			622			622
Equity-instrument-based payments		—		—			(73	)		—			—			—			—			(73	)
Other increases/(decreases) in equity		—		(128	)		(15	)		—			—			—			(408	)		(551	)
Balance as at 30/09/15		7,158		90,191			262			(245	)		5,941			(14,988	)		10,368			98,687

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of changes in total equity for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY

(Millions of reais)


	Equity attributable to the Parent
	Shareholders’ equity
	Share capital		Share premium and reserves less dividends and remuneration			Other equity instruments			Less: Treasury shares			Profit for the period attributable to the Parent			Valuation adjustments		Non-controlling interests			Total equity
*Balance as at 31/12/14 ()**		15,027		188,920			613			(31	)		18,135			37,584		28,692			288,940
Adjustments due to changes in accounting policies		—		—			—			—			—			—		—			—
Adjustments due to errors		—		—			—			—			—			—		—			—
*Adjusted beginning balance ()**		15,027		188,920			613			(31	)		18,135			37,584		28,692			288,940

Total recognised income and expense		—		—			—			—			20,715			97,299		15,507			133,521

Other changes in equity		2,749		33,899			38			(1,069	)		(18,135	)		—		2,255			19,737
Capital increases/(reductions)		2,749		20,882			—			—			—			—		1,050			24,681
Conversion of financial liabilities into equity		—		—			—			—			—			—		—			—
Increases in other equity instruments		—		—			296			—			—			—		3,014			3,310
Reclassification from/to financial liabilities		—		—			—			—			—			—		—			—
Distribution of dividends		—		(4,595	)		—			—			—			—		(1,090	)		(5,685	)
Transactions involving own equity instruments (net)		—		66			—			(1,069	)		—			—		—			(1,003	)
Transfers between equity items		—		18,135			—			—			(18,135	)		—		—			—
Increases/(decreases) due to business combinations		—		—			—			—			—			—		2,169			2,169
Equity-instrument-based payments		—		—			(255	)		—			—			—		—			(255	)
Other increases/(decreases) in equity		—		(589	)		(3	)		—			—			—		(2,888	)		(53,480	)
Balance as at 30/09/15		17,776		222,819			651			(1,100	)		20,715			134,883		46,454			442,198

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of changes in total equity for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY

(Millions of euros)


	Equity attributable to the Parent (*)
	Shareholders’ equity
	Share capital		Share premium and reserves less dividends and remuneration			Other equity instruments			Less: Treasury shares			Profit for the period attributable to the Parent			Valuation adjustments			Non-controlling interests (*)			Total equity (*)
Balance as at 31/12/13		5,667		74,519			193			(9	)		4,370			(14,152	)		9,314			79,902
Adjustments due to changes in accounting policies		—		—			—			—			—			—			—			—
Adjustments due to errors		—		—			—			—			—			—			—			—
Adjusted beginning balance		5,667		74,519			193			(9	)		4,370			(14,152	)		9,314			79,902

Total recognised income and expense		—		—			—			—			4,361			3,585			1,363			9,309

Other changes in equity		327		3,047			98			(49	)		(4,370	)		—			21			(926	)
Capital increases/(reductions)		327		(330	)		—			—			—			—			(525	)		(528	)
Conversion of financial liabilities into equity		—		—			—			—			—			—			—			—
Increases in other equity instruments		—		—			209			—			—			—			—			209
Reclassification from/to financial liabilities		—		—			—			—			—			—			—			—
Distribution of dividends		—		(664	)		—			—			—			—			(307	)		(971	)
Transactions involving own equity instruments (net)		—		37			—			(49	)		—			—			—			(12	)
Transfers between equity items		—		4,423			(53	)		—			(4,370	)		—			—			—
Increases/(decreases) due to business combinations		—		—			—			—			—			—			103			103
Equity-instrument-based payments		—		—			(51	)		—			—			—			—			(51	)
Other increases/(decreases) in equity		—		(419	)		(7	)		—			—			—			750			324
Balance as at 30/09/14		5,994		77,566			291			(58	)		4,361			(10,567	)		10,698			88,285

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement of changes in total equity for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY

(Millions of reais)


	Equity attributable to the Parent (*)
	Shareholders’ equity
	Share capital		Share premium and reserves less dividends and remuneration			Other equity instruments			Less: Treasury shares			Profit for the period attributable to the Parent			Valuation adjustments			Non-controlling interests (*)			Total equity (*)
Balance as at 31/12/13		13,069		175,003			389			(28	)		12,463			29,055			30,338			260,289
Adjustments due to changes in accounting policies		—		—			—			—			—			—			—			—
Adjustments due to errors		—		—			—			—			—			—			—			—
Adjusted beginning balance		13,069		175,003			389			(28	)		12,463			29,055			30,338			260,289

Total recognised income and expense		—		—			—			—			13,516			(1,602	)		2,870			14,784

Other changes in equity		1,030		8,540			308			(151	)		(12,463	)		—			(237	)		(2,973	)
Capital increases/(reductions)		1,030		(1,038	)		—			—			—			—			(1,724	)		(1,732	)
Conversion of financial liabilities into equity		—		—			—			—			—			—			—			—
Increases in other equity instruments		—		—			648			—			—			—			—			648
Reclassification from/to financial liabilities		—		—			—			—			—			—			—			—
Distribution of dividends		—		(1,949	)		—			—			—			—			(951	)		(2,900	)
Transactions involving own equity instruments (net)		—		115			—			(151	)		—			—			—			(36	)
Transfers between equity items		—		12,627			(164	)		—			(12,463	)		—			—			—
Increases/(decreases) due to business combinations		—		—			—			—			—			—			323			323
Equity-instrument-based payments		—		—			(158	)		—			—			—			—			(158	)
Other increases/(decreases) in equity		—		(1,215	)		(18	)		—			—			—			2,115			882
Balance as at 30/09/14		14,099		183,543			697			(179	)		13,516			27,453			32,971			272,100

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of changes in total equity for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of euros)


	Note	30/09/15			30/09/14 (*)

A. CASH FLOWS FROM OPERATING ACTIVITIES			(1,122	)		(352	)

Consolidated profit for the period			7,067			5,190
Adjustments made to obtain the cash flows from operating activities:			13,767			14,049
Depreciation and amortisation charge			1,806			1,726
Other adjustments			11,961			12,323
Net increase/(decrease) in operating assets and liabilities:			(20,729	)		(19,047	)
Operating assets			(62,937	)		(62,766	)
Operating liabilities			42,208			43,719
Income tax recovered/(paid)			(1,227	)		(544	)

B. CASH FLOWS FROM INVESTING ACTIVITIES			(3,430	)		(3,579	)

Payments:			7,429			(6,155	)
Tangible assets	7		5,736			(4,748	)
Intangible assets			615			(850	)
Investments			56			(34	)
Subsidiaries and other business units	2		1,022			(523	)
Non-current assets held for sale and associated liabilities			—			—
Held-to-maturity investments			—			—
Other payments related to investing activities			—			—
Proceeds:			3,999			2,576
Tangible assets	7		2,577			986
Intangible assets			7			—
Investments			277			286
Subsidiaries and other business units			497			664
Non-current assets held for sale and associated liabilities	6		641			640
Held-to-maturity investments			—			—
Other proceeds related to investing activities			—			—

C. CASH FLOWS FROM FINANCING ACTIVITIES			9,306			219

Payments:			5,029			(6,456	)
Dividends	3		1,389			(664	)
Subordinated liabilities			689			(3,399	)
Redemption of own equity instruments			—			—
Acquisition of own equity instruments			2,678			(2,393	)
Other payments related to financing activities			273			—
Proceeds:			14,335			6,675
Subordinated liabilities			3,486			4,295
Issuance of own equity instruments	11		7,500			—
Disposal of own equity instruments			2,469			2,380
Other proceeds related to financing activities			880			—

D. EFFECT OF FOREIGN EXCHANGE RATE CHANGES			(3,341	)		3,087

E. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS			1,413			(625	)

F. CASH AND CASH EQUIVALENTS AS AT BEGINNING OF PERIOD			69,428			77,103

G. CASH AND CASH EQUIVALENTS AS AT END OF PERIOD			70,841			76,478


COMPONENTS OF CASH AND CASH EQUIVALENTS AS AT END OF PERIOD
Cash			6,288			5,333
Cash equivalents at central banks			64,553			71,145
Other financial assets			—			—
Less - Bank overdrafts refundable on demand			—			—

TOTAL CASH AND CASH EQUIVALENTS AS AT END OF PERIOD			70,841			76,478

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of cash flows for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

SANTANDER GROUP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of reais)


	Note	30/09/15			30/09/14 (*)

A. CASH FLOWS FROM OPERATING ACTIVITIES			(3,912	)		(1,091	)

Consolidated profit for the period			24,642			16,085
Adjustments made to obtain the cash flows from operating activities:			48,002			43,541
Depreciation and amortisation charge			6,297			5,349
Other adjustments			41,705			38,192
Net increase/(decrease) in operating assets and liabilities:			(72,278	)		(59,031	)
Operating assets			(219,446	)		(194,525	)
Operating liabilities			147,168			135,494
Income tax recovered/(paid)			(4,278	)		(1,686	)

B. CASH FLOWS FROM INVESTING ACTIVITIES			(11,957	)		(11,091	)

Payments:			25,902			(19,171	)
Tangible assets	7		20,000			(14,716	)
Intangible assets			2,144			(2,745	)
Investments			195			(105	)
Subsidiaries and other business units	2		3,563			(1,605	)
Non-current assets held for sale and associated liabilities			—			—
Held-to-maturity investments			—			—
Other payments related to investing activities			—			—
Proceeds:			13,945			8,080
Tangible assets	7		8,986			3,057
Intangible assets			24			—
Investments			966			889
Subsidiaries and other business units			1,733			2,150
Non-current assets held for sale and associated liabilities	6		2,236			1,984
Held-to-maturity investments			—			—
Other proceeds related to investing activities			—			—

C. CASH FLOWS FROM FINANCING ACTIVITIES			30,375			678

Payments:			17,287			(20,009	)
Dividends	3		4,595			(1,949	)
Subordinated liabilities			2,402			(10,643	)
Redemption of own equity instruments			—			—
Acquisition of own equity instruments			9,338			(7,417	)
Other payments related to financing activities			952			—
Proceeds:			47,662			20,687
Subordinated liabilities			12,155			13,311
Issuance of own equity instruments	11		23,830			—
Disposal of own equity instruments			8,609			7,376
Other proceeds related to financing activities			3,068			—

D. EFFECT OF FOREIGN EXCHANGE RATE CHANGES			79,311			(3,955	)

E. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS			93,817			(15,459	)

F. CASH AND CASH EQUIVALENTS AS AT BEGINNING OF PERIOD			223,607			251,171

G. CASH AND CASH EQUIVALENTS AS AT END OF PERIOD			317,424			235,712


COMPONENTS OF CASH AND CASH EQUIVALENTS AS AT END OF PERIOD
Cash			28,175			16,437
Cash equivalents at central banks			289,249			219,275
Other financial assets			—			—
Less - Bank overdrafts refundable on demand			—			—

TOTAL CASH AND CASH EQUIVALENTS AS AT END OF PERIOD			317,424			235,712

(*)	Presented for comparison purposes only (see Note 1.e).

The accompanying explanatory Notes 1 to 16 are an integral part of the condensed consolidated statement

of cash flows for the period ended 30 September 2015.

In the event of a discrepancy, the Portuguese-language version prevails.

Banco Santander, S.A. and Companies composing Santander Group

Explanatory notes to the interim condensed consolidated financial statements for the period ended 30 September 2015

1.	Introduction, basis of presentation of the interim condensed consolidated financial statements and other information

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. The Bylaws and other public information on the Bank can be consulted on the website of the Bank (www.santander.com) and at its registered office at Paseo de Pereda 9-12, Santander.

In addition to the operations carried on directly by it, the Bank is the head of a group of subsidiaries that engage in various business activities and which compose, together with it, Santander Group (“the Group” or “Santander Group”).

These interim condensed consolidated financial statements (“interim financial statements”) were prepared and signed by the Group’s directors at the board meeting held on 28 October 2015.

Basis of presentation of the interim financial statements

Under Regulation (EC) no. 1606/02 of the European Parliament and of the Council of 19 July 2002, all companies governed by the law of an EU Member State and whose securities are admitted to trading on a regulated market of any Member State must prepare their consolidated financial statements for the years beginning on or after 1 January 2005 in accordance with the International Financial Reporting Standards (IFRSs) previously adopted by the European Union. In order to adapt the accounting system of Spanish credit institutions to the new standards, the Bank of Spain issued Circular 4/04, of 22 December, on Public and Confidential Financial Reporting Rules and Formats.

Banco Santander, S.A.’s policy is to present its interim financial statements using the euro as its presentation currency, for their use in the various markets. These interim financial statements were prepared to comply with the requirements and specific provisions established in CVM Instruction no. 480/09 of the Securities and Exchange Commission of Brazil (CVM), as a result of the trading of the Bank’s marketable securities in Brazilian regulated markets, which requires the presentation of interim financial statements prepared in accordance with financial reporting standard IAS 34 issued by the IASB, in Brazilian reais and in Brazilian Portuguese. Accordingly, these interim financial statements may not be suitable for other purposes.

The Group’s consolidated financial statements for 2014 prepared in accordance with the requirements and specific provisions of CVM Instruction no. 480/09 of the Securities and Exchange Commission of Brazil were prepared by the Bank (and approved at the board of directors meeting on 23 February 2015) in compliance with International Financial Reporting Standards as adopted by the European Union, taking into account Bank of Spain Circular 4/04, and with the International Financial Reporting Standards adopted by the International Accounting Standards Board (IASB-IFRSs), using the basis of consolidation, accounting policies and

measurement bases described in Note 2 to the aforementioned consolidated financial statements and, accordingly, they presented fairly the Group’s consolidated equity and consolidated financial position as at 31 December 2014 and the consolidated results of its operations, the consolidated recognised income and expense, the changes in consolidated equity and the consolidated cash flows in 2014.

These interim financial statements were prepared and are presented in accordance with IAS 34, Interim Financial Reporting, for the preparation of interim condensed financial statements and contain disclosures relating both to the three-month period ended 30 September 2015 and to the nine-month period then ended.

In accordance with IAS 34, the interim financial report is intended only to provide an update on the content of the latest annual consolidated financial statements formally prepared, focusing on new activities, events and circumstances occurring during the interim period ended 30 September 2015, and does not duplicate information previously reported in the latest approved annual consolidated financial statements. Consequently, these interim financial statements do not include all the information that would be required for a complete set of consolidated financial statements prepared in accordance with IFRSs and, accordingly, for a proper comprehension of the information included in these interim financial statements, they should be read together with the Group’s consolidated financial statements for the year ended 31 December 2014.

These interim financial statements are presented in euros (the Bank’s functional currency and the Group’s presentation currency) and in Brazilian reais. The amounts presented in reais are included solely to comply with the requirements of CVM Instruction no. 480/09 of the Securities and Exchange Commission of Brazil and subsequent amendments thereto. The balances were translated to reais in accordance with the policies set forth in Note 2.a to the Group’s consolidated financial statements for 2014, which were prepared to comply with the requirements and specific provisions of CVM Instruction no. 480/09 of the Securities and Exchange Commission of Brazil. As indicated in the aforementioned Note 2.a, for practical reasons, income and expenses were translated at the average exchange rate for the period; the application of this exchange rate or that corresponding to the date of each transaction does not give rise to significant differences in the Group’s interim financial statements.

The accounting policies and methods used in preparing these interim financial statements are the same as those applied in the consolidated financial statements for 2014, taking into account the standards and interpretations that came into force in the first nine months of 2015. In this connection it should be noted that the following standards came into force for the Group in the nine-month period ended 30 September 2015:

•

Improvements to IFRSs, 2011-2013 cycle (obligatory for reporting periods beginning on or after 1 July 2014) - these improvements introduce minor amendments to IFRS 1, IFRS 3, IFRS 13 and IAS 40.

The application of the aforementioned accounting standards did not have any material effects on the Group’s interim financial statements.

In addition, the Group decided to apply early the following standards (the application of which is obligatory under IASB-IFRSs for annual reporting periods beginning on or after 1 July 2014) under IFRSs adopted by the European Union, as permitted by the corresponding standard:

•

Amendments to IAS 19, Employee Benefits - Defined Benefit Plans: Employee Contributions - these amendments allow employee contributions to be deducted from the service cost in the same period in which they are paid, provided certain requirements are met, without having to perform calculations to attribute the reduction to each year of service.

•

Improvements to IFRSs, 2010-2012 cycle - these improvements introduce minor amendments to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38.

The application of the aforementioned accounting standards did not have any material effects on the Group’s interim financial statements.

Use of estimates

The consolidated results and the determination of consolidated equity are sensitive to the accounting policies, measurement bases and estimates used by the directors of the Bank in preparing the interim financial statements. The main accounting policies and measurement bases are set forth in Note 2 to the consolidated financial statements for 2014.

In the interim financial statements estimates were occasionally made by the senior management of the Bank and of the consolidated entities 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 best information available, relate basically to the following:

The income tax expense, which, in accordance with IAS 34, is recognised in interim periods based on the best estimate of the weighted average tax rate expected by the Group for the full financial year;

The impairment losses on certain assets - available-for-sale financial assets, loans and receivables, held-to-maturity investments, non-current assets held for sale, investments, tangible assets and intangible assets –;

The assumptions used in the calculation of the post-employment benefit liabilities and commitments and other obligations;

The useful life of the tangible and intangible assets;

The measurement of goodwill arising on consolidation;

The calculation of provisions and the consideration of contingent liabilities;

The fair value of certain unquoted assets and liabilities; and

The recoverability of deferred tax assets.

In the nine-month period ended 30 September 2015 there were no significant changes in the estimates made at 2014 year-end other than those indicated in these interim financial statements. In this connection, in relation to the tax-related proceeding concerning the Brazilian PIS and COFINS social contributions and taking into account the latest events, which are described in Note 10.d, in the second quarter of 2015 Banco Santander (Brasil), S.A. reversed tax liabilities amounting to EUR 2,407 million (BRL 7,950 million) (EUR 1,444 million (BRL 4,770 million) net of the tax effect).

Contingent assets and liabilities

Note 2.o to the Group’s consolidated financial statements for the year ended 31 December 2014 includes information on the contingent assets and liabilities at that date. There were no significant changes in the Group’s contingent assets and liabilities from 31 December 2014 to the date of preparation of these interim financial statements.

Comparative information

The information for 2014 contained in these interim financial statements is presented for comparison purposes only with the information relating to the three- and nine-month periods ended 30 September 2015.

In order to interpret the changes in the balances with respect to December 2014, it is necessary to take into consideration the exchange rate effect arising from the volume of foreign currency balances held by the Group in view of its geographic diversity (see Note 51.b to the consolidated financial statements for the year ended 31 December 2014) and the impact of the appreciation/depreciation of the various currencies against the euro in the first nine months of 2015, considering the exchange rates at 30 September 2015: Mexican peso (-5.84%), US dollar (+8.37%), Brazilian real (-28.12%), pound sterling (+5.47%), Chilean peso (-6.06%) and Polish zloty (+0.67%).

Seasonality of the Group’s transactions

In view of the business activities carried on by the Group companies, their transactions are not cyclical or seasonal in nature. Therefore, no specific disclosures are included in these explanatory notes to the Group’s interim financial statements.

Materiality

In determining the note disclosures to be made on the various items in the interim financial statements or other matters, the Group, in accordance with IAS 34, took into account their materiality in relation to the interim financial statements.

Events after the reporting period

It should be noted that from 1 October 2015 to the date on which these interim financial statements were prepared, the following significant event occurred:

•

At its meeting of 16 October 2015, the Bank’s executive committee resolved to apply the Santander Dividendo Elección scrip dividend scheme on the dates on which the second interim dividend is traditionally paid, whereby the shareholders were offered the option of receiving an amount equivalent to said dividend, the gross amount of which was EUR 0.05 per share, in shares or cash.

Condensed consolidated statements of cash flows

The following terms are used in the condensed consolidated 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.

The Group classifies as cash and cash equivalents the balances recognised under Cash and balances with central banks in the condensed consolidated 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.

2.	Santander Group

Appendices I, II and III to the consolidated financial statements for the year ended 31 December 2014 provide relevant information on the Group companies at that date and on the equity-accounted companies.

Also, Note 3 to the aforementioned consolidated financial statements includes a description of the most significant acquisitions and disposals of companies performed by the Group in 2014, 2013 and 2012.

The tables below provide detailed information on the most representative acquisitions of ownership interests in the capital/equity of the aforementioned and other entities, as well as on other significant corporate transactions, performed in the nine-month period ended 30 September 2015:


BUSINESS COMBINATIONS OR OTHER ACQUISITIONS OR INCREASES IN OWNERSHIP INTERESTS IN SUBSIDIARIES, JOINT VENTURES AND/OR INVESTMENTS IN ASSOCIATES (CURRENT PERIOD)
Name of entity (or line of business) acquired or merged	Category		Effective transaction date (dd/mm/yy)		Cost (net) of the combination (a) + (b) (millions of euros)				% of voting power acquired			% of total voting power at entity after acquisition
Name of entity (or line of business) acquired or merged	Category		Effective transaction date (dd/mm/yy)		Amount (net) paid in acquisition + other costs directly attributable to combination (a)		Fair value of equity instruments issued for acquisition of entity (b)		% of voting power acquired			% of total voting power at entity after acquisition
Carfinco Financial Group Inc.		Acquisition		06/03/15		209		—		100.00	%		100.00	%
PSA Finance UK Limited		Acquisition		03/02/15		148		—		50.00	%		50.00	%
Société Financière de Banque SOFIB		Acquisition		02/02/15		462		—		50.00	%		50.00	%


BUSINESS COMBINATIONS OR OTHER ACQUISITIONS OR INCREASES IN OWNERSHIP INTERESTS IN SUBSIDIARIES, JOINT VENTURES AND/OR INVESTMENTS IN ASSOCIATES (CURRENT PERIOD)
Name of entity (or line of business) acquired or merged	Category		Effective transaction date (dd/mm/yy)		Cost (net) of the combination (a) + (b) (millions of reais)				% of voting power acquired			% of total voting power at entity after acquisition
Name of entity (or line of business) acquired or merged	Category		Effective transaction date (dd/mm/yy)		Amount (net) paid in acquisition + other costs directly attributable to combination (a)		Fair value of equity instruments issued for acquisition of entity (b)		% of voting power acquired			% of total voting power at entity after acquisition
Carfinco Financial Group Inc.		Acquisition		06/03/15		680		—		100.00	%		100.00	%
PSA Finance UK Limited		Acquisition		03/02/15		445		—		50.00	%		50.00	%
Société Financière de Banque SOFIB		Acquisition		02/02/15		1,391		—		50.00	%		50.00	%

There were no significant disposals of ownership interests in the first nine months of 2015.

The most significant transactions performed in the nine-month period ended 30 September 2015 were as follows:

Agreement with Banque PSA Finance

As part of the agreement for the operation of the PSA Peugeot Citroën Group’s vehicle financing business entered into by the Group, through its subsidiary Santander Consumer Finance, S.A., and Banque PSA Finance, in January 2015 the related regulatory authorisations to commence activities in France and the United Kingdom were obtained and, accordingly, on 2 and 3 February 2015 the Group acquired 50% of Société Financière de Banque - SOFIB and PSA Finance UK Limited for EUR 462 million and EUR 148 million (BRL 1,391 million and BLR 445 million), respectively.

Carfinco Financial Group

On 16 September 2014, the Bank announced that it had reached an agreement to purchase the listed Canadian company Carfinco Financial Group Inc. (“Carfinco”), a company specialising in vehicle financing.

In order to acquire Carfinco, Santander Holding Canada Inc. was incorporated, a company 96.4% owned by Banco Santander, S.A. and 3.6% owned by certain members of the former management group. On 6 March 2015, all of Carfinco was acquired through the aforementioned holding company for EUR 209 million (BRL 680 million), giving rise to goodwill of EUR 162 million (BRL 528 million).

These transactions did not have a material effect on the condensed consolidated income statement for the nine-month period ended 30 September 2015.

Other transactions

Custody business

On 19 June 2014, the Group announced that it had reached an agreement with FINESP Holdings II B.V., a subsidiary of Warburg Pincus, to sell a 50% stake in Santander’s custody business in Spain, Mexico and Brazil, with this business valued at EUR 975 million (BRL 2,949 million). The remaining 50% will be retained by the Group. The sale is subject to the obtainment of the relevant regulatory authorisations.

Agreement with UniCredit

On 23 April 2015, the Group announced that, together with its partners Warburg Pincus and General Atlantic, it had entered into a heads of terms and exclusivity agreement with UniCredit, subject to the signing of the final agreement, to merge Santander Asset Management and Pioneer Investments.

The agreement provides for the creation of a new company comprising the local asset managers of Santander Asset Management and Pioneer Investments. The Group will have a 33.3% direct stake in the new company, UniCredit another 33.3%, and Warburg Pincus and General Atlantic will share a 33.3% stake. Pioneer Investments’ operations in the United States will not be included in the new company but rather will be owned by UniCredit (50%) and Warburg Pincus and General Atlantic (50%).

SCUSA

On 3 July 2015, the Group announced that it had reached an agreement to purchase the 9.68% ownership interest held by DDFS LLC in Santander Consumer USA Holdings Inc. (SCUSA) for USD 928 million. Following this transaction, which is subject to the obtainment of the relevant regulatory authorisations, the Group will have an ownership interest of approximately 68.7% in SCUSA.

3.	Shareholder remuneration system and earnings per share

Shareholder remuneration system

The cash remuneration paid by the Bank to its shareholders in the first nine months of 2015 and 2014 was as follows:


	30/09/15							30/09/14
	% of par value			Euros per share		Amount (millions of euros)		% of par value			Euros per share		Amount (millions of euros)

Ordinary shares		19.64	%		0.0982		1,389		11.49	%		0.0575		664
Other shares (non-voting, redeemable, etc.)		—			—		—		—			—		—

Total remuneration paid		19.64	%		0.0982		1,389		11.49	%		0.0575		664

Remuneration paid out of profit		14.74	%		0.0737		1,044		7.98	%		0.0399		461
Remuneration paid with a charge to reserves or share premium		4.90	%		0.0245		345		3.51	%		0.0176		203
Remuneration paid in kind		—			—		—		—			—		—

	30/09/15							30/09/14
	% of par value			Reais per share		Amount (millions of reais)		% of par value			Reais per share		Amount (millions of reais)

Ordinary shares		19.64	%		0.3246		4,595		11.49	%		0.1686		1,949
Other shares (non-voting, redeemable, etc.)		—			—		—		—			—		—

Total remuneration paid		19.64	%		0.3246		4,595		11.49	%		0.1686		1,949

Remuneration paid out of profit		14.74	%		0.2482		3,519		7.98	%		0.1186		1,370
Remuneration paid with a charge to reserves or share premium		4.90	%		0.0764		1,076		3.51	%		0.0500		579
Remuneration paid in kind		—			—		—		—			—		—

Under the remuneration scheme (Santander Dividendo Elección) the shareholders were offered the possibility of opting to receive an amount equal to the third interim dividend for 2014 and the final dividend for that year (fourth dividend for 2013), respectively, in cash or new shares.

In addition to the EUR 1,389 million (BRL 4,595 million) in cash shown in the foregoing table (of which EUR 328 million (BRL 1,023 million) relate to the amount of the third interim dividend for 2014, EUR 345 million (BRL 1,076 million) to the amount of the final dividend for 2014 and EUR 716 million (BRL 2,496 million) to the amount of the first interim dividend for 2015, paid in full in cash), in the first nine months of 2015 shares with a value of EUR 3,465 million (BRL 10,804 million) were assigned to shareholder remuneration under the framework of the shareholder remuneration scheme (Santander Dividendo Elección).

Earnings per share from continuing and discontinued operations

i. Basic earnings per share

Basic earnings per share for the period are calculated by dividing the net profit attributable to the Group for the period (adjusted by the after-tax amount relating to the remuneration of contingently convertible preference shares recognised in equity) by the weighted average number of ordinary shares outstanding during the period, excluding the average number of treasury shares held in the period.

Accordingly:


	30/09/15			30/09/14
Net profit attributable to the Parent (millions of euros)		5,941			4,361
Remuneration of contingently convertible preference shares (millions of euros)		(206	)		(65	)

		5,735			4,296
Of which:
from discontinued operations (millions of euros)					(7	)
from continuing operations (millions of euros)		5,735			4,303

Weighted average number of shares outstanding		14,040,876,221			11,706,617,834

Basic earnings per share (euros)		0.41			0.37

*Of which: from discontinued operations (euros)*		*0.00*			*0.00*

*from continuing operations (euros)*		*0.41*			*0.37*


	30/09/15			30/09/14
Net profit attributable to the Parent (millions of reais)		20,715			13,516
Remuneration of contingently convertible preference shares (millions of reais)		(718	)		(201	)

		19,997			13,315
Of which:
from discontinued operations (millions of reais)		—			(22	)
from continuing operations (millions of reais)		19,997			13,337

Weighted average number of shares outstanding		14,040,876,221			11,706,617,834

Basic earnings per share (reais)		1.42			1.14

*Of which: from discontinued operations (reais)*		*0.00*			*0.00*

*from continuing operations (reais)*		*1.42*			*1.14*

ii. Diluted earnings per share

Diluted earnings per share for the period are calculated by dividing the net profit attributable to the Group for the period (adjusted by the after-tax amount relating to the remuneration of contingently convertible preference shares recognised in equity) by the weighted average number of ordinary shares outstanding during the period, 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 per share were determined as follows:


	30/09/15			30/09/14

Net profit attributable to the Parent (millions of euros)		5,941			4,361
Remuneration of contingently convertible preference shares (millions of euros)		(206	)		(65	)
Dilutive effect of changes in profit for the period arising from potential conversion of ordinary shares		—			—

Profit attributable to the Parent (millions of euros)		5,735			4,296

Of which:

from discontinued operations (millions of euros)		—			(7	)
from continuing operations (millions of euros)		5,735			4,303


Weighted average number of shares outstanding		14,040,876,221			11,706,617,834
Dilutive effect of:
Options/ receipt of shares		26,364,716			30,438,437

Adjusted number of shares		14,067,240,937			11,737,056,271

Diluted earnings per share (euros)		0.41			0.37

*Of which: from discontinued operations (euros)*		*0.00*			*0.00*

*from continuing operations (euros)*		*0.41*			*0.37*


	30/09/15			30/09/14

Net profit attributable to the Parent (millions of reais)		20,715			13,516
Remuneration of contingently convertible preference shares (millions of reais)		(718	)		(201	)
Dilutive effect of changes in profit for the period arising from potential conversion of ordinary shares		—			—

Profit attributable to the Parent (millions of reais)		19,997			13,315

Of which:

from discontinued operations (millions of reais)		—			(22	)
from continuing operations (millions of reais)		19,997			13,337


Weighted average number of shares outstanding		14,040,876,221			11,706,617,834
Dilutive effect of:
Options/ receipt of shares		26,364,716			30,438,437

Adjusted number of shares		14,067,240,937			11,737,056,271

Diluted earnings per share (reais)		1.42			1.13

*Of which: from discontinued operations (reais)*		*0.00*			*0.00*

*from continuing operations (reais)*		*1.42*			*1.13*

4.	Remuneration and other benefits paid to the Bank’s directors and senior managers

Note 5 to the Group’s consolidated financial statements for the year ended 31 December 2014 includes the detail of the remuneration and other benefits paid to the Bank’s directors and senior managers in 2014 and 2013.

The most salient data relating to the aforementioned remuneration and benefits for the nine-month periods ended 30 September 2015 and 2014 are summarised as follows:

Remuneration of directors (1) (2)


	Thousands of euros
	30/09/15		30/09/14

Members of the board of directors:
Type of remuneration-
Fixed salary remuneration of executive directors		6,362		6,010
Variable remuneration in cash of executive directors		—		—
Attendance fees of directors		1,331		961
Other (except insurance premiums)		413		356

Sub-total		8,106		7,327

Transactions with shares and/or other financial instruments		—		—

		8,106		7,327


	Thousands of reais
	30/09/15		30/09/14

Members of the board of directors:
Type of remuneration-
Fixed salary remuneration of executive directors		22,183		18,627
Variable remuneration in cash of executive directors		—		—
Attendance fees of directors		4,641		2,978
Other (except insurance premiums)		1,440		1,103

Sub-total		28,264		22,708

Transactions with shares and/or other financial instruments		—		—
		28,264		22,708

(1)	The consolidated financial statements for 2015 will contain detailed and complete information on the remuneration paid to all the directors, including executive directors.

(2)

Additionally, in the nine-month period ended 30 September 2015, EUR 2,574 thousand (BRL 8,975 thousand) were paid relating to nine months’ instalments of the annual emolument for 2015, which was set by a resolution of the board of directors on 27 April 2015. The annual emolument for 2014 was set by a board resolution on 22 December 2014 and was paid in a single payment subsequent to said resolution.

Other benefits of the directors (1)


	Thousands of euros
	30/09/15		30/09/14

Members of the board of directors:
Other benefits-
Advances		—		—
Loans granted		139		5,204
Pension funds and plans: Provisions and/or contributions ⁽²⁾		3,865		2,755
Pension funds and plans: Accumulated rights ⁽³⁾		118,118		123,839
Life insurance premiums		427		229
Guarantees provided for directors		—		—


	Thousands of reais
	30/09/15		30/09/14

Members of the board of directors:
Other benefits-
Advances		—		—
Loans granted		621		16,039
Pension funds and plans: Provisions and/or contributions ⁽²⁾		17,318		8,491
Pension funds and plans: Accumulated rights⁽³⁾		529,263		381,684
Life insurance premiums		1,913		706
Guarantees provided for directors		—		—

(1)

On 12 January 2015, Mr Javier Marín Romano ceased to be a director and took voluntary pre-retirement, as provided for in his contract. The financial statements for 2014 contain information on the terms and conditions of this pre-retirement, and this information will also be included in the financial statements for 2015.

(2)	Corresponds to the provisions and/or contributions made in the first nine months of 2015 and 2014 for retirement pensions and supplementary benefits (surviving spouse and child benefits, and permanent disability).

(3)	Corresponds to the pension rights accumulated by the directors. In addition, at 30 September 2015 and 2014, former Board members held accumulated pension rights amounting to EUR 110,672 thousand (BRL 495,899 thousand) and EUR 89,725 thousand (BRL 276,541 thousand), respectively.

Also, in his capacity as a member of the boards of directors of Group companies, in the first nine months of 2015 Mr Matías Rodríguez Inciarte received EUR 31.5 thousand (BRL 110 thousand) as non-executive director of U.C.I., S.A. (first nine months of 2014: EUR 28 thousand (BRL 87 thousand)).

Remuneration of senior managers

In recent months, the Bank’s board of directors has approved a series of appointments and organisational changes aimed at simplifying the Group’s organisation and rendering it more competitive. As a result, at 2015 year-end the number of executive vice presidents will have been reduced by eight.

The table below includes the amounts relating to the remuneration of the members of the Bank’s senior management at 30 September, excluding the remuneration of the executive directors. This remuneration includes EUR 2,424 thousand (BRL 8,452 thousand) relating to three members of senior management who at 31 December 2015 will have ceased to discharge their functions as such.


	Thousands of euros
	30/09/15		30/09/14

Senior management:
Total remuneration of senior management ⁽¹⁾		20,108		22,373


	Thousands of reais
	30/09/15		30/09/14

Senior management:
Total remuneration of senior management ⁽¹⁾		70,112		69,340

(1)	Additionally, members of senior management who at 30 September had ceased to discharge their functions received remuneration or amounts on vacation of office of EUR 8,099 thousand (BRL 28,239 thousand) in the nine-month period ended 30 September 2015.

The annual variable remuneration (or bonus) for 2014 paid to the directors and the other members of senior management was disclosed in the information on remuneration set forth in the financial statements for that year. Similarly, the variable remuneration allocable to 2015 profit or loss, which will be submitted for approval by the board of directors, will be disclosed in the financial statements for 2015.

5.	Financial assets

Breakdown

The detail, by nature and category for measurement purposes, of the Group’s financial assets, other than the balances relating to Cash and balances with central banks and Hedging derivatives, at 30 September 2015 and 31 December 2014 is as follows:


	Millions of euros
	30/09/15
	Financial assets held for trading		Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments

Loans and advances to credit institutions		2,104		35,306		—		50,413		—
Loans and advances to customers		8,235		12,320		—		756,465		—
Debt instruments		43,882		3,889		112,965		9,788		4,405
Equity instruments		15,257		595		4,870		—		—
Trading derivatives		80,425		—		—		—		—

		149,903		52,110		117,835		816,666		4,405


	Millions of reais
	30/09/15
	Financial assets held for trading		Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments

Loans and advances to credit institutions		9,428		158,199		—		225,891		—
Loans and advances to customers		36,899		55,203		—		3,389,568		—
Debt instruments		196,626		17,426		506,174		43,858		19,738
Equity instruments		68,364		2,666		21,821		—		—
Trading derivatives		360,368		—		—		—		—

		671,685		233,494		527,995		3,659,317		19,738


	Millions of euros
	31/12/14
	Financial assets held for trading		Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments

Loans and advances to credit institutions		1,815		28,592		—		51,306		—
Loans and advances to customers		2,921		8,971		—		722,819		—
Debt instruments		54,374		4,231		110,249		7,510		—
Equity instruments		12,920		879		5,001		—		—
Trading derivatives		76,858		—		—		—		—

		148,888		42,673		115,250		781,635		—


	Millions of reais
	31/12/14
	Financial assets held for trading		Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments

Loans and advances to credit institutions		5,846		92,086		—		165,241		—
Loans and advances to customers		9,408		28,893		—		2,327,983		—
Debt instruments		175,122		13,627		355,079		24,187		—
Equity instruments		41,611		2,831		16,107		—		—
Trading derivatives		247,537		—		—		—		—

		479,524		137,437		371,186		2,517,411		—

In the third quarter of 2015 the Group reclassified certain financial instruments classified as available-for-sale financial assets as held-to-maturity investments. Pursuant to the applicable legislation, the fair value of these instruments at the date of reclassification was considered their initial cost and the valuation adjustments in the Group’s consolidated equity remained in the consolidated balance sheet, together with the adjustments relating to the other available-for-sale financial assets. The reclassified instruments were subsequently measured at their amortised cost, and both the difference between their amortised cost and their maturity amount and the valuation adjustments previously recognised in equity will be recognised in the consolidated income statement over the remaining life of the financial assets using the effective interest method.

Sovereign risk with peripheral European countries

The detail at 30 September 2015 and 31 December 2014, by type of financial instrument, of the Group credit institutions’ sovereign risk exposure to Europe’s peripheral countries and of the short positions held with them, taking into consideration the scope established by the European Banking Authority (EBA) in the analyses performed on the capital needs of European credit institutions (see Note 54 to the consolidated financial statements for 2014), is as follows:


Sovereign risk by country of issuer/borrower at 30 September 2015 (*)
	Millions of euros
	Debt instruments											Loans and advances to customers (**)		Total net direct exposure			Derivatives (***)
	Financial assets held for trading and Other financial assets at fair value through profit or loss		Short positions			Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure			Other than CDSs		CDSs

Spain		4,060		(2,844	)		25,615		927		15,207		45,045		(153	)		—		4,060
Portugal		212		(292	)		6,862		—		736		7,518		—			1		212
Italy		2,486		(1,023	)		—		—		—		1,463		(1	)		1		2,486
Greece		—		—			—		—		—		—		—			—		—
Ireland		—		—			—		—		—		—		92			—		—


Sovereign risk by country of issuer/borrower at 30 September 2015 (*)
	Millions of reais
	Debt instruments											Loans and advances to customers (**)		Total net direct exposure		Derivatives (***)
	Financial assets held for trading and Other financial assets at fair value through profit or loss		Short positions			Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure		Other than CDSs			CDSs

Spain		18,192		(12,743	)		114,776		4,154		9,320		68,140		201,838		(686	)		—
Portugal		950		(1,308	)		30,747		—		—		3,298		33,687		—			4
Italy		11,139		(4,584	)		—		—		—		—		6,555		(4	)		4
Greece		—		—			—		—		—		—		—		—			—
Ireland		—		—			—		—		—		—		—		412			—

(*)

Information prepared under EBA standards. Also, there are government debt securities on insurance companies’ balance sheets amounting to EUR 10,017 million (BRL 44,884 million) (of which EUR 8,727.620 million, EUR 670 million (BRL 39,104 million, BRL 2,778 million and BRL 3,002 million) relate to Spain, Portugal and Italy, respectively) and off-balance-sheet exposure other than derivatives –contingent liabilities and commitments– amounting to EUR 2,864 million (BRL 12,833 million) (of which EUR 2,798 million and EUR 66 million (BRL 12,537 million and BRL 296 million) relate to Spain and Portugal, respectively).

(**)	Presented without taking into account the valuation adjustments recognised (EUR 46 million (BRL 206 million)).

(***)

“Other than CDSs” refers to the exposure to derivatives based on the location of the counterparty, irrespective of the location of the underlying. “CDSs” refers to the exposure to CDSs based on the location of the underlying.


Sovereign risk by country of issuer/borrower at 30 September 2014 (*)
	Millions of euros
	Debt instruments											Loans and advances to customers (**)		Loans and advances to customers (**)		Derivatives (***)
	Financial assets held for trading and Other financial assets at fair value through profit or loss		Short positions			Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Loans and advances to customers (**)		Other than CDSs			CDSs

Spain		4,374		(2,558	)		23,893		1,595		—		17,465		44,769		(60	)		—
Portugal		163		(60	)		7,811		—		—		590		8,504		—			—
Italy		3,448		(1,723	)		—		—		—		—		1,725		—			—
Greece		—		—			—		—		—		—		—		—			—
Ireland		—		—			—		—		—		—		—		61			—


Sovereign risk by country of issuer/borrower at 31 December 2014 (*)
	Millions of reais
	Debt instruments											Loans and advances to customers (**)		Total net direct exposure		Derivatives (***)
	Financial assets held for trading and Other financial assets at fair value through profit or loss		Short positions			Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure		Other than CDSs			CDSs

Spain		14,085		(8,239	)		76,954		5,138		—		56,251		144,189		(193	)		—
Portugal		524		(194	)		25,158		—		—		1,900		27,388		—			(1	)
Italy		11,104		(5,551	)		2		—		—		—		5,555		—			1
Greece		—		—			—		—		—		—		—		—			—
Ireland		—		—			—		—		—		—		—		196			—

(*)

Information prepared under EBA standards. Also, there are government debt securities on insurance companies’ balance sheets amounting to EUR 8,420 million (BRL 27,118 million) (of which EUR 7,414 million, EUR 691 million and EUR 315 million (BRL 23,878 million, BRL 2,226 million and BRL 1,015 million) relate to Spain, Portugal and Italy, respectively) and off-balance-sheet exposure other than derivatives –contingent liabilities and commitments– amounting to EUR 3,081 million (BRL 9,923 million) (of which EUR 2,929 million, EUR 97 million and EUR 55 million (BRL 9,433 million, BRL 312 million and BRL 177 million) relate to Spain, Portugal and Italy, respectively).

(**)	Presented without taking into account the valuation adjustments recognised (EUR 45 million (BRL 145 million)).

(***)

The detail of the Group’s other exposure to other counterparties (private sector, central banks and other public entities that are not considered to be sovereign risks) in the aforementioned countries at 30 September 2015 and 31 December 2014 is as follows:


Exposure to other counterparties by country of issuer/borrower at 30 September 2015 (*)
	Millions of euros
	Balances with central banks		Reverse repurchase agreements		Debt instruments								Loans and advances to customers (**)		Total net direct exposure		Derivatives (***)
	Balances with central banks		Reverse repurchase agreements		Financial assets held for trading and Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure		Other than CDSs		CDSs

Spain		1,711		26,124		1,840		5,609		1,011		—		152,196		188,491		3,394		(45	)
Portugal		392		—		86		782		2,937		—		24,489		28,686		1,793		—
Italy		6		—		374		850		—		—		7,245		8,475		23		7
Greece		5		—		—		—		—		—		48		53		34		—
Ireland		—		—		58		220		154		—		768		1,200		301		—


Exposure to other counterparties by country of issuer/borrower at 30 September 2015 (*)
	Millions of euros
	Balances with central banks		Reverse repurchase agreements		Debt instruments								Loans and advances to customers (**)		Total net direct exposure		Derivatives (***)
	Balances with central banks		Reverse repurchase agreements		Financial assets held for trading and Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure		Other than CDSs		CDSs

Spain		7,667		117,056		8,245		25,133		4,530		—		681,960		844,591		15,208		(201	)
Portugal		1,756		—		385		3,504		13,160		—		109,730		128,535		8,034		—
Italy		27		—		1,676		3,809		—		—		32,463		37,975		103		31
Greece		22		—		—		—		—		—		215		237		152		—
Ireland		—		—		260		986		690		—		3,441		5,377		1,349		—

(*)

Also, the Group has off-balance-sheet exposure other than derivatives –contingent liabilities and commitments– amounting to EUR 64,934 million, EUR 4,608 million, EUR 3,193 million, EUR 17 million and EUR 400 million (BRL 290,956 million, BRL 20,648 million, BRL 14,307 million, BRL 76 million and BRL 1,792 million) to counterparties in Spain, Portugal, Italy, Greece and Ireland, respectively.

(**)	Presented excluding valuation adjustments and impairment losses recognised (EUR 11,157 million (BRL 49,992 million)).

(***)


Exposure to other counterparties by country of issuer/borrower at 31 December 2014 (*)
	Millions of euros
	Balances with central banks		Reverse repurchase agreements		Debt instruments								Loans and advances to customers (**)		Total net direct exposure		Derivatives (***)
	Balances with central banks		Reverse repurchase agreements		Financial assets held for trading and Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure		Other than CDSs		CDSs

Spain		1,513		17,701		3,467		5,803		1,176		—		154,906		184,567		3,521		(15	)
Portugal		675		—		229		1,126		2,221		—		24,258		28,509		1,889		—
Italy		5		—		1,037		1,040		—		—		6,342		8,424		20		6
Greece		—		—		—		—		—		—		50		50		37		—
Ireland		—		—		161		133		111		—		538		943		299		—


Sovereign risk by country of issuer/borrower at 30 September 2014 (*)
	Millions of reais
	Balances with central banks		Reverse repurchase agreements		Debt instruments								Loans and advances to customers (**)		Total net direct exposure		Derivatives (***)
	Balances with central banks		Reverse repurchase agreements		Financial assets held for trading and Other financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and advances to customers		Held-to- maturity investments		Loans and advances to customers (**)		Total net direct exposure		Other than CDSs		CDSs

Spain		4,873		57,009		11,169		18,690		3,787		—		498,903		594,431		11,340		(48	)
Portugal		2,174		—		738		3,625		7,154		—		78,128		91,819		6,085		(1	)
Italy		16		—		3,340		3,350		—		—		20,426		27,132		65		20
Greece		—		—		—		—		—		—		161		161		119		—
Ireland		—		—		518		429		359		—		1,733		3,039		963		—

(*)

Also, the Group has off-balance-sheet exposure other than derivatives –contingent liabilities and commitments– amounting to EUR 60,318 million, EUR 6,051 million, EUR 3,049 million, EUR 17 million and EUR 237 (BRL 194,266 million, BRL 19,488 million, BRL 9,820 million, BRL 55 million and BRL 763 million) to counterparties in Spain, Portugal, Italy, Greece and Ireland, respectively.

(**)	Presented excluding valuation adjustments and impairment losses recognised (EUR 12,238 million (BRL 39,415 million)).

(***)

Following is certain information on the notional amounts of the CDSs detailed in the foregoing tables at 30 September 2015 and 31 December 2014:


30/09/15
Millions of euros
		Notional amount							Fair value
		Bought		Sold		Net			Bought			Sold			Net
Spain	Sovereign		—		—		—			—			—			—
	Other		912		1,163		(251	)		(3	)		(42	)		(45	)
Portugal	Sovereign		27		186		(159	)		1			—			1
	Other		94		92		2			—			—			—
Italy	Sovereign		193		458		(265	)		(1	)		2			1
	Other		596		632		(36	)		7			—			7
Greece	Sovereign		—		—		—			—			—			—
	Other		—		—		—			—			—			—
Ireland	Sovereign		4		4		—			—			—			—
	Other		—		—		—			—			—			—


30/09/15
Millions of reais
		Notional amount							Fair value
		Bought		Sold		Net			Bought			Sold			Net
Spain	Sovereign		—		—		—			—			—			—
	Other		4,086		5,211		(1,125	)		(13	)		(188	)		(201	)
Portugal	Sovereign		121		833		(712	)		4			—			4
	Other		421		412		9			—			—			—
Italy	Sovereign		865		2,052		(1,187	)		(4	)		48			4
	Other		2,671		2,832		(161	)		31			—			31
Greece	Sovereign		—		—		—			—			—			—
	Other		—		—		—			—			—			—
Ireland	Sovereign		18		18		—			—			—			—
	Other		—		—		—			—			—			—

31/12/14
Millions of euros
		Notional amount							Fair value
		Bought		Sold		Net			Bought			Sold			Net
Spain	Sovereign		—		—		—			—			—			—
	Other		1,260		1,576		(316	)		(11	)		(4	)		(15	)
Portugal	Sovereign		210		239		(29	)		1			(1	)		—
	Other		149		162		(13	)		—			—			—
Italy	Sovereign		401		318		83			(1	)		1			—
	Other		668		735		(67	)		2			4			6
Greece	Sovereign		—		—		—			—			—			—
	Other		—		—		—			—			—			—
Ireland	Sovereign		4		4		—			—			—			—
	Other		—		—		—			—			—			—

31/12/14
Millions of reais
		Notional amount							Fair value
		Bought		Sold		Net			Bought			Sold			Net
Spain	Sovereign		—		—		—			—			—			—
	Other		4,058		5,076		(1,018	)		(36	)		(12	)		(48	)
Portugal	Sovereign		676		770		(94	)		2			(3	)		(1	)
	Other		480		522		(42	)		(1	)		—			(1	)
Italy	Sovereign		1,292		1,024		268			(4	)		5			1
	Other		2,151		2,367		(216	)		6			14			20
Greece	Sovereign		—		—		—			—			—			—
	Other		—		—		—			—			—			—
Ireland	Sovereign		13		13		—			—			—			—
	Other		—		—		—			—			—			—

Valuation adjustments for impairment of financial assets

c.1) Available-for-sale financial assets

At 30 September 2015, the Group analysed the changes in the fair value of the various assets composing this portfolio and charged net impairment losses of EUR 214 million (BRL 746 million) to the consolidated income statement for the first nine months of 2015 (first nine months of 2014: net charge of EUR 59 million (BRL 183 million)). Accordingly, most of the changes in value of these assets are presented in equity under Valuation adjustments - Available-for-sale financial assets (see Note 11). The changes in valuation adjustments in the first nine months are recognised in the condensed consolidated statement of recognised income and expense.

c.2) Loans and receivables

The changes in the balance of the allowances for impairment losses on the assets included under Loans and receivables in the nine-month periods ended 30 September 2015 and 2014 were as follows:


	Millions of euros
	30/09/15			30/09/14

Balance at beginning of period		27,321			24,959


Impairment losses charged to income for the period		8,785			9,055
Of which:
Impairment losses charged to income		12,737			12,593
Impairment losses reversed with a credit to income		(3,952	)		(3,538	)
Write-off of impaired balances against recorded impairment allowance		(8,339	)		(8,722	)
Exchange differences and other changes		(1,489	)		2,191

Balance at end of period		26,278			27,483


Of which, relating to:
Impaired assets		18,190			19,592
Of which, arising from country risk		49			39
Other assets		8,088			7,891


	Millions of reais
	30/09/15			30/09/14

Balance at beginning of period		87,994			81,306


Impairment losses charged to income for the period		30,631			28,064
Of which:
Impairment losses charged to income		44,411			39,029
Impairment losses reversed with a credit to income		(13,780	)		(10,965	)
Write-off of impaired balances against recorded impairment allowance		(29,076	)		(27,032	)
Exchange differences and other changes		28,196			2,366

Balance at end of period		117,745			84,704


Of which, relating to:
Impaired assets		81,506			60,382
Of which, arising from country risk		220			120
Other assets		36,239			24,322

Previously written-off assets recovered in the first nine months of 2015 amounted to EUR 1,151 million (BRL 4,013 million) (first nine months of 2014: EUR 956 million (BRL 2,963 million)). Considering these amounts and those recognised under Impairment losses charged to income in the foregoing table, the impairment losses on Loans and receivables amounted to EUR 7,634 million (BRL 26,618 million) in the first nine months of 2015 (first nine months of 2014: EUR 8,099 million (BRL 25,101 million)). If the impairment losses on available-for-sale financial assets (see Note 5.c.1) are added to these amounts, total impairment losses on financial assets amounted to EUR 7,848 million (BRL 27,364 million) for the nine-month period ended 30 September 2015 (nine-month period ended 30 September 2014: EUR 8,158 million (BRL 25,284 million)).

Doubtful assets

The detail of the changes in the nine-month periods ended 30 September 2015 and 2014 in the balance of financial assets classified as loans and receivables and considered to be impaired due to credit risk is as follows:


	Millions of euros
	30/09/15			30/09/14

Balance at beginning of period		40,552			40,374
Net additions		5,459			7,153
Written-off assets		(8,339	)		(8,722	)
Changes in scope of consolidation		54			326
Exchange differences and other		(728	)		1,336

Balance at end of period		36,998			40,467


	Millions of reais
	30/09/15			30/09/14

Balance at beginning of period		130,606			131,522
Net additions		19,036			22,169
Written-off assets		(29,076	)		(27,032	)
Changes in scope of consolidation		188			1,010
Exchange differences and other		45,027			(2,946	)

Balance at end of period		165,781			124,723

This amount, after deducting the related allowances, represents the Group’s best estimate of the discounted value of the flows that are expected to be recovered from the doubtful assets.

Fair value of financial assets not measured at fair value

Following is a comparison of the carrying amounts of the Group’s financial assets measured at other than fair value and their respective fair values at 30 September 2015 and 31 December 2014:


	Millions of euros				Millions of euros
	30/09/15				31/12/14
	Carrying amount		Fair value		Carrying amount		Fair value

Loans and advances to credit institutions		50,413		50,608		51,306		51,202
Loans and advances to customers		756,465		763,055		722,819		727,383
Debt instruments		14,193		13,906		7,510		7,441

ASSETS		821,071		827,569		781,635		786,026


	Millions of reais				Millions of reais
	30/09/15				31/12/14
	Carrying amount		Fair value		Carrying amount		Fair value

Loans and advances to credit institutions		225,891		226,764		165,241		164,906
Loans and advances to customers		3,389,568		3,419,097		2,327,983		2,342,682
Debt instruments		63,596		62,310		24,187		23,966

ASSETS		3,679,055		3,708,171		2,517,411		2,531,554

The main valuation methods and inputs used in the estimates of the fair values of the financial assets in the foregoing table are detailed in Note 51.c to the consolidated financial statements for 2014.

6.	Non-current assets held for sale

The detail, by nature, of the Group’s non-current assets held for sale at 30 September 2015 and 31 December 2014 is as follows:


	Millions of euros
	30/09/15		31/12/14

Tangible assets		5,546		5,256
Of which:
Foreclosed assets		5,451		5,139
Of which: Property assets in Spain		4,936		4,597
Other tangible assets held for sale		95		117
Other assets		22		120

		5,568		5,376


	Millions of reais
	30/09/15		31/12/14

Tangible assets		24,851		16,928
Of which:
Foreclosed assets		24,425		16,551
Of which: Property assets in Spain		22,117		14,805
Other tangible assets held for sale		426		377
Other assets		98		386

		24,949		17,314

At 30 September 2015, the allowance that covers the value of the foreclosed assets amounted to EUR 5,756 million (BRL 25,791 million) (31 December 2014: EUR 5,404 million (BRL 17,404 million)), which represents a coverage ratio of 51.4% of the gross value of the portfolio (31 December 2014: 51.3%). The net charges recorded in the first nine months of 2015 amounted to EUR 125 million (BRL 436 million) (first nine months of 2014: EUR 210 million (BRL 651 million)), and are recognised under Gains/(losses) on non-current assets held for sale not classified as discontinued operations in the condensed consolidated income statement.

In the first nine months of 2015, the Group sold foreclosed properties for a total of approximately EUR 609 million (BRL 2,124 million) with a gross carrying amount of EUR 898 million (BRL 3,131 million), for which provisions totalling EUR 322 million (BRL 1,123 million) had been recognised. These sales gave rise to gains of EUR 33 million (BRL 116 million), which are recognised under Gains/(losses) on non-current assets held for sale not classified as discontinued operations in the condensed consolidated income statement for the first nine months of 2015 (first nine months of 2015: gains of EUR 23 million (BRL 72 million)). Also, in the first nine months of 2015 other tangible assets were sold for EUR 32 million (BRL 112 million), giving rise to a gain of EUR 7 million (BRL 24 million).

7.	Tangible assets

Changes in the period

In the first nine months of 2015, tangible assets were acquired for EUR 5,736 million (BRL 20,000 million) (first nine months of 2014: EUR 4,748 million (BRL 14,716 million)).

Also, in the first nine months of 2015, tangible asset items were disposed of with a carrying amount of EUR 2,551 million (BRL 8,895 million) (first nine months of 2014: EUR 954 million (BRL 2,956 million)), giving rise to a net gain of EUR 26 million (BRL 91 million) in the first nine months of 2015 (first nine months of 2014: a gain of EUR 32 million (BRL 101 million)).

Impairment losses

In the first nine months of 2015, there were impairment losses on tangible assets (mainly investment property) amounting to EUR 72 million (BRL 251 million) (first nine months of 2014: EUR 110 million (BRL 341 million)), which were recognised under Impairment losses on other assets (net) in the consolidated income statement.

Property, plant and equipment purchase commitments

At 30 September 2015 and 2014, the Group did not have any significant commitments to purchase property, plant and equipment items.

8.	Intangible assets

Goodwill

The detail of Intangible Assets - Goodwill at 30 September 2015 and 31 December 2014, based on the cash-generating units giving rise thereto, is as follows:


	Millions of euros
	30/09/15		31/12/14

Santander UK		10,062		9,540
Banco Santander (Brazil)		4,421		6,129
Santander Consumer USA		2,994		2,762
Bank Zachodni WBK		2,434		2,418
Santander Bank NA		1,833		1,691
Santander Consumer Germany		1,315		1,315
Banco Santander Totta		1,040		1,040
Banco Santander - Chile		635		675
Santander Consumer Bank (Nordics)		538		564
Grupo Financiero Santander (Mexico)		515		561
Other companies		990		853

		26,777		27,548


	Millions of reais
	30/09/15		31/12/14

Santander UK		45,086		30,725
Banco Santander (Brazil)		19,813		19,740
Santander Consumer USA		13,416		8,896
Bank Zachodni WBK		10,906		7,788
Santander Bank NA		8,213		5,446
Santander Consumer Germany		5,892		4,235
Banco Santander Totta		4,660		3,350
Banco Santander - Chile		2,845		2,174
Santander Consumer Bank (Nordics)		2,411		1,816
Grupo Financiero Santander (Mexico)		2,308		1,807
Other companies		4,432		2,747

		119,982		88,724

In the first nine months of 2015, goodwill decreased by EUR 902 million due to exchange differences (see Note 11). Pursuant to current regulations, these exchange differences were recognised with a charge to Valuation adjustments - Exchange differences in equity through the consolidated statement of recognised income and expense.

Note 17 to the consolidated financial statements for the year ended 31 December 2014 includes detailed information on the procedures followed by the Group to analyse the potential impairment losses on the goodwill recognised with respect to its recoverable amount and to recognise the related impairment, as appropriate.

Accordingly, based on the analysis performed of the available information on the performance of the various cash-generating units which might evidence the existence of indications of impairment, the Group’s directors concluded that in the first nine months of 2015 there were no impairment losses which required recognition.

Other intangible assets

In the first nine months of 2015, there were impairment losses amounting to EUR 33 million (BRL 115 million) which were recognised under Impairment losses on other assets (net) in the consolidated income statement.

In the first nine months of 2014, there were impairment losses amounting to EUR 688 million (BRL 2,131 million) which were recognised under the aforementioned line item. These impairment losses related mainly to the decline in or loss of the recoverable value of certain computer systems and applications as a result of the processes initiated by the Group to adapt to the various regulatory changes and to transform or integrate businesses.

9.	Financial liabilities

Breakdown

The detail, by nature and category for measurement purposes, of the Group’s financial liabilities, other than hedging derivatives, at 30 September 2015 and 31 December 2014 is as follows:


	Millions of euros
	30/09/15						31/12/14
	Financial liabilities held for trading		Other financial liabilities at fair value through profit or loss		Financial liabilities at amortised cost		Financial liabilities held for trading		Other financial liabilities at fair value through profit or loss		Financial liabilities at amortised cost

Deposits from central banks		1,968		14,336		35,865		2,041		6,321		17,290
Deposits from credit institutions		1,830		13,818		105,753		5,531		19,039		105,147
Customer deposits		9,693		27,094		632,449		5,544		33,127		608,956
Marketable debt securities		—		3,352		193,905		—		3,830		193,059
Trading derivatives		80,572		—		—		79,048		—		—
Subordinated liabilities		—		—		19,606		—		—		17,132
Short positions		18,397		—		—		17,628		—		—
Other financial liabilities		—		1		21,990		—		—		19,468

		112,460		58,601		1,009,568		109,792		62,317		961,052


	Millions of reais
	30/09/15						31/12/14
	Financial liabilities held for trading		Other financial liabilities at fair value through profit or loss		Financial liabilities at amortised cost		Financial liabilities held for trading		Other financial liabilities at fair value through profit or loss		Financial liabilities at amortised cost

Deposits from central banks		8,818		64,237		160,704		6,573		20,358		55,686
Deposits from credit institutions		8,200		61,916		473,858		17,814		61,319		338,647
Customer deposits		43,432		121,403		2,833,877		17,856		106,692		1,961,265
Marketable debt securities		—		15,020		868,850		—		12,335		621,785
Trading derivatives		361,027		—		—		254,590		—		—
Subordinated liabilities		—		—		87,851		—		—		55,177
Short positions		82,433		—		—		56,774		—		—
Other financial liabilities		—		4		98,533		—		—		62,701

		503,910		262,580		4,523,673		353,607		200,704		3,095,261

Information on issues, repurchases or redemptions of debt instruments

Following is a detail, at 30 September 2015 and 2014, of the outstanding balance of the debt instruments which at these dates had been issued by the Bank or any other Group entity. Also included is the detail of the changes in this balance in the first nine months of 2015 and 2014:


	Millions of euros
	30/09/15
	Outstanding beginning balance at 01/01/15		Issues		Repurchases or redemptions			Exchange rate and other adjustments			Outstanding ending balance at 30/09/15

Debt instruments issued in an EU member state for which it was necessary to file a prospectus		148,105		38,951		(44,667	)		999			143,388
Debt instruments issued in an EU member state for which it was not necessary to file a prospectus		2,084		801		(636	)		685			2,934
Other debt instruments issued outside EU member states		63,832		36,788		(29,030	)		(1,049	)		70,541

		214,021		76,540		(74,333	)		635			216,863


	Millions of reais
	30/09/15
	Outstanding beginning balance at 01/01/15		Issues		Repurchases or redemptions			Exchange rate and other adjustments			Outstanding ending balance at 30/09/15

Debt instruments issued in an EU member state for which it was necessary to file a prospectus		477,002		135,813		(155,743	)		185,421			642,493
Debt instruments issued in an EU member state for which it was not necessary to file a prospectus		6,712		2,793		(2,218	)		5,860			13,147
Other debt instruments issued outside EU member states		205,583		128,272		(101,220	)		83,446			316,081

		689,297		266,878		(259,181	)		274,727			971,721


	Millions of euros
	30/09/14
	Outstanding beginning balance at 01/01/14		Issues		Repurchases or redemptions			Exchange rate and other adjustments			Outstanding ending balance at 30/09/14

Debt instruments issued in an EU member state for which it was necessary to file a prospectus		143,865		25,373		(33,377	)		(5,753	)		130,108
Debt instruments issued in an EU member state for which it was not necessary to file a prospectus		3,226		15,572		(9,233	)		5,248			14,813
Other debt instruments issued outside EU member states		44,525		31,922		(27,040	)		18,600			68,007

		191,616		72,867		(69,650	)		18,095			212,928


	Millions of reais
	30/09/14
	Outstanding beginning balance at 01/01/14		Issues		Repurchases or redemptions			Exchange rate and other adjustments			Outstanding ending balance at 30/09/14

Debt instruments issued in an EU member state for which it was necessary to file a prospectus		468,655		78,638		(103,444	)		(42,841	)		401,008
Debt instruments issued in an EU member state for which it was not necessary to file a prospectus		10,509		48,262		(28,616	)		15,500			45,655
Other debt instruments issued outside EU member states		145,045		98,935		(83,804	)		49,428			209,604

		624,209		225,835		(215,864	)		22,087			656,267

Other issues guaranteed by the Group

At 30 September 2015, there were no debt instruments issued by associates or non-Group third parties that had been guaranteed by the Bank or any other Group entity.

Case-by-case information on certain issues, repurchases or redemptions of debt instruments

The main characteristics of the most significant issues (excluding promissory notes, securitisations and issues maturing within less than one year), repurchases or redemptions performed by the Group in the first nine months of 2015, or guaranteed by the Bank or Group entities, are as follows:

Issuer data

Data on the transactions performed in the first nine months of 2015

Name

Relationship
with the
Bank

Country of
registered
office

Issuer
or issue
credit
rating

Transaction

ISIN
code

Type of
security

Transaction
date

Amount of
the issue,
repurchase or
redemption
(Millions of
euros) (a)

Balance
outstanding
(Millions
of euros) (a)

Interest
rate

Market
where
listed

Type of
guarantee
provided

Risks
additional
to the
guarantee
that the
Group
would
assume

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

US002799AT16

Senior debt

16/03/15

893

2.38%

TRACE

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

Aaa / AAA / -

Issue

XS1220923996

Mortgage-backed bond

21/04/15

1,000

0.25%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

Aaa / AAA / AAA

Issue

XS1238066622

Mortgage-backed bond

29/05/15

677

0.79%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

US002799AV61

Senior debt

24/08/15

669

2.00%

TRACE

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

US002799AW45

Senior debt

24/08/15

223

3M US LIBOR +0.85%

TRACE

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

XS1274152690

Senior debt

11/08/15

300

3M EU + 0.45%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

XS1070235004

Senior debt

13/08/15

400

3M EU + 0.62%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Issue

Financial bill (LF)

25/02/15

216

6.75%

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Issue

Financial bill (LF)

22/04/15

227

14.56%

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aa2 / AAe / -

Issue

ES0413900384

Mortgage-backed bond

09/09/15

1,000

0.75%

AIAF

N/A

EMISORA SANTANDER ESPAÑA, S.A.U.

Subsidiary

Spain

A3 / A- / BBB+

Issue

ES0305014435

Senior debt

06/08/15

300

1.00%

AIAF

N/A

SANTANDER BANK, NATIONAL ASSOCIATION

Subsidiary

United States

Baa1 / BBB+ / BBB+

Issue

US80280JDB44

Senior debt

12/01/15

669

2.00%

TRACE

N/A

SANTANDER BANK, NATIONAL ASSOCIATION

Subsidiary

United States

Baa1 / BBB+ / BBB+

Issue

US80280JDC27

Senior debt

12/01/15

223

3M US LIBOR + 0.93%

TRACE

N/A

SANTANDER CONSUMER BANK AS

Subsidiary

Norway

N/A

Issue

NO0010731037

Senior debt

19/02/15

210

3M NIBOR + 0.77%

Norway

N/A

SANTANDER CONSUMER BANK AS

Subsidiary

Norway

A3 / - / BBB

Issue

XS1218217377

Senior debt

21/04/15

750

0.63%

Dublin / Norway

N/A

SANTANDER CONSUMER FINANCE, S.A.

Subsidiary

Spain

Baa1 / A- / BBB+

Issue

XS1188117391

Senior debt

18/02/15

1,000

0.90%

Dublin

N/A

SANTANDER CONSUMER FINANCE, S.A.

Subsidiary

Spain

- / A- / -

Issue

XS1226746490

Senior debt

11/05/15

200

0.14%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

A3 / A- / -

Issue

XS1265772498

Senior debt

31/07/15

309

3M EU + 0.62%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

A3 / A- / BBB+

Issue

XS1264601805

Senior debt

29/07/15

1,000

1.10%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

A3 / A- / -

Issue

XS1265772498

Senior debt

27/08/15

200

3M EU + 0.62%

Dublin

N/A

SANTANDER HOLDINGS USA, Inc.

Subsidiary

United States

Baa2 / - / BBB

Issue

US80282KAD81

Senior debt

04/04/15

893

2.65%

TRACE

N/A

SANTANDER HOLDINGS USA, Inc.

Subsidiary

United States

Baa2 / - / BBB+

Issue

US80282KAE6

Senior debt

17/07/15

982

4.50%

TRACE

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB+ / BBB+

Issue

XS1169932289

Senior debt

26/01/15

250

3M EU + 0.27%

Dublin

Banco Santander, S.A. guarantee

N/A

Issuer data

Data on the transactions performed in the first nine months of 2015

Name

Relationship
with the
Bank

Country of
registered
office

Issuer
or issue
credit
rating

Transaction

ISIN
code

Type of
security

Transaction
date

Amount of
the issue,
repurchase or
redemption
(Millions of
euros) (a)

Balance
outstanding
(Millions
of euros) (a)

Interest
rate

Market
where
listed

Type of
guarantee
provided

Risks
additional
to the
guarantee
that the
Group
would
assume

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB+ / BBB+

Issue

XS1171573188

Senior debt

28/01/15

200

3M EU + 0.23%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / A- / BBB+

Issue

XS1195284705

Senior debt

04/03/15

300

3M EU + 0.60%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER ISSUANCES, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa2 / BBB+ / BBB-

Issue

XS1201001572

Subordinated debt

18/03/15

1,500

2.50%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER UK GROUP HOLDINGS PLC

Subsidiary

United Kingdom

Baa1 / A- / BB+

Issue

XS1291333760 / US80281LAA35

Subordinated debt

15/09/15

893

4.75%

London

N/A

SANTANDER UK GROUP HOLDINGS PLC

Subsidiary

United Kingdom

Baa1 / A- / BB+

Issue

XS1291352711 / US80281LAB18

Subordinated debt

15/09/15

446

5.63%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1166160173

Senior debt

14/01/15

1,500

1.13%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1172406818

Senior debt

18/02/15

605

3M EU + 0.30%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1172406818

Senior debt

12/02/15

645

3M EU + 0.30%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1190294063

Senior debt

25/02/15

1,016

1.88%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1199439222

Senior debt

10/03/15

1,000

1.13%

London

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AAA

Repayment

XS0746622009

Mortgage-backed bond

16/02/15

1,016

—

3M GB LIBOR + 1.60%

London

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AA-

Repayment

XS0220989692

Mortgage-backed bond

04/06/15

250

—

3.38%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AA-

Repayment

XS0220989692

Mortgage-backed bond

08/06/15

2,000

—

3.38%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A

Repayment

CH0115236322

Senior debt

08/06/15

252

—

3.38%

Switzerland

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AA-

Repayment

XS0220989692

Mortgage-backed bond

08/06/15

525

—

2.00%

London

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

- / A / A

Repayment

XS0098255176

Senior debt

15/09/15

226

—

3.38%

London

Santander UK PLC guarantee

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Repayment

Financial bill (LF)

25/02/15

166

—

7.78%

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Repayment

BANSAOCLN

Private senior debt

12/01/15

295

—

3.18%

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

Baa2 / BBB- / BBB

Repayment

US05966UAB08

Senior debt

06/04/15

759

—

4.60%

Luxembourg

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa / - / AAA

Repayment

ES0413440068

Mortgage-backed bond

27/01/15

1,642

—

3.50%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa / - / AAA

Repayment

ES0413440068

Mortgage-backed bond

27/01/15

200

—

3.50%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

AAA

Repayment

ES0413440217

Mortgage-backed bond

30/03/15

597

—

4.63%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa / AAA

Repayment

ES0413900202

Mortgage-backed bond

28/01/15

1,000

—

3.13%

Spain

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa

Repayment

ES0413900285

Mortgage-backed bond

17/02/15

1,990

—

3.25%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa

Repayment

ES0413900244

Mortgage-backed bond

16/03/15

1,999

—

4.38%

Spain

N/A

BANCO SANTANDER, S.A.

Parent

Spain

A2 / A+

Repayment

ES0313440150

Senior debt

17/04/15

477

—

3.00%

AIAF

N/A

Issuer data

Data on the transactions performed in the first nine months of 2015

Name

Relationship
with the
Bank

Country of
registered
office

Issuer
or issue
credit
rating

Transaction

ISIN
code

Type of
security

Transaction
date

Amount of
the issue,
repurchase or
redemption
(Millions of
euros) (a)

Balance
outstanding
(Millions
of euros) (a)

Interest
rate

Market
where
listed

Type of
guarantee
provided

Risks
additional
to the
guarantee
that the
Group
would
assume

BANCO SANTANDER, S.A.

Parent

Spain

Aa3 / AA / AA

Repayment

ES0413440175

Mortgage-backed bond

07/09/15

600

—

3.63%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aa3 / AA- / A+

Repayment

ES0413900103

Mortgage-backed bond

28/09/15

2,500

—

3.13%

AIAF

N/A

BANCO SANTANDER CHILE

Subsidiary

Chile

Aa3 / A+ / A

Repayment

US05965XAH26

Senior debt

22/09/15

446

—

3.75%

TRACE

N/A

SANTANDER CONSUMER FINANCE, S.A.

Subsidiary

Spain

- / - / BBB-

Repayment

XS0981705618

Senior debt

23/04/15

917

—

1.63%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

Baa1 / A- / BBB

Repayment

XS1076820312

Senior debt

20/07/15

564

—

3M EUR+0.57%

Dublin

N/A

SANTANDER HOLDINGS USA, Inc.

Subsidiary

United States

Baa2 / BBB / BBB+

Repayment

US80282KAB26

Senior debt

24/09/15

536

—

3.00%

TRACE

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB / BBB

Repayment

XS1022793951

Senior debt

04/02/15

500

—

3M GB LIBOR + 0.65%

Ireland

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa2 / AA / AA

Repayment

XS0491856265

Senior debt

10/03/15

865

—

3.50%

Spain

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa2 / BBB / BBB+

Repayment

XS0907861214

Senior debt

25/03/15

300

—

3M EU + 1.90%

Luxembourg

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB+ / BBB

Repayment

XS1041097301

Senior debt

10/04/15

300

—

3M EU + 0.61%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa3 / A+ / A

Repayment

XS0770378619

Senior debt

16/04/15

248

—

1.80%

New York and London

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa2 / AA / AA

Repayment

XS0624668801

Senior debt

18/05/15

937

—

4.50%

Luxembourg

Banco Santander, S.A. guarantee

N/A

SANTANDER US DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa2 / AA / AA

Repayment

US808215AQ38

Senior debt

20/01/15

893

—

3.72%

United States

Banco Santander, S.A. guarantee

N/A

(a)	The amounts relating to securities denominated in foreign currencies were translated to euros at the exchange rate prevailing at 30 September 2015.

Issuer data

Data on the transactions performed in the first nine months of 2015

Name

Relationship
with the
Bank

Country of
registered
office

Issuer
or issue
credit
rating

Transaction

ISIN
code

Type of
security

Transaction
date

Amount of
the issue,
repurchase or
redemption
(Millions of
reais) (a)

Balance
outstanding
(Millions
of reais) (a)

Interest
rate

Market
where
listed

Type of
guarantee
provided

Risks
additional
to the
guarantee
that the
Group
would
assume

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

US002799AT16

Senior debt

16/03/15

4,000

2.38%

TRACE

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

Aaa / AAA / -

Issue

XS1220923996

Mortgage-backed bond

21/04/15

4,481

0.25%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

Aaa / AAA / AAA

Issue

XS1238066622

Mortgage-backed bond

29/05/15

3,034

0.79%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

US002799AV61

Senior debt

24/08/15

3,000

2.00%

TRACE

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

US002799AW45

Senior debt

24/08/15

1,000

3M US LIBOR +0.85%

TRACE

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

XS1274152690

Senior debt

11/08/15

1,344

3M EU + 0.45%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A / A

Issue

XS1070235004

Senior debt

13/08/15

1,792

3M EU + 0.62%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Issue

Financial bill (LF)

25/02/15

966

6.75%

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Issue

Financial bill (LF)

22/04/15

1,016

14.56%

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aa2 / AAe / -

Issue

ES0413900384

Mortgage-backed bond

09/09/15

4,481

0.75%

AIAF

N/A

EMISORA SANTANDER ESPAÑA, S.A.U.

Subsidiary

Spain

A3 / A- / BBB+

Issue

ES0305014435

Senior debt

06/08/15

1,343

1.00%

AIAF

N/A

SANTANDER BANK, NATIONAL ASSOCIATION

Subsidiary

United States

Baa1 / BBB+ / BBB+

Issue

US80280JDB44

Senior debt

12/01/15

3,000

2.00%

TRACE

N/A

SANTANDER BANK, NATIONAL ASSOCIATION

Subsidiary

United States

Baa1 / BBB+ / BBB+

Issue

US80280JDC27

Senior debt

12/01/15

1,000

3M US LIBOR + 0.93%

TRACE

N/A

SANTANDER CONSUMER BANK AS

Subsidiary

Norway

N/A

Issue

NO0010731037

Senior debt

19/02/15

941

3M NIBOR + 0.77%

Norway

N/A

SANTANDER CONSUMER BANK AS

Subsidiary

Norway

A3 / - / BBB

Issue

XS1218217377

Senior debt

21/04/15

3,361

0.63%

Dublin / Norway

N/A

SANTANDER CONSUMER FINANCE, S.A.

Subsidiary

Spain

Baa1 / A- / BBB+

Issue

XS1188117391

Senior debt

18/02/15

4,481

0.90%

Dublin

N/A

SANTANDER CONSUMER FINANCE, S.A.

Subsidiary

Spain

- / A- / -

Issue

XS1226746490

Senior debt

11/05/15

896

0.14%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

A3 / A- / -

Issue

XS1265772498

Senior debt

31/07/15

1,385

3M EU + 0.62%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

A3 / A- / BBB+

Issue

XS1264601805

Senior debt

29/07/15

4,481

4,480

1.10%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

A3 / A- / -

Issue

XS1265772498

Senior debt

27/08/15

896

3M EU + 0.62%

Dublin

N/A

SANTANDER HOLDINGS USA, Inc.

Subsidiary

United States

Baa2 / - / BBB

Issue

US80282KAD81

Senior debt

04/04/15

4,000

2.65%

TRACE

N/A

SANTANDER HOLDINGS USA, Inc.

Subsidiary

United States

Baa2 / - / BBB+

Issue

US80282KAE6

Senior debt

17/07/15

4,400

4.50%

TRACE

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB+ / BBB+

Issue

XS1169932289

Senior debt

26/01/15

1,120

3M EU + 0.27%

Dublin

Banco Santander, S.A. guarantee

N/A

Issuer data

Data on the transactions performed in the first nine months of 2015

Name

Relationship
with the
Bank

Country of
registered
office

Issuer
or issue
credit
rating

Transaction

ISIN
code

Type of
security

Transaction
date

Amount of
the issue,
repurchase or
redemption
(Millions of
reais) (a)

Balance
outstanding
(Millions
of reais) (a)

Interest
rate

Market
where
listed

Type of
guarantee
provided

Risks
additional
to the
guarantee
that the
Group
would
assume

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB+ / BBB+

Issue

XS1171573188

Senior debt

28/01/15

896

3M EU + 0.23%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / A- / BBB+

Issue

XS1195284705

Senior debt

04/03/15

1,344

3M EU + 0.60%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER ISSUANCES, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa2 / BBB+ / BBB-

Issue

XS1201001572

Subordinated debt

18/03/15

6,721

2.50%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER UK GROUP HOLDINGS PLC

Subsidiary

United Kingdom

Baa1 / A- / BB+

Issue

XS1291333760 / US80281LAA35

Subordinated debt

15/09/15

4,000

4.75%

London

N/A

SANTANDER UK GROUP HOLDINGS PLC

Subsidiary

United Kingdom

Baa1 / A- / BB+

Issue

XS1291352711 / US80281LAB18

Subordinated debt

15/09/15

2,000

5.63%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1166160173

Senior debt

14/01/15

6,721

1.13%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1172406818

Senior debt

18/02/15

2,711

3M EU + 0.30%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1172406818

Senior debt

12/02/15

2,890

3M EU + 0.30%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1190294063

Senior debt

25/02/15

4,551

1.88%

London

N/A

SANTANDER UK PLC

Subsidiary

United Kingdom

A2 / A / A

Issue

XS1199439222

Senior debt

10/03/15

4,481

1.13%

London

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AAA

Repayment

XS0746622009

Mortgage-backed bond

16/02/15

4,551

—

3M GB LIBOR + 1.60%

London

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AA-

Repayment

XS0220989692

Mortgage-backed bond

04/06/15

1,120

—

3.38%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AA-

Repayment

XS0220989692

Mortgage-backed bond

08/06/15

8,962

—

3.38%

London

Santander UK PLC - Abbey Covered Bonds LLP guarantee

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

A1 / A

Repayment

CH0115236322

Senior debt

08/06/15

1,129

—

3.38%

Switzerland

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

AA-

Repayment

XS0220989692

Mortgage-backed bond

08/06/15

2,352

—

2.00%

London

N/A

ABBEY NATIONAL TREASURY SERVICES PLC

Subsidiary

United Kingdom

- / A / A

Repayment

XS0098255176

Senior debt

15/09/15

1,013

—

3.38%

London

Santander UK PLC guarantee

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Repayment

Financial bill (LF)

25/02/15

744

—

7.78%

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

N/A

Repayment

BANSAOCLN

Private senior debt

12/01/15

1,320

—

3.18%

N/A

BANCO SANTANDER (BRASIL) S.A.

Subsidiary

Brazil

Baa2 / BBB- / BBB

Repayment

US05966UAB08

Senior debt

06/04/15

3,400

—

4.60%

Luxembourg

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa / - / AAA

Repayment

ES0413440068

Mortgage-backed bond

27/01/15

7,358

—

3.50%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa / - / AAA

Repayment

ES0413440068

Mortgage-backed bond

27/01/15

896

—

3.50%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

AAA

Repayment

ES0413440217

Mortgage-backed bond

30/03/15

2,675

—

4.63%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa / AAA

Repayment

ES0413900202

Mortgage-backed bond

28/01/15

4,481

—

3.13%

Spain

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa

Repayment

ES0413900285

Mortgage-backed bond

17/02/15

8,917

—

3.25%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aaa

Repayment

ES0413900244

Mortgage-backed bond

16/03/15

8,959

—

4.38%

Spain

N/A

Issuer data

Data on the transactions performed in the first nine months of 2015

Name

Relationship
with the
Bank

Country of
registered
office

Issuer
or issue
credit
rating

Transaction

ISIN
code

Type of
security

Transaction
date

Amount of
the issue,
repurchase or
redemption
(Millions of
reais) (a)

Balance
outstanding
(Millions
of reais) (a)

Interest
rate

Market
where
listed

Type of
guarantee
provided

Risks
additional
to the
guarantee
that the
Group
would
assume

BANCO SANTANDER, S.A.

Parent

Spain

A2 / A+

Repayment

ES0313440150

Senior debt

17/04/15

2,136

—

3.00%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aa3/AA/AA

Repayment

ES0413440175

Mortgage-backed bond

07/09/15

2,688

—

3.63%

AIAF

N/A

BANCO SANTANDER, S.A.

Parent

Spain

Aa3 / AA- / A+

Repayment

ES0413900103

Mortgage-backed bond

28/09/15

11,202

—

3.13%

AIAF

N/A

BANCO SANTANDER CHILE

Subsidiary

Chile

Aa3 / A+ / A

Repayment

US05965XAH26

Senior debt

22/09/15

2,000

—

3.75%

TRACE

N/A

SANTANDER CONSUMER FINANCE, S.A.

Subsidiary

Spain

- / - / BBB-

Repayment

XS0981705618

Senior debt

23/04/15

4,107

—

1.63%

Dublin

N/A

SANTANDER CONSUMER FINANCE S.A.

Subsidiary

Spain

Baa1 / A- / BBB

Repayment

XS1076820312

Senior debt

20/07/15

2,527

—

3M EUR+0.57%

Dublin

N/A

SANTANDER HOLDINGS USA, Inc.

Subsidiary

United States

Baa2 / BBB / BBB+

Repayment

US80282KAB26

Senior debt

24/09/15

2,400

—

3.00%

TRACE

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB / BBB

Repayment

XS1022793951

Senior debt

04/02/15

2,240

—

3M GB LIBOR + 0.65%

Ireland

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa2 / AA / AA

Repayment

XS0491856265

Senior debt

10/03/15

3,878

—

3.50%

Spain

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa2 / BBB / BBB+

Repayment

XS0907861214

Senior debt

25/03/15

1,344

—

3M EU + 1.90%

Luxembourg

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Baa1 / BBB+ / BBB

Repayment

XS1041097301

Senior debt

10/04/15

1,344

—

3M EU + 0.61%

Dublin

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa3 / A+ / A

Repayment

XS0770378619

Senior debt

16/04/15

1,111

—

1.80%

New York and London

Banco Santander, S.A. guarantee

N/A

SANTANDER INTERNATIONAL DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa2 / AA / AA

Repayment

XS0624668801

Senior debt

18/05/15

4,199

—

4.50%

Luxembourg

Banco Santander, S.A. guarantee

N/A

SANTANDER US DEBT, S.A. (SOLE-SHAREHOLDER COMPANY)

Subsidiary

Spain

Aa2 / AA / AA

Repayment

US808215AQ38

Senior debt

20/01/15

4,000

—

3.72%

United States

Banco Santander, S.A. guarantee

N/A

(a)	The amounts relating to securities denominated in foreign currencies were translated to reais at the exchange rate prevailing at 30 September 2015.

Fair value of financial liabilities not measured at fair value

Following is a comparison of the carrying amounts of the Group’s financial liabilities measured at other than fair value and their respective fair values at 30 September 2015 and 31 December 2014:


	Millions of euros
	30/09/15				31/12/14
	Carrying amount		Fair value		Carrying amount		Fair value

Deposits from central banks		35,865		35,865		17,290		17,290
Deposits from credit institutions		105,753		105,933		105,147		105,557
Customer deposits		632,449		630,903		608,956		608,339
Marketable debt securities		193,905		196,593		193,059		197,093
Subordinated liabilities		19,606		19,561		17,132		17,428
Other financial liabilities		21,990		22,150		19,468		19,428

LIABILITIES		1,009,568		1,011,005		961,052		965,135


	Millions of reais
	30/09/15				31/12/14
	Carrying amount		Fair value		Carrying amount		Fair value

Deposits from central banks		160,704		160,704		55,686		55,686
Deposits from credit institutions		473,858		474,665		338,647		339,967
Customer deposits		2,833,877		2,826,950		1,961,265		1,959,277
Marketable debt securities		868,850		880,894		621,785		634,777
Subordinated liabilities		87,851		87,649		55,177		56,130
Other financial liabilities		98,533		99,250		62,701		62,572

LIABILITIES		4,523,673		4,530,112		3,095,261		3,108,409

The main valuation methods and inputs used in the estimates of the fair values of the financial liabilities in the foregoing table are detailed in Note 51.c to the consolidated financial statements for 2014.

10.

Provisions

Breakdown

The detail of Provisions at 30 September 2015 and 31 December 2014 is as follows:


	Millions of euros
	30/09/15		31/12/14

Provisions for pensions and similar obligations		8,397		9,412
Provisions for taxes and other legal contingencies		2,632		2,916
Provisions for contingent liabilities and commitments		602		654
Of which: due to country risk		11		2
Other provisions		2,144		2,394

Provisions		13,775		15,376


	Millions of reais
	30/09/15		31/12/14

Provisions for pensions and similar obligations		37,625		30,313
Provisions for taxes and other legal contingencies		11,793		9,392
Provisions for contingent liabilities and commitments		2,697		2,106
Of which: due to country risk		49		6
Other provisions		9,607		7,710

Provisions		61,722		49,521

Provisions for pensions and similar obligations

The change in Provisions for pensions and similar obligations in the nine-month period ended 30 September 2015 related partly to benefit payments exceeding EUR 676 million (BRL 2,357 million) and to the smaller obligations arising from the decrease in the cumulative actuarial gains and losses due to changes in the actuarial assumptions.

Provisions for taxes and other legal contingencies and Other provisions

Set forth below is the detail, by type of provision, of the balances at 30 September 2015 and at 31 December 2014 of Provisions for taxes and other legal contingencies and Other provisions. The types of provision were determined by grouping together items of a similar nature:


	Millions of euros
	30/09/15		31/12/14

Provisions for taxes		1,146		1,289
Provisions for employment-related proceedings (Brazil)		593		616
Provisions for other legal proceedings		893		1,011
Provision for customer remediation		388		632
Regulatory framework-related provisions		140		298
Provision for restructuring		255		273
Other		1,361		1,191

		4,776		5,310


	Millions of reais
	30/09/15		31/12/14

Provisions for taxes		5,135		4,151
Provisions for employment-related proceedings (Brazil)		2,657		1,984
Provisions for other legal proceedings		4,001		3,256
Provision for customer remediation		1,739		2,035
Regulatory framework-related provisions		627		960
Provision for restructuring		1,143		879
Other		6,098		3,837

		21,400		17,102

Relevant information is set forth below in relation to each type of provision shown in the preceding table:

The provisions for taxes include provisions for tax-related proceedings.

The provisions for employment-related proceedings (Brazil) relate to claims filed by trade unions, associations, the prosecutor’s office and ex-employees claiming employment rights to which, in their view, they are entitled, particularly the payment of overtime and other employment rights, including litigation concerning retirement benefits. The number and nature of these proceedings, which are common for banks in Brazil, justify the classification of these provisions in a separate category or as a separate type from the rest. The Group calculates the provisions associated with these claims in accordance with past experience of payments made in relation to claims for similar items. When claims do not fall within these categories, a case-by-case assessment is performed and the amount of the provision is calculated in accordance with the status of each proceeding and the risk assessment carried out by the legal advisers. The average duration of the employment-related proceedings is approximately eight years.

The provisions for other legal proceedings include provisions for court, arbitration or administrative proceedings (other than those included in other categories or types of provisions disclosed separately) brought against Santander Group companies.

The provisions for customer remediation include the estimated cost of payments to remedy errors relating to the sale of certain products in the UK and Germany. To calculate the provision for customer remediation, the best estimate of the provision made by management is used, which is based on the estimated number of claims to be received and, of these, the number that will be accepted, as well as the estimated average payment per case.

The regulatory framework-related provisions include mainly the provisions for the extraordinary contribution to the Deposit Guarantee Fund in Spain and those relating to the FSCS and the bank levy in the UK.

The provisions for restructuring include only the direct costs arising from restructuring processes carried out by the various Group companies.

Qualitative information on the main litigation is provided in Note 10.d.

Our 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 Group 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.

The main changes in Provisions for taxes and other legal contingencies and Other provisions related to the performance of exchange rates in the first nine months and were also as follows: with regard to Brazil, the main charges to profit or loss in the period ended 30 September 2015 relate to EUR 183 million (BRL 638 million) due to civil contingencies and EUR 350 million (BRL 1,220 million) arising from employment-related claims. This increase was offset partially by the use of available provisions, of which EUR 237 million (BRL 826 million) related to payments of employment-related claims and EUR 170 million (BRL 593 million) to civil payments. With regard to the United Kingdom, EUR 82 million (BRL 286 million) of net provisions for customer remediation, EUR 104 million (BRL 363 million) of regulatory framework-related provisions and EUR 21 million (BRL 73 million) of restructuring provisions were recognised in the first nine months of 2015. These increases were offset by the use of EUR 163 million (BRL 568 million) of customer remediation provisions, EUR 196 million (BRL 683 million) of regulatory framework-related provisions and EUR 38 million (BRL 132 million) of restructuring provisions. With regard to Germany, customer remediation payments totalling EUR 190 million (BRL 662 million) were made.

Litigation and other matters

i. Tax-related litigation

At 30 September 2015, the main tax-related proceedings concerning the Group were as follows:

•

Legal actions filed by Banco Santander (Brasil) S.A. and certain Group companies in Brazil challenging the increase in the rate of Brazilian social contribution tax on net income from 9% to 15% stipulated by Interim Measure 413/08, ratified by Law 11,727/08, a provision having been recognised for the amount of the estimated loss.

•

Legal actions filed by certain Group companies in Brazil claiming their right to pay the Brazilian social contribution tax on net income at a rate of 8% and 10% from 1994 to 1998. No provision was recognised in connection with the amount considered to be a contingent liability.

•

Legal actions filed by Banco Santander, S.A. (currently Banco Santander (Brasil), S.A.) and other Group entities claiming their right to pay the Brazilian PIS and COFINS social contributions only on the income from the provision of services. In the case of Banco Santander, S.A., the legal action was declared unwarranted and an appeal was filed at the Federal Regional Court. In September 2007 the Federal Regional Court found in favour of Banco Santander, S.A., but the Brazilian authorities appealed against the judgment at the Federal Supreme Court. On 23 April 2015, the Federal Supreme Court issued a decision granting leave for the extraordinary appeal filed by the Brazilian authorities with regard to the PIS contribution to proceed, and dismissing the extraordinary appeal lodged by the Brazilian Public Prosecutor’s Office in relation to the COFINS contribution. The Federal Supreme Court has not yet handed down its decision on the PIS contribution and, with regard to the COFINS contribution, on 28 May 2015, the Federal Supreme Court in plenary session unanimously dismissed the extraordinary appeal filed by the Brazilian Public Prosecutor’s Office, and the petition for clarification (“embargos de declaraçao”) subsequently filed by the Brazilian Public Prosecutor’s Office, which on 3 September admitted that no further appeals may be filed. In the case of Banco ABN AMRO Real, S.A. (currently Banco Santander (Brasil), S.A.), in March 2007 the court found in its favour, but the Brazilian authorities appealed against the judgment at the Federal Regional Court, which handed down a decision partly upholding the appeal in September 2009. Banco Santander (Brasil), S.A. filed an appeal at the Federal Supreme Court. Law 12,865/13 established a programme of payments or deferrals of certain tax and social security debts, under which any entities that availed themselves of the programme and withdrew the legal actions brought by them were exempted from paying late-payment interest. In November 2013 Banco Santander (Brasil) S.A. partially availed itself of this programme but only with respect to the legal actions brought by the former Banco ABN AMRO Real, S.A. in relation to the period from September 2006 to April 2009, and with respect to other minor actions brought by other entities in its Group. However, the legal actions brought by Banco Santander, S.A. and those of Banco ABN AMRO Real, S.A. relating to the periods prior to September 2006, for which the estimated loss was provided for, still subsist.

•

Banco Santander (Brasil), S.A. and other Group companies in Brazil appealed against the assessments issued by the Brazilian tax authorities questioning the deduction of loan losses in their income tax returns (IRPJ and CSLL) on the ground that the relevant requirements under the applicable legislation were not met. No provision has been 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 several 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. No provision was recognised in connection with the amount considered to be a contingent liability.

•

In addition, Banco Santander (Brasil), S.A. and other Group companies in Brazil are involved in several 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. No provision was recognised in connection with the amount considered to be a contingent liability.

•

In December 2008 the Brazilian tax authorities issued an infringement notice against Banco Santander (Brasil), S.A. in relation to income tax (IRPJ and CSLL) for 2002 to 2004. The tax authorities took the view that Banco Santander (Brasil), S.A. did not meet the necessary legal requirements to be able to deduct the goodwill arising on the acquisition of Banespa (currently Banco Santander (Brasil), S.A.). Banco Santander (Brasil) S.A. filed an appeal against the infringement notice at Conselho Administrativo de Recursos Fiscais (the Brazilian Tax Appeal Administrative Council, CARF), which on 21 October 2011 unanimously decided to render the infringement notice null and void. The tax authorities appealed against this decision at a higher administrative level. In June 2010 the Brazilian tax authorities issued infringement notices in relation to this same matter for 2005 to 2007. Banco Santander (Brasil), S.A. filed an appeal against these procedures at CARF, which was partially upheld on 8 October 2013. This decision was appealed at the Tax Appeal High Chamber, the higher instance of CARF. In December 2013 the Brazilian tax authorities issued the infringement notice relating to 2008, the last year for amortisation of the goodwill. Banco Santander (Brasil), S.A. appealed against this infringement notice and the court found in its favour. The Brazilian tax authorities appealed against this decision at CARF. Based on the advice of its external legal counsel and in view of the first decision by CARF, the Group considers that the stance taken by the Brazilian tax authorities is incorrect and that there are sound defence arguments to appeal against the infringement notices. Accordingly, the risk of incurring a loss is remote. Consequently, no provisions have been recognised in connection with these proceedings because this matter should not affect the consolidated financial statements.

•

In May 2003 the Brazilian tax authorities issued separate infringement notices against Santander Distribuidora de Títulos e Valores Mobiliarios Ltda. (DTVM) and Banco Santander Brasil, S.A. (currently Banco Santander (Brasil), S.A.) in relation to the Provisional Tax on Financial Movements (CPMF) with respect to certain transactions carried out by DTVM in the management of its customers’ funds and for the clearing services provided by Banco Santander Brasil, S.A. to DTVM in 2000, 2001 and the first two months of 2002. The two entities appealed against the infringement notices at CARF, with DTVM obtaining a favourable decision and Banco Santander Brasil, S.A. an unfavourable decision. Both decisions were appealed by the losing parties at the Higher Chamber of CARF. Unfavourable decisions were obtained for Banco Santander (Brasil) S.A. and DTVM on 12 and 19 June 2015, respectively. Both cases were appealed at court in a single proceeding and a provision was recognised for the estimated loss.

•

In December 2010 the Brazilian tax authorities issued an infringement notice against Santander Seguros, S.A., as the successor by merger to ABN AMRO Brazil Dois Participacoes, S.A., in relation to income tax (IRPJ and CSLL) for 2005. The tax authorities questioned the tax treatment applied to a sale of shares of Real Seguros, S.A. made in that year. The bank filed an appeal for reconsideration against this infringement notice. 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 was considered to be a contingent liability.

•

Also, in December 2010, the Brazilian tax authorities issued infringement notices against Banco Santander (Brasil), S.A. in connection with income tax (IRPJ and CSLL), questioning the tax treatment applied to the economic compensation received under the contractual guarantees provided by the sellers of the former Banco Meridional. The bank filed an appeal for reconsideration against this infringement notice. On 23 November 2011, CARF unanimously decided to render null and void an infringement notice relating to 2002 with regard to the same matter, and the decision was declared final in February 2012. The proceedings relating to the 2003 to 2006 fiscal years are still in progress although, based on the advice of its external legal counsel, the Group considers that the risk of incurring a loss is remote.

•

In June 2013, the Brazilian tax authorities issued an infringement notice against Banco Santander (Brasil), S.A. as the party liable for tax on the capital gain allegedly obtained in Brazil by the entity not resident in Brazil, Sterrebeeck B.V., as a result of the “incorporação de ações” (merger of shares) transaction carried out in August 2008. As a result of the aforementioned transaction, Banco Santander (Brasil), S.A. acquired all of the shares of Banco ABN AMRO Real, S.A. and ABN AMRO Brasil Dois Participações, S.A. through the delivery to these entities’ shareholders of newly issued shares of Banco Santander (Brasil), S.A., issued in a capital increase carried out for that purpose. The Brazilian tax authorities take the view that in the aforementioned transaction Sterrebeeck B.V. obtained income subject to tax in Brazil consisting of the difference between the issue value of the shares of Banco Santander (Brasil), S.A. that were received and the acquisition cost of the shares delivered in the exchange. In December 2014 the Group appealed against the infringement notice at CARF after the appeal for reconsideration lodged at the Federal Tax Office was dismissed. Based on the advice of its external legal counsel, the Group considers that the stance taken by the Brazilian tax authorities is incorrect and that there are sound defence arguments to appeal against the infringement notice. Accordingly, the risk of incurring a loss is remote. Consequently, the Group has not recognised any provisions in connection with these proceedings because this matter should not affect the consolidated financial statements.

•

In November 2014 the Brazilian tax authorities issued an infringement notice against Banco Santander (Brasil), S.A. in relation to 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. On the advice of its external legal counsel, Banco Santander (Brasil), S.A. lodged an appeal against this decision at the Federal Tax Office and obtained a favourable decision in July 2015, which will foreseeably be appealed at CARF by the Brazilian tax authorities. No provision was recognised in connection with this proceeding as it was considered to be a contingent liability. Banco Santander (Brasil), S.A. 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 Sudameris. No provision was recognised in connection with this matter as it was considered to be a contingent liability.

•

Legal action brought by Sovereign Bancorp, Inc. (currently Santander Holdings USA, Inc.) claiming its right to take a foreign tax credit in connection with taxes paid outside the United States in fiscal years 2003 to 2005 in relation to financing transactions carried out with an international bank. Santander Holdings USA Inc. considers that, in accordance with applicable tax legislation, it is entitled to recognise the aforementioned tax credits as well as the related issuance and financing costs. In addition, if the outcome of this legal action is favourable to the interests of Santander Holdings USA, Inc., the amounts paid over by the entity in relation to this matter with respect to 2006 and 2007 would have to be refunded. In 2013 the US courts found against two taxpayers in cases with a similar structure In the case of Santander Holdings USA, Inc. the proceeding was scheduled for 7 October 2013, although it was adjourned indefinitely when the judge found in favour of Santander Holdings USA, Inc. with respect to one of the main grounds of the case. Santander Holdings USA, Inc. is expecting the judge to rule on whether his previous decision will result in the proceedings being stayed in the case or whether other matters need to be analysed before a final decision may be handed down. If the decision is favourable to Santander Holdings USA, Inc.’s interests, the US government has stated its intention to appeal against it. The estimated loss relating to this proceeding was provided for.

•

Santander UK has proactively engaged with HM Revenue & Customs to resolve a number of outstanding legacy tax matters, all of which relate to periods prior to Santander UK Plc.’s adoption of the Code of Practice on Taxation for Banks. However, litigation proceedings were commenced in relation to a small number of these issues, with respect to which the court of first instance found in favour of HM Revenue & Customs. Santander UK has decided not to appeal these rulings. The provision recognised for the amounts relating to these matters has been used in full.

At the date of approval of these interim financial statements certain other less significant tax-related proceedings were also in progress.

ii. Other litigation

At 30 September 2015, the main non-tax-related proceedings concerning the Group were as follows:

•

Customer remediation: claims associated with the sale by Santander UK of certain financial products (principally payment protection insurance or PPI) to its customers.

At 30 September 2015, the provision recognised in this connection amounted to GBP 48 million. The monthly cost of remediation, excluding pro-active contact with customers, amounted to GBP 9 million per month, compared with a monthly average of GBP 9 million for 2014 (2013: GBP 18 million).

•

After the Madrid Provincial Appellate Court had rendered null and void the award handed down in the previous arbitration proceeding, on 8 September 2011, Banco Santander, S.A. filed a new request for arbitration with the Spanish Arbitration Court against Delforca 2008, S.A. (formerly Gaesco Bolsa Sociedad de Valores, S.A.), claiming EUR 66 million that the latter owes it as a result of the notice of acceleration of all the financial transactions agreed upon between the parties, issued by the Bank on 4 January 2008.

On 3 August 2012, Delforca 2008, S.A. was declared to be in a position of voluntary insolvency by Barcelona Commercial Court no. 10, which had agreed as part of the insolvency proceeding to stay the arbitration proceeding and the effects of the arbitration agreement entered into by Banco Santander, S.A. and Delforca 2008, S.A. The Arbitration Court, in compliance with the decision of the Commercial Court, agreed on 20 January 2013 to stay the arbitration proceedings at the stage reached at that date until a decision could be issued in this respect in the insolvency proceeding.

In addition, as part of the insolvency proceeding of Delforca 2008, S.A., Banco Santander, S.A. notified its claim against the insolvent party with a view to having the claim recognised as a contingent ordinary claim without specified amount. However, the insolvency manager opted to exclude Banco Santander, S.A.’s claim from the provisional list of creditors and, accordingly, Banco Santander, S.A. filed an ancillary claim which was dismissed by a court decision on 17 February 2015. This decision also held that Banco Santander, S.A. had breached its contractual obligations under the framework financial transactions agreement entered into with Delforca 2008, S.A.

As part of the same insolvency proceeding, Delforca 2008, S.A. filed another ancillary claim requesting the termination of the arbitration agreement included in the framework financial transactions agreement entered into by that party and Banco Santander, S.A. in 1998, as well as the termination of the obligation that allegedly binds the insolvent party to the High Council of Chambers of Commerce (Spanish Arbitration Court). This claim was upheld in full by the Court.

On 30 December 2013, Banco Santander filed a complaint requesting the termination of the insolvency proceeding of Delforca 2008, S.A. due to supervening disappearance of the alleged insolvency of the company. The complaint was dismissed by a decision handed down on 30 June 2014.

A court order dated 25 May 2015 declared the end of the common phase of the insolvency proceeding and the opening of the arrangement phase. Banco Santander filed an appeal against the court’s decisions on the following: 1) the stay of the arbitration proceeding and the effects of the arbitral award, 2) the termination of the arbitration agreement 3) the failure to recognise the contingent claim and the declaration of breach by Banco Santander, S.A. and 4) the decision not to conclude the proceeding due to the non-existence of insolvency.

On 23 June 2015, Delforca 2008, S.A. submitted an arrangement proposal entailing the payment in full of the ordinary and subordinate claims.

In its appeal documents Banco Santander requested the stay of any proceedings that might be affected by the decision on the appeals filed, including the stay of the insolvency proceeding and the processing of the common phase until a decision has been handed down on the appeals. By means of an interlocutory order made on 16 September 2015 the Court resolved to postpone the holding of the creditors’ meeting until the Provincial Appellate Court has handed down a decision on the requested stay of the proceedings.

In addition, in April 2009 Mobilaria Monesa, S.A. (parent of Delforca 2008, S.A.) filed a claim against Banco Santander, S.A. at Santander Court of First Instance no. 5, claiming damages which it says it incurred as a result of the (in its opinion) unwarranted claim filed by the Bank against its subsidiary, reproducing the same objections as Delforca 2008, S.A. This proceeding has currently been stayed on preliminary civil ruling grounds, against which Mobilaria Monesa, S.A. filed an appeal which was dismissed by the Cantabria Provincial Appellate Court in a judgment dated 16 January 2014.

Lastly, on 11 April 2012, Banco Santander, S.A. was notified of the claim filed by Delforca 2008, S.A., heard by Madrid Court of First Instance no. 21, in which it sought indemnification for the damage and losses it alleges it incurred due to the (in its opinion) unwarranted claim by the Bank. Delforca 2008, S.A. made the request in a counterclaim filed in the arbitration proceeding that concluded with the annulled award and put the figure at up to EUR 218 million. The aforementioned Court upheld the motion for declinatory exception proposed by Banco Santander, S.A. as the matter had been referred for arbitration. This decision was confirmed in an appeal at the Madrid Provincial Appellate Court in a judgment dated 27 May 2014. The Group considers that the risk of loss arising as a result of these matters is remote and, accordingly, it has not recognised any provisions in connection with these proceedings.

•

Former employees of Banco do Estado de São Paulo S.A., Santander Banespa, Cia. de Arrendamiento Mercantil: a claim was filed in 1998 by the association of retired Banespa employees (AFABESP) on behalf of its members, requesting the payment of a half-yearly bonus initially envisaged in the entity’s Bylaws in the event that the entity 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 the bank did not make a profit and partial payments were made from 1996 to 2000, as agreed by the board of directors, and the relevant clause was eliminated in 2001. The Regional Employment Court ordered the bank to pay this half-yearly bonus in September 2005 and the bank filed an appeal against the decision at the High Employment Court (“TST”) and, subsequently, at the Federal Supreme Court (“STF”). The TST confirmed the judgment against the bank, whereas the STF rejected the extraordinary appeal filed by the bank in a decision adopted by only one of the Court members, thereby also upholding the order issued to the bank. This decision was appealed by the bank and the association. Only the appeal lodged by the bank was given leave to proceed and will be decided upon by the STF in plenary session.

•

“Planos economicos”: Like the rest of the banking system, Santander Brazil has been the subject of claims from customers, mostly depositors, and of class actions brought for a common reason, arising from a series of legislative changes relating to the calculation of inflation (“planos economicos”). The claimants considered that their vested rights had been impaired due to the immediate application of these adjustments. In April 2010, the High Court of Justice (“STJ”) set the limitation period for these class actions at five years, as claimed by the banks, rather than 20 years, as sought by the claimants, which will probably significantly reduce the number of actions brought and the amounts claimed in this connection. As regards the substance of the matter, the decisions issued to date have been adverse for the banks, although two proceedings have been brought at the STJ and the Supreme Federal Court (“STF”) with which the matter is expected to be definitively settled. In August 2010, the STJ handed down a decision finding for the plaintiffs in terms of substance, but excluding one of the “planos” from the claim, thereby reducing the amount thereof, and once again confirming the five-year statute-of-limitations period. Shortly thereafter, the STF issued an injunctive relief order whereby the proceedings in progress were stayed until this court issues a final decision on the matter.

•

Proceeding under Criminal Procedure Law (case no. 1043/09) conducted at Madrid Court of First Instance no. 26, following a claim brought by Banco Occidental de Descuento, Banco Universal, C.A. against the Bank for USD 150 million in principal plus USD 4.7 million in interest, upon alleged termination of an escrow contract.

The court upheld the claim but did not make a specific pronouncement on costs. A judgment handed down by the Madrid Provincial Appellate Court on 9 October 2012 upheld the appeal lodged by the Bank and dismissed the appeal lodged by Banco Occidental de Descuento, Banco Universal, C.A., dismissing the claim. The dismissal of the claim was confirmed in an ancillary order to the judgment dated 28 December 2012. An appeal was filed at the Supreme Court by Banco Occidental de Descuento against the Madrid Provincial Appellate Court decision. The appeal was dismissed in a Supreme Court judgment dated 24 October 2014. Banco Occidental de Descuento filed a motion for annulment against the aforementioned judgment. The Bank filed a challenge. The Bank has not recognised any provisions in this connection.

•

On 26 January 2011, notice was served on the Bank of an ancillary insolvency claim to annul acts detrimental to the assets available to creditors as part of the voluntary insolvency proceedings of Mediterráneo Hispa Group, S.A. at Murcia Commercial Court no. 2. The aim of the principal action is to request annulment of the application of the proceeds obtained by the company undergoing insolvency from an asset sale and purchase transaction involving EUR 32 million in principal and EUR 2.7 million in interest. On 24 November 2011, the hearing was held with the examination of the proposed evidence. Upon completion of the hearing, it was resolved to conduct a final proceeding. The Court dismissed the claim in full in a judgment dated 13 November 2013. The judgment was confirmed at appeal by the Murcia Provincial Appellate Court in a judgment dated 10 July 2014. The insolvency managers filed a cassation and extraordinary appeal against procedural infringements against the aforementioned judgment.

•

The bankruptcy of various Lehman Group companies was made public on 15 September 2008. Various customers of Santander Group were affected by this situation since they had invested in securities issued by Lehman or in other products which had such assets as their underlying.

At the date of these interim financial statements, certain claims had been filed in relation to this matter. The Bank’s directors and its legal advisers consider that the various Lehman products were sold in accordance with the applicable legal regulations in force at the time of each sale or subscription and that the fact that the Group acted as intermediary would not give rise to any liability for it in relation to the insolvency of Lehman. Accordingly, the risk of loss is considered to be remote and, as a result, no provisions needed to be recognised in this connection.

•

The intervention, on the grounds of alleged fraud, of Bernard L. Madoff Investment Securities LLC (“Madoff Securities”) by the US Securities and Exchange Commission (“SEC”) took place in December 2008. The exposure of customers of the Group through the Optimal Strategic US Equity (“Optimal Strategic”) subfund was EUR 2,330 million, of which EUR 2,010 million related to institutional investors and international private banking customers, and the remaining EUR 320 million were part of the investment portfolios of the Group’s private banking customers in Spain, who were qualifying investors.

At the date of these interim financial statements, certain claims had been filed against Group companies in relation to this matter. The Group considers that it has at all times exercised due diligence and that these products have always been sold in a transparent way pursuant to applicable legislation and established procedures. The risk of loss is therefore considered to be remote or immaterial.

•

At the end of the first quarter of 2013, news stories were published stating that the public sector was debating the validity of the interest rate swaps arranged between various financial institutions and public sector companies in Portugal, particularly in the public transport industry.

The swaps under debate included swaps arranged by Banco Santander Totta, S.A. with the public companies Metropolitano de Lisboa, E.P.E. (MdL), Metro de Porto, S.A. (MdP), Sociedade de Transportes Colectivos do Porto, S.A. (STCP) and Companhia Carris de Ferro de Lisboa, S.A. (Carris). These swaps were arranged prior to 2008, i.e. before the start of the financial crisis, and had been executed without incident.

In view of this situation Banco Santander Totta, S.A. took the initiative to request a court judgment on the validity of the swaps in the jurisdiction of the United Kingdom to which the swaps are subject. The corresponding claims were filed in May 2013.

After the Bank had filed the claims, the four companies (MdL, MdP, STCP and Carris) notified Banco Santander Totta, S.A. that they were suspending payment of the amounts owed under the swaps until a final decision had been handed down in the UK jurisdiction in the proceedings. MdL, MdP and Carris suspended payment in September 2013 and STCP did the same in December 2013.

Consequently, Banco Santander Totta, S.A. extended each of the claims to include the unpaid amounts.

On 29 November 2013, the companies presented their defence in which they claimed that the swaps were null and void under Portuguese law and, accordingly, that they should be refunded the amounts paid.

On 14 February 2014, Banco Santander Totta, S.A. answered the counterclaim, maintaining its arguments and rejecting the opposing arguments in its documents dated 29 November 2013.

On 4 April 2014, the companies issued their replies to the bank’s documents. The preliminary hearing took place on 16 May 2014. The trial is set to begin on 12 October 2015.

Banco Santander Totta, S.A. and its legal advisers consider that the entity acted at all times in accordance with applicable legislation and under the terms of the swaps, and take the view that the UK courts will confirm the full validity and effectiveness of the swaps. As a result, the Group has not recognised any provisions in this connection.

•

Most of the German banking industry was affected by two German Supreme Court decisions in 2014 in relation to handling fees in consumer loan agreements.

In May 2014 the German Supreme Court held handling fees in loan agreements to be null and void. The Court subsequently handed down a ruling at the end of October 2014 extending the statute-of-limitations period for claims from three to ten years. As a result of the ruling, any claims relating to handling fees paid between 2004 and 2011 became statute-barred in 2014. This situation gave rise to numerous claims at the end of 2014 which affected the income statements of banks in Germany.

Santander Consumer Bank AG stopped including these handling fees in agreements from 1 January 2013 and ceased charging these fees definitively at that date, i.e. before the Supreme Court handed down its judgment on the issue.

In 2014 Santander Consumer Bank AG recognised provisions totalling approximately EUR 455 million to cover the estimated cost of the claims relating to handling fees, considering both the claims already received and the estimated claims that may be received in 2015 relating to fees paid in 2012; no new claims are expected to be received for fees paid earlier than 2012 since they are statute-barred.

The Bank 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).

In this context, it must be considered that the outcome of court proceedings is uncertain, particularly in the case of claims for indeterminate amounts, those based on legal issues for which there are no precedents, those that affect a large number of parties or those at a very preliminary stage.

With the information available to it, the Group considers that at 30 September 2015, it had reliably estimated the obligations associated with each proceeding and had recognised, where necessary, sufficient provisions to cover reasonably any liabilities that may arise as a result of these tax and legal situations. 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.

11.

Equity

In the nine-month periods ended 30 September 2015 and 2014 there were no other quantitative or qualitative changes in the Group’s equity other than those indicated in the condensed consolidated statements of changes in total equity.

Issued capital

On 8 January 2015, the Group announced that its board of directors had resolved to increase capital through an accelerated bookbuilt offering with disapplication of pre-emption rights. The capital increase amounted to EUR 7,500 million (BRL 23,830 million), of which EUR 607 million (BRL 1,928 million) related to the par value of the 1,213,592,234 new shares issued and EUR 6,893 million (BRL 21,902 million) to the share premium.

On 29 January and 29 April 2015, the bonus issues through which the Santander Dividendo Elección scrip dividend scheme was instrumented took place, whereby 262,578,993 and 256,046,919 shares (1.90% and 1.82% of the share capital) were issued for an amount of EUR 131 million and EUR 128 million (BRL 395 million and BRL 426 million), respectively.

At 30 September 2015, the Bank’s share capital consisted of 14,316,632,805 shares with a total nominal value of EUR 7,158 million (BRL 17,776 million).

Valuation adjustments - Available-for-sale financial assets

Valuation adjustments - Available-for-sale financial assets includes the net amount of unrealised changes in the fair value of assets classified as available-for-sale financial assets (see Note 5.b).

The breakdown, by type of instrument and geographical origin of the issuer, of Valuation adjustments - Available-for-sale financial assets at 30 September 2015 and 31 December 2014 is as follows:

Millions of euros

30/09/15

31/12/14

Revaluation
gains

Revaluation
losses

Net
revaluation
gains/(losses)

Fair value

Revaluation
gains

Revaluation
losses

Net
revaluation
gains/(losses)

Fair value

Debt instruments

Government debt securities and debt instruments issued by central banks

Spain

555

(82

)

473

34,270

835

(176

)

659

31,190

Rest of Europe

320

(55

)

265

20,851

325

(56

)

269

20,597

Latin America and rest of the world

(585

)

(489

)

28,950

(97

)

30,230

Private-sector debt securities

198

(187

)

28,894

243

(193

)

28,232

1,169

(909

)

260

112,965

1,492

(522

)

970

110,249

Equity instruments

Domestic

Spain

)

1,364

)

1,447

International

Rest of Europe

268

(57

)

211

1,139

282

(23

)

259

1,245

United States

)

949

—

762

Latin America and rest of the world

249

)

244

1,418

298

(19

)

279

1,547

578

(72

)

506

4,870

640

(50

)

590

5,001

Of which:

Listed

458

(64

)

394

1,557

311

(26

)

285

1,787

Unlisted

120

)

112

3,313

329

(24

)

305

3,214

1,747

(981

)

766

117,835

2,132

(572

)

1,560

115,250

Millions of reais

30/09/15

31/12/14

Revaluation
gains

Revaluation
losses

Net
revaluation
gains/(losses)

Fair value

Revaluation
gains

Revaluation
losses

Net
revaluation
gains/(losses)

Fair value

Debt instruments

Government debt securities and debt instruments issued by central banks

Spain

2,486

(367

)

2,119

153,557

2,686

(566

)

2,121

100,452

Rest of Europe

1,433

(246

)

1,187

93,429

1,047

(180

)

866

66,338

Latin America and rest of the world

430

(2,621

)

(2,191

)

129,719

287

(312

)

(26

)

97,360

Private-sector debt securities

886

(838

)

129,469

783

(622

)

162

90,929

5,235

(4,072

)

1,163

506,174

4,803

(1,680

)

3,123

355,079

Equity instruments

Domestic

Spain

179

(40

)

139

6,112

113

(26

)

4,661

International

Rest of Europe

1,201

(255

)

946

5,104

909

(74

)

834

4,010

United States

)

4,251

)

2,454

Latin America and rest of the world

1,116

(22

)

1,094

6,354

960

(62

)

899

4,982

2,590

(321

)

2,269

21,821

2,066

(162

)

1,903

16,107

Of which:

Listed

2,052

(286

)

1,766

6,976

1,001

(84

)

917

5,755

Unlisted

538

(35

)

503

14,845

1,062

(79

)

983

10,351

7,825

(4,393

)

3,432

527,995

6,869

(1,842

)

5,026

371,186

In the first nine months of 2015 the Group recognised EUR 121 million (BRL 422 million) in the income statement in relation to impairment of debt instruments and EUR 93 million (BRL 324 million) in relation to impairment of equity instruments.

Valuation adjustments - Hedges of net investments in foreign operations and Exchange differences

Valuation adjustments - Hedges of net investments in foreign operations includes the net amount of the changes in value of hedging instruments in hedges of net investments in foreign operations, in respect of the portion of these changes considered to be effective hedges.

Valuation adjustments - Exchange differences includes the net amount of exchange differences arising on non-monetary items whose fair value is adjusted against equity and the differences arising on the translation to euros of the balances of the consolidated entities whose functional currency is not the euro.

The net changes in both these items in the first nine months of 2015 recognised in the statement of recognised income and expense reflect the effect arising from the depreciation of foreign currencies, mainly the Brazilian real, and the appreciation of the pound sterling and the US dollar. Of the change in the balance in the first nine months, a loss of approximately EUR 902 million related to the measurement of goodwill using the period-end exchange rate.

Valuation adjustments - Other valuation adjustments

The changes in the balance of Valuation adjustments - Other valuation adjustments are shown in the condensed consolidated statement of recognised income and expense and include the actuarial gains and losses generated in the period and the return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset), less the administrative expenses and taxes inherent to the plan, and any change in the effect of the asset ceiling.

The most significant changes in the first nine months of 2015 related to:

•

Decrease of EUR 337 million (BRL 1,175 million) in the cumulative actuarial losses relating to the Group’s businesses in Brazil, due to an increase in the discount rate.

•

Decrease of EUR 288 million (BRL 1,005 million) in the cumulative actuarial losses relating to the Group’s businesses in the United Kingdom, due to an increase in the actual discount rate.

•

Increase of EUR 115 million (BRL 401 million) in the cumulative actuarial losses relating to the Group’s businesses in Spain, due to changes in the main actuarial assumptions -a decrease in the discount rate from 2% to 1.75%.

•

A net decrease of EUR 7 million (BRL 24 million) in the actuarial losses of the rest of the Group’s units, due to changes in the actuarial assumptions.

•

A net decrease of EUR 142 million (BRL 495 million) in the actuarial losses of all foreign units, due to changes in exchange rates.

12.

Segment information

In the first nine months of 2015 the Group made the following changes to its criteria for the management and presentation of its financial information by segment described in Note 52 to the consolidated financial statements for the year ended 31 December 2014:

•

Changes in criteria: the changes affect mainly the income statement line items Net interest income, Gains/losses on financial assets and liabilities (net) and Other operating expenses, due to a decrease in the corporate activities segment and its allocation to the business units.


Previous criteria		New criteria

The Spain business unit was treated as a retail network. Therefore, individualised internal transfer rates (ITR) by operation were applied to calculate the financial margin, and the balance sheet was matched in terms of interest rate risk. The counterparty of these results was the corporate activities segment.		The Spain business unit will be treated like the other countries and units of the Group. All results from financial management of the balance sheet will therefore be recorded in Spain, including the results from interest rate risk management.

The cost of issuances eligible as additional Tier 1 (AT1) capital made by Brazil and Mexico to replace core equity tier 1 (CET1) capital was recorded in the corporate activities segment, as the issuances were made for capital optimisation in these units.		Each country will recognise the cost related to its AT1 issuances.

The corporate activities segment costs were charged to the countries/units based on the previous structure, which had not changed in recent years.		The scope of costs allocated to the units from the corporate activities segment will be expanded in accordance with the new structure.

•

The United States geographical segment has been changed to include Santander Bank, Santander Holdings USA, SCUSA and Puerto Rico (already included in previous scope) plus Banco Santander International Miami and Banco Santander, S.A. New York branch.

The segment information for the first nine months of 2014 shown below has been recalculated using these criteria in order to make it comparable.

For Group management purposes, the primary level of segmentation, by geographical area, comprises five segments: four operating areas plus Corporate Centre. The operating areas, which include all the business activities carried on therein by the Group, are Continental Europe, the United Kingdom, Latin America and the United States, based on the location of the Group’s assets.

Following is the breakdown of revenue by the geographical segments used by the Group. For the purposes of the table below, revenue is deemed to be that recognised under Interest and similar income, Income from equity instruments, Fee and commission income, Gains/losses on financial assets and liabilities (net) and Other operating income in the accompanying condensed consolidated income statements for the nine-month periods ended 30 September 2015 and 2014.


Segment	Revenue (Millions of euros)
	Revenue from external customers				Inter-segment revenue						Total revenue
	30/09/15		30/09/14		30/09/15			30/09/14			30/09/15			30/09/14

Continental Europe		12,518		16,612		343			16			12,861			16,628
United Kingdom		8,329		7,253		417			516			8,746			7,769
Latin America		25,240		25,326		(790	)		(188	)		24,450			25,138
United States		7,778		5,615		78			34			7,856			5,649
Corporate Centre		1,912		2,155		4,817			5,957			6,729			8,112
Inter-segment revenue adjustments and eliminations		—		—		(4,865	)		(6,335	)		(4,865	)		(6,335	)

Total		55,777		56,961		—			—			55,777			56,961


Segment	Revenue (Millions of reais)
	Revenue from external customers				Inter-segment revenue						Total revenue
	30/09/15		30/09/14		30/09/15			30/09/14			30/09/15			30/09/14

Continental Europe		43,645		51,484		1,198			51			44,843			51,535
United Kingdom		29,041		22,481		1,452			1,599			30,493			24,080
Latin America		88,008		78,492		(2,756	)		(583	)		85,252			77,909
United States		27,120		17,401		272			106			27,392			17,507
Corporate Centre		6,666		6,678		16,797			18,463			23,463			25,141
Inter-segment revenue adjustments and eliminations		—		—		(16,963	)		(19,636	)		(16,963	)		(19,636	)

Total		194,480		176,536		—			—			194,480			176,536

Also, following is the reconciliation of the Group’s consolidated profit before tax for the nine-month periods ended 30 September 2015 and 2014, broken down by business segment, to the profit before tax per the consolidated income statements for these periods:


	Consolidated profit (Millions of euros)
Segment	30/09/15			30/09/14

Continental Europe		2,027			1,158
United Kingdom		1,523			1,170
Latin America		3,927			2,731
United States		937			756
Corporate Centre		(1,347	)		(625	)

Total profit of the segments reported		7,067			5,190
(+/-) Unallocated profit/loss		—			—
(+/-) Elimination of inter-segment profit/loss		—			—
(+/-) Other profit/loss		—			—
(+/-) Income tax and/or profit from discontinued operations		1,552			2,605

Profit before tax		8,619			7,795


	Consolidated profit (Millions of reais)
Segment	30/09/15			30/09/14

Continental Europe		7,067			3,589
United Kingdom		5,310			3,625
Latin America		13,691			8,466
United States		3,270			2,342
Corporate Centre		(4,696	)		(1,937	)

Total profit of the segments reported		24,642			16,085
(+/-) Unallocated profit/loss		—			—
(+/-) Elimination of inter-segment profit/loss		—			—
(+/-) Other profit/loss		—			—
(+/-) Income tax and/or profit from discontinued operations		5,411			8,074

Profit before tax		30,053			24,159

13.

Related parties

The parties related to the Group are deemed to include, in addition to its subsidiaries, associates and jointly controlled entities, the Bank’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 the Group with its related parties in the first nine months of 2015 and 2014, distinguishing between significant shareholders, members of the Bank’s board of directors, the Bank’s executive vice presidents, Group entities 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 recognised:


	Millions of euros
	30/09/15
Expenses and income	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Expenses:
Finance costs		—		—		13				13
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Leases		—		—		—		—		—
Services received		—		—		—		—		—
Purchases of goods (finished or in progress)		—		—		—		—		—
Valuation adjustments for uncollectible or doubtful debts		—		—		—		—		—
Losses on derecognition or disposal of assets		—		—		—		—		—
Other expenses		—		—		13		—		13

		—		—		26				26

Income:
Finance income		—		—		69		13		82
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Dividends received		—		—		—		—		—
Leases		—		—		—		—		—
Services rendered		—		—		—		—		—
Sale of goods (finished or in progress)		—		—		—		—		—
Gains on derecognition or disposal of assets		—		—		—		—		—
Other income		—		—		558		8		566

		—		—		627		21		648


	Millions of reais
	30/09/15
Expenses and income	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Expenses:
Finance costs		—		—		45				45
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Leases		—		—		—		—		—
Services received		—		—		—		—		—
Purchases of goods (finished or in progress)		—		—		—		—		—
Valuation adjustments for uncollectible or doubtful debts		—		—		—		—		—
Losses on derecognition or disposal of assets		—		—		—		—		—
Other expenses		—		—		45		—		45

		—		—		90				90

Income:
Finance income		—		—		241		45		286
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Dividends received		—		—		—		—		—
Leases		—		—		—		—		—
Services rendered		—		—		—		—		—
Sale of goods (finished or in progress)		—		—		—		—		—
Gains on derecognition or disposal of assets		—		—		—		—		—
Other income		—		—		1,946		28		1,974

		—		—		2,187		73		2,260


	Millions of euros
	30/09/15
Other transactions	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Purchases of tangible, intangible or other assets		—		2		—		—		2
Financing agreements: loans and capital contributions (lender)		—		24		6,585		1,463		8,072
Finance leases (lessor)		—		—		—		—		—
Repayment or termination of loans and leases (lessor)		—		—		—		—		—
Sales of tangible, intangible or other assets		—		—		—		—		—
Financing agreements: loans and capital contributions (borrower)		—		31		1,090		137		1,258
Finance leases (lessee)		—		—		—		—		—
Repayment or termination of loans and leases (lessee)		—		—		—		—		—

Guarantees provided		—		—		38		171		209

Guarantees received		—		—		—		—		—

Commitments acquired		—		5		49		91		145

Commitments/guarantees cancelled		—		—		—		—		—

Dividends and other distributed profit		—		14		—		50		64

Other transactions		—		—		4,345		2,084		6,429


	Millions of reais
	30/09/15
Other transactions	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Purchases of tangible, intangible or other assets		—		9		—		—		9
Financing agreements: loans and capital contributions (lender)		—		108		29,506		6,555		36,169
Finance leases (lessor)		—		—		—		—		—
Repayment or termination of loans and leases (lessor)		—		—		—		—		—
Sales of tangible, intangible or other assets		—		—		—		—		—
Financing agreements: loans and capital contributions (borrower)		—		139		4,884		614		5,637
Finance leases (lessee)		—		—		—		—		—
Repayment or termination of loans and leases (lessee)		—		—		—		—		—

Guarantees provided		—		—		170		766		936

Guarantees received		—		—		—		—		—

Commitments acquired		—		22		220		408		650

Commitments/guarantees cancelled		—		—		—		—		—

Dividends and other distributed profit		—		49		—		174		223

Other transactions		—		—		19,469		9,338		28,807


	Millions of euros
	30/09/14
Expenses and income	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Expenses:
Finance costs		—		—		14		1		15
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Leases		—		—		—		—		—
Services received		—		—		—		—		—
Purchases of goods (finished or in progress)		—		—		—		—		—
Valuation adjustments for uncollectible or doubtful debts		—		—		—		—		—
Losses on derecognition or disposal of assets		—		—		—		—		—
Other expenses		—		—		16		—		16

		—		—		30		1		31


Income:
Finance income		—		—		68		4		72
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Dividends received		—		—		—		—		—
Leases		—		—		—		—		—
Services rendered		—		—		—		—		—
Sale of goods (finished or in progress)		—		—		—		—		—
Gains on derecognition or disposal of assets		—		—		—		—		—
Other income		—		—		442		10		452

		—		—		510		14		524


	Millions of reais
	30/09/14
Expenses and income	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Expenses:
Finance costs		—		—		43		3		46
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Leases		—		—		—		—		—
Services received		—		—		—		—		—
Purchases of goods (finished or in progress)		—		—		—		—		—
Valuation adjustments for uncollectible or doubtful debts		—		—		—		—		—
Losses on derecognition or disposal of assets		—		—		—		—		—
Other expenses		—		—		50		—		50

		—		—		93		3		96


Income:
Finance income		—		—		211		12		223
Management or cooperation agreements		—		—		—		—		—
R&D transfers and licensing agreements		—		—		—		—		—
Dividends received		—		—		—		—		—
Leases		—		—		—		—		—
Services rendered		—		—		—		—		—
Sale of goods (finished or in progress)		—		—		—		—		—
Gains on derecognition or disposal of assets		—		—		—		—		—
Other income		—		—		1,370		31		1,401

		—		—		1,581		43		1,624


	Millions of euros
	30/09/14
Other transactions	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Purchases of tangible, intangible or other assets		—		—		—		—		—
Financing agreements: loans and capital contributions (lender)		—		31		6,941		1,246		8,218
Finance leases (lessor)		—		—		—		—		—
Repayment or termination of loans and leases (lessor)		—		—		—		—		—
Sales of tangible, intangible or other assets		—		—		—		—		—
Financing agreements: loans and capital contributions (borrower)		—		19		1,128		255		1,402
Finance leases (lessee)		—		—		—		—		—
Repayment or termination of loans and leases (lessee)		—		—		—		—		—

Guarantees provided		—		—		46		265		311

Guarantees received		—		—		—		—		—

Commitments acquired		—		5		72		134		211

Commitments/guarantees cancelled		—		—		—		—		—

Dividends and other distributed profit		—		13		—		74		87

Other transactions		—		—		5,555		3,292		8,847


	Millions of reais
	30/09/14
Other transactions	Significant shareholders		Directors and executives		Group companies or entities		Other related parties		Total

Purchases of tangible, intangible or other assets		—		—		—		—		—
Financing agreements: loans and capital contributions (lender)		—		96		21,393		3,840		25,329
Finance leases (lessor)		—		—		—		—		—
Repayment or termination of loans and leases (lessor)		—		—		—		—		—
Sales of tangible, intangible or other assets		—		—		—		—		—
Financing agreements: loans and capital contributions (borrower)		—		59		3,477		786		4,322
Finance leases (lessee)		—		—		—		—		—
Repayment or termination of loans and leases (lessee)		—		—		—		—		—

Guarantees provided		—		—		142		817		959

Guarantees received		—		—		—		—		—

Commitments acquired		—		15		222		413		650

Commitments/guarantees cancelled		—		—		—		—		—

Dividends and other distributed profit		—		40		—		229		269

Other transactions		—		—		17,121		10,146		27,267

In addition to the detail provided above, there were insurance contracts linked to pensions amounting to EUR 327 million (BRL 1,465 million) at 30 September 2015 (30 September 2014: EUR 331 million (BRL 1,021 million)).

14.

Average headcount

The average number of employees at the Group and at the Bank, by gender, in the nine-month periods ended 30 September 2015 and 2014 was as follows:

Bank

Group

Average headcount

30/09/15

30/09/14

30/09/15

30/09/14

Men

13,010

13,983

84,330

82,684

Women

10,162

10,241

104,164

101,012

23,172

24,224

188,494

183,696

15.

Other disclosures: valuation techniques for financial assets and liabilities

The following table shows a summary of the fair values, at 30 September 2015 and 31 December 2014, of the financial assets and liabilities indicated below, classified on the basis of the various measurement methods used by the Group to determine their fair value:


	Millions of euros
	30/09/15						31/12/14
	Published price quotations in active markets		Internal models		Total		Published price quotations in active markets		Internal models		Total

Financial assets held for trading		62,373		87,530		149,903		67,319		81,569		148,888
Other financial assets at fair value through profit or loss		3,308		48,802		52,110		3,670		39,003		42,673
Available-for-sale financial assets ⁽¹⁾		89,821		26,191		116,012		90,149		23,455		113,604
Hedging derivatives (assets)		299		8,024		8,323		26		7,320		7,346
Financial liabilities held for trading		21,949		90,511		112,460		17,409		92,383		109,792
Other financial liabilities at fair value through profit or loss		—		58,601		58,601		—		62,317		62,317
Hedging derivatives (liabilities)		460		8,713		9,173		226		7,029		7,255
Liabilities under insurance contracts		—		644		644		—		713		713


	Millions of reais
	30/09/15						31/12/14
	Published price quotations in active markets		Internal Models		Total		Published price quotations in active markets		Internal models		Total

Financial assets held for trading		279,481		392,204		671,685		216,813		262,711		479,524
Other financial assets at fair value through profit or loss		14,822		218,672		233,494		11,821		125,616		137,437
Available-for-sale financial assets ⁽¹⁾		402,470		117,357		519,827		290,343		75,542		365,885
Hedging derivatives (assets)		1,340		35,954		37,294		84		23,575		23,659
Financial liabilities held for trading		98,348		405,562		503,910		56,069		297,538		353,607
Other financial liabilities at fair value through profit or loss		—		262,580		262,580		—		200,704		200,704
Hedging derivatives (liabilities)		2,059		39,043		41,102		728		22,638		23,366
Liabilities under insurance contracts		—		2,886		2,886		—		2,296		2,296

(1)

In addition to the financial instruments measured at fair value shown in the foregoing table, at 30 September 2015, the Bank held equity instruments classified as available-for-sale financial assets and carried at cost amounting to EUR 1,823 million (BRL 8,168 million) (31 December 2014: EUR 1,646 million (BRL 5,301 million)).

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 very specific 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.

The Group did not make any material transfers of financial instruments between one measurement level and another in the nine-month period ended 30 September 2015.

The Group 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 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 most important products and families of derivatives, and the related valuation techniques and inputs, by asset class, are detailed in the consolidated financial statements as at 31 December 2014. These valuations include the calculation of the valuation adjustment for counterparty risk or default risk (the CVA and DVA recognised at 30 September 2015 totalled EUR 705 million and EUR 413 million (BRL 3,160 million and BRL 1,852 million), respectively).

Set forth below are the financial instruments at fair value whose measurement was based on internal models (Levels 2 and 3) at 30 September 2015 and 31 December 2014:

Millions of euros

Fair values calculated
using internal models at
30/09/15

Fair values calculated
using internal models at
31/12/14

Level 2

Level 3

Level 2

Level 3

Valuation techniques

Main inputs

ASSETS:

168,254

2,293

148,760

2,587

Financial assets held for trading

86,497

1,033

80,378

1,191

Loans and advances to credit institutions

2,104

—

1,815

—

Present Value Method

Observable market data

Loans and advances to customers (a)

8,235

—

2,921

—

Present Value Method

Observable market data

Debt and equity instruments

987

1,768

Present Value Method

Observable market data, HPI

Trading derivatives

75,171

986

73,874

1,106

Swaps

52,051

55,794

116

Present Value Method, Gaussian Copula (b)

Observable market data, basis, liquidity

Exchange rate options

1,180

—

1,000

—

Black-Scholes Model

Observable market data, liquidity

Interest rate options

8,571

679

8,385

768

Black’s Model, Heath-Jarrow-Morton Model

Observable market data, liquidity, correlation

Interest rate futures

202

—

132

—

Present Value Method

Observable market data

Index and securities options

2,941

129

2,420

111

Black-Scholes Model

Observable market data, dividends, correlation, liquidity, HPI

Other

10,226

118

6,143

111

Present Value Method, Monte Carlo simulation and other

Observable market data and other

Hedging derivatives

8,005

7,320

—

Swaps

6,186

7,058

—

Present Value Method

Observable market data, basis

Exchange rate options

—

Black-Scholes Model

Observable market data

Interest rate options

—

Black’s Model

Observable market data

Other

1,793

—

194

—

N/A

Other financial assets at fair value through profit or loss

48,329

473

38,323

680

Loans and advances to credit institutions

35,306

—

28,592

—

Present Value Method

Observable market data

Loans and advances to customers (c)

12,237

8,892

Present Value Method

Observable market data, HPI

Debt and equity instruments

786

390

839

602

Present Value Method

Observable market data

Available-for-sale financial assets

25,423

768

22,739

716

Debt and equity instruments

25,423

768

22,739

716

Present Value Method

Observable market data

LIABILITIES:

158,125

344

161,890

552

Financial liabilities held for trading

90,188

323

91,847

536

Deposits from central banks

1,968

—

2,041

—

Present Value Method

Observable market data

Deposits from credit institutions

1,830

—

5,531

—

Present Value Method

Observable market data

Customer deposits

9,693

—

5,544

—

Present Value Method

Observable market data

Trading derivatives

74,417

323

76,644

536

Swaps

50,943

56,586

Present Value Method, Gaussian Copula (b)

Observable market data, basis, liquidity, HPI

Exchange rate options

1,067

—

1,033

—

Black-Scholes Model

Observable market data, liquidity

Interest rate options

9,563

222

9,816

294

Black’s Model, Heath-Jarrow-Morton Model

Observable market data, liquidity, correlation

Index and securities options

3,070

100

3,499

193

Black-Scholes Model

Observable market data, dividends, correlation, liquidity, HPI

Interest rate and equity futures

871

—

165

—

Present Value Method

Observable market data

Other

8,903

—

5,545

—

Present Value Method, Monte Carlo simulation and other

Observable market data and other

Short positions

2,280

—

2,087

—

Present Value Method

Observable market data

Hedging derivatives

8,701

7,029

—

Swaps

8,210

6,901

—

Present Value Method

Observable market data, basis

Exchange rate options

—

Black-Scholes Model

Observable market data

Interest rate options

—

Black’s Model

Observable market data

Other

477

—

112

—

N/A

Other financial liabilities at fair value through profit or loss

58,592

62,301

Present Value Method

Observable market data

Liabilities under insurance contracts

644

—

713

—

Present Value Method

Millions of reais

Fair values calculated
using internal models at
30/09/15

Fair values calculated
using internal models at
31/12/14

Level 2

Level 3

Level 2

Level 3

Valuation techniques

Main inputs

ASSETS:

753,913

10,274

479,111

8,333

Financial assets held for trading

387,575

4,629

258,875

3,836

Loans and advances to credit institutions

9,427

—

5,846

—

Present Value Method

Observable market data

Loans and advances to customers (a)

36,899

—

9,408

—

Present Value Method

Observable market data

Debt and equity instruments

4,423

211

5,694

274

Present Value Method

Observable market data, HPI

Trading derivatives

336,826

4,418

237,927

3,562

Swaps

233,230

269

179,700

374

Present Value Method, Gaussian Copula (b)

Observable market data, basis, liquidity

Exchange rate options

5,287

—

3,219

—

Black-Scholes Model

Observable market data, liquidity

Interest rate options

38,405

3,042

27,006

2,473

Black’s Model, Heath-Jarrow-Morton Model

Observable market data, liquidity, correlation

Interest rate futures

905

—

424

—

Present Value Method

Observable market data

Index and securities options

13,178

578

7,794

357

Black-Scholes Model

Observable market data, dividends, correlation, liquidity, HPI

Other

45,821

529

19,784

358

Present Value Method, Monte Carlo simulation and other

Observable market data and other

Hedging derivatives

35,869

23,575

—

Swaps

27,718

22,731

—

Present Value Method

Observable market data, basis

Exchange rate options

—

129

—

Black-Scholes Model

Observable market data

Interest rate options

117

—

Black’s Model

Observable market data

Other

8,034

—

623

—

N/A

Other financial assets at fair value through profit or loss

216,553

2,119

123,425

2,191

Loans and advances to credit institutions

158,199

—

92,085

—

Present Value Method

Observable market data

Loans and advances to customers (c)

54,832

371

28,639

253

Present Value Method

Observable market data, HPI

Debt and equity instruments

3,522

1,748

2,701

1,938

Present Value Method

Observable market data

Available-for-sale financial assets

113,916

3,441

73,236

2,306

Debt and equity instruments

113,916

3,441

73,236

2,306

Present Value Method

Observable market data

LIABILITIES:

708,530

1,541

521,397

1,779

Financial liabilities held for trading

404,115

1,447

295,811

1,727

Deposits from central banks

8,818

—

6,574

—

Present Value Method

Observable market data

Deposits from credit institutions

8,200

—

17,813

—

Present Value Method

Observable market data

Customer deposits

43,432

—

17,856

—

Present Value Method

Observable market data

Trading derivatives

333,449

1,447

246,848

1,727

Swaps

228,262

182,247

158

Present Value Method, Gaussian Copula (b)

Observable market data, basis, liquidity, HPI

Exchange rate options

4,782

—

3,327

—

Black-Scholes Model

Observable market data, liquidity

Interest rate options

42,850

995

31,614

947

Black’s Model, Heath-Jarrow-Morton Model

Observable market data, liquidity, correlation

Index and securities options

13,758

448

11,269

622

Black-Scholes Model

Observable market data, dividends, correlation, liquidity, HPI

Interest rate and equity futures

3,903

—

532

—

Present Value Method

Observable market data

Other

39,894

—

17,859

—

Present Value Method, Monte Carlo simulation and other

Observable market data and other

Short positions

10,216

—

6,720

—

Present Value Method

Observable market data

Hedging derivatives

38,989

22,638

—

Swaps

36,786

22,226

—

Present Value Method

Observable market data, basis

Exchange rate options

—

Black-Scholes Model

Observable market data

Interest rate options

—

Black’s Model

Observable market data

Other

2,138

—

361

—

N/A

Other financial liabilities at fair value through profit or loss

262,540

200,652

Present Value Method

Observable market data

Liabilities under insurance contracts

2,886

—

2,296

—

Present Value Method

(a)	Includes mainly short-term loans and reverse repurchase agreements with corporate customers (mainly brokerage and investment companies).

(b)	Includes credit risk derivatives with a net fair value of EUR 131 million (BRL 589 million) recognised in the consolidated balance sheet. These assets and liabilities are measured using the Standard Gaussian Copula Model.

(c)

Includes home mortgage loans to financial institutions in the UK (which are regulated and partly financed by the Government). The fair value of these loans was obtained using observable market variables, including current market transactions with similar amounts and collateral facilitated by the UK Housing Association. Since the Government is involved in these financial institutions, the credit risk spreads have remained stable and are homogeneous in this sector. The results arising from the valuation model are checked against current market transactions.

The measurements obtained using the internal models might have been different had other methods or assumptions 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 consolidated balance sheet and the gains and losses arising from these financial instruments are reasonable.

The net loss recognised in the income statement for the nine-month period ended 30 September 2015 arising from the aforementioned valuation models amounted to EUR 326 million (BRL 1,135 million), of which a gain of EUR 32 million (BRL 112 million) related to models whose significant inputs are unobservable market data.

Level 3 financial instruments

Set forth below are the Group’s main financial instruments measured using unobservable market data that constitute significant inputs of the internal models (Level 3):

•

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 rate of that rate, its volatility and mortality rates, which are not always observable in the market and, accordingly, these instruments are considered illiquid.

•

The HPI spot rate: for some instruments the NSA HPI spot rate, which is directly observable and published on a monthly basis, is used. For other instruments where regional HPI rates must be used (published quarterly), adjustments are made to reflect the different composition of the rates and adapt them to the regional composition of Santander UK’s portfolio.

•

HPI growth rate: this is not always directly observable in the market, especially for long maturities, and is estimated in accordance with existing quoted prices. To reflect the uncertainty implicit in these estimates, adjustments are made based on an analysis of the historical volatility of the HPI, incorporating reversion to the mean.

•

HPI volatility: the long-term volatility is not directly observable in the market but is estimated on the basis of more short-term quoted prices and by making an adjustment to reflect the existing uncertainty, based on the standard deviation of historical volatility over various time periods.

•

Mortality rates: these are based on published official tables and adjusted to reflect the composition of the customer portfolio for this type of product at Santander UK.

•

Illiquid CDOs and CLOs in the portfolio of the treasury unit in Madrid. These are measured by grouping together the securities by type of underlying (sector/country), payment hierarchy (prime, mezzanine, junior, etc.), and assuming forecast conditional prepayment rates (CPR) and default rates, adopting conservative criteria.

•

Trading derivatives on baskets of shares. These are measured using advanced local and stochastic volatility models, using Monte Carlo simulations; the main unobservable input is the correlation between the prices of the shares in each basket in question.

•

Callable interest rate trading derivatives (Bermudan-style options) where the main unobservable input is mean reversion of interest rates.

The table below shows the effect, at 30 September 2015, 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:


Portfolio/Instrument	Valuation technique	Main unobservable inputs	Range	Weighted average			Impacts (in millions of euros)
(Level 3)	Valuation technique	Main unobservable inputs	Range	Weighted average			Unfavourable scenario			Favourable scenario
Financial assets held for trading
Debt instruments	Partial differential equations	Long-term volatility	27%-41%		32.30	%		(0.2	)		0.1
Trading derivatives	Present Value Method	Curves on TAB indices (*)	(a)			(a)		(2.5	)		2.5
	Present Value Method, Modified Black-Scholes Model	HPI forward growth rate	0%-5%		2.24	%		(34.6	)		42.6
	Present Value Method, Modified Black-Scholes Model	HPI spot rate	n/a		683	(***)		(11.6	)		11.6
	Gaussian Copula model	Probability of default	0%-5%		0.84	%		(13.0	)		2.6
	Advanced local and stochastic volatility models	Correlation between share prices	55%-75%		65	%		(8.5	)		8.5
	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		0.01	(***)		—			38.8

Hedging derivatives (assets)	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		3.0	%		(0.1	)		—

Other financial assets at fair value through profit or loss
Loans and advances to customers	Weighted average by probability (according to forecast mortality rates) of European HPI options, using the Black-Scholes model	HPI forward growth rate	0%-5%		2.6	%		(8.1	)		7.5
Debt and equity instruments	Weighted average by probability (according to forecast mortality rates) of HPI forwards, using the present value model	HPI forward growth rate	0%-5%		2.2	%		(46.1	)		56.8
	Weighted average by probability (according to forecast mortality rates) of HPI forwards, using the present value model	HPI spot rate	n/a		683	(**)		(27.1	)		27.1

Available-for-sale financial assets
Debt and equity instruments	Present Value Method, others	Non-performing loans and prepayment ratios, cost of capital, long-term earnings growth rate, long-term estimated dividends; valuation multipliers	(a)			(a)		(1.0	)		1.0

Financial liabilities held for trading
Trading derivatives	Present Value Method, Modified Black-Scholes Model	HPI forward growth rate	0%-5%		0.8	%		(21.4	)		4.3
	Present Value Method, Modified Black-Scholes Model	HPI spot rate	n/a		665.6	(**)		(19.9	)		21.3
	Present Value Method, Modified Black-Scholes Model	Curves on TAB indices (*)	(a)			(a)		—			—
	Advanced local and stochastic volatility models	Correlation between share prices	55%-75%		65	%			(b)			(b)
	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		0.01	(***)			(b)			(b)

Hedging derivatives (liabilities)	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		3.0	%		(0.1	)		—

Other financial liabilities at fair value through profit or loss	—	—	—		—				(b)			(b)


Portfolio/Instrument	Valuation technique	Main unobservable inputs	Range	Weighted average			Impacts (in millions of reais)
(Level 3)	Valuation technique	Main unobservable inputs	Range	Weighted average			Unfavourable scenario			Favourable scenario
Financial assets held for trading
Debt instruments	Partial differential equations	Long-term volatility	27%-41%		32.30	%		(0.7	)		0.4
Trading derivatives	Present Value Method	Curves on TAB indices (*)	(a)			(a)		(8.6	)		8.6
	Present Value Method, Modified Black-Scholes Model	HPI forward growth rate	0%-5%		2.24	%		(120.6	)		148.6
	Present Value Method, Modified Black-Scholes Model	HPI spot rate	n/a		683	(***)		(40.6	)		40.6
	Gaussian Copula model	Probability of default	0%-5%		0.84	%		(45.2	)		9.1
	Advanced local and stochastic volatility models	Correlation between share prices	55%-75%		65	%		(29.6	)		29.6
	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		0.01	(***)		—			135.3

Hedging derivatives (assets)	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		3.0	%		(0.2	)		—

Other financial assets at fair value through profit or loss
Loans and advances to customers	Weighted average by probability (according to forecast mortality rates) of European HPI options, using the Black-Scholes model	HPI forward growth rate	0%-5%		2.6	%		(28.1	)		26.2
Debt and equity instruments	Weighted average by probability (according to forecast mortality rates) of HPI forwards, using the present value model	HPI forward growth rate	0%-5%		2.2	%		(160.8	)		198.1
	Weighted average by probability (according to forecast mortality rates) of HPI forwards, using the present value model	HPI spot rate	n/a		683	(**)		(94.4	)		94.4

Available-for-sale financial assets
Debt and equity instruments	Present Value Method, others	Non-performing loans and prepayment ratios, cost of capital, long-term earnings growth rate, long-term estimated dividends; valuation multipliers	(a)			(a)		(3.4	)		3.4

Financial liabilities held for trading
Trading derivatives	Present Value Method, Modified Black-Scholes Model	HPI forward growth rate	0%-5%		0.8	%		(74.6	)		15.1
	Present Value Method, Modified Black-Scholes Model	HPI spot rate	n/a		665.6	(**)		(69.4	)		74.1
	Present Value Method, Modified Black-Scholes Model	Curves on TAB indices (*)	(a)			(a)		—			—
	Advanced local and stochastic volatility models	Correlation between share prices	55%-75%		65	%			(b)			(b)
	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		0.01	(***)			(b)			(b)

Hedging derivatives (liabilities)	Advanced multi-factor interest rate models	Mean reversion of interest rates	0.0001-0.03		3.0	%		(0.2	)		—

Other financial liabilities at fair value through profit or loss	—	—	—		—				(b)			(b)

(*)	TAB: “Tasa Activa Bancaria” (Active Bank Rate). Average deposit interest rates (over 30, 90, 180 and 360 days) published by the Chilean Association of Banks and Financial Institutions (ABIF) in nominal currency (Chilean peso) and in real terms, adjusted for inflation (Unidad de Fomento - UF).

(**)	There are regional indices in addition to a UK nationwide HPI. The HPI spot value is the weighted average of the indices that correspond to the positions of each portfolio. The impact reported is a change of 10%.

(***)

Theoretical average value of the parameter. The change made for the favourable scenario is from 0.0001% to 0.03%. An unfavourable scenario was not considered as there was no margin for downward movement from the parameter’s current level. The Group is also exposed, to a lesser extent, to this type of derivative in currencies other than the euro and, therefore, both the average and the range of the unobservable inputs are different. The impact in an unfavourable scenario would be EUR 2.7 million (BRL 9.4 million).

(a)

The exercise was conducted for the unobservable inputs described in the Main unobservable inputs column under probable scenarios. The range and weighted average value used are not shown because the aforementioned exercise was conducted jointly for various inputs or variants thereof (e.g. the TAB input comprises vector-time curves, for which there are also nominal yield curves and inflation-indexed yield curves), and it was not possible to break down the results separately by type of input. In the case of the TAB curve the gain or loss is reported for changes of +/-100 b.p. for the total sensitivity to this index in Chilean pesos and UFs.

(b)

The Group calculates the potential impact on the measurement of each instrument on a joint basis, regardless of whether the individual value is positive (assets) or negative (liabilities), and discloses the joint effect associated with the related instruments classified on the asset side of the consolidated balance sheet.

Lastly, the changes in the financial instruments classified as Level 3 in the first nine months of 2015 were as follows:


	31/12/14		Changes																							30/09/15
Millions of euros	Fair value calculated using internal models (Level 3)		Purchases		Sales			Issues		Settlements			Changes in fair value recognised in profit or loss (unrealised)			Changes in fair value recognised in profit or loss (realised)			Changes in fair value recognised in equity		Level reclassifications		Other			Fair value calculated using internal models (Level 3)

Financial assets held for trading		1,191		—		(254	)		—		—			85			(6	)		—		—		17			1,033
Debt and equity instruments		85		—		(35	)		—		—			(8	)		8			—		—		(3	)		47
Trading derivatives		1,106		—		(219	)		—		—			93			(14	)		—		—		20			986
Swaps		116		—		(59	)		—		—			24			(14	)		—		—		(7	)		60
Interest rate options		768		—		(108	)		—		—			(6	)		—			—		—		25			679
Index and securities options		111		—		(48	)		—		—			70			—			—		—		(4	)		129
Other		111		—		(4	)		—		—			5			—			—		—		6			118
Hedging derivatives		—		—		—			—		—			2			—			—		17		—			19
Swaps		—		—		—			—		—			2			—			—		17		—			19
Other financial assets at fair value through profit or loss		680		1		(16	)		—		—			(48	)		—			—		—		(144	)		473
Loans and advances to customers		78		—		—			—		—			4			—			—		—		1			83
Debt and equity instruments		602		1		(16	)		—		—			(52	)		—			—		—		(145	)		390
Available-for-sale financial assets		716		2		(67	)		—		(58	)		—			—			12		60		103			768
TOTAL ASSETS		2,587		3		(337	)		—		(58	)		39			(6	)		12		77		(24	)		2,293

Financial liabilities held for trading		536		3		(222	)		—		—			3			—			—		—		3			323
Trading derivatives		536		3		(222	)		—		—			3			—			—		—		3			323
Swaps		49		—		(49	)		—		—			1			—			—		—		—			1
Interest rate options		294		—		(76	)		—		—			3			—			—		—		1			222
Index and securities options		193		3		(97	)		—		—			(1	)		—			—		—		2			100
Hedging derivatives		—		—		—			—		—			(9	)		—			—		5		16			12
Swaps		—		—		—			—		—			(9	)		—			—		5		16			12
Other liabilities at fair value through profit or loss		16		—		(9	)		—		—			7			—			—		—		(5	)		9
TOTAL LIABILITIES		552		3		(231	)		—		—			1			—			—		5		14			344


	31/12/14		Changes																							30/09/15
Millions of reais	Fair value calculated using internal models (Level 3)		Purchases		Sales			Issues		Settlements			Changes in fair value recognised in profit or loss (unrealised)			Changes in fair value recognised in profit or loss (realised)			Changes in fair value recognised in equity		Level reclassifications		Other			Fair value calculated using internal models (Level 3)

Financial assets held for trading		3,836		—		(886	)		—		—			296			(21	)		—		—		1,404			4,629
Debt and equity instruments		274		—		(122	)		—		—			(28	)		28			—		—		59			211
Trading derivatives		3,562		—		(764	)		—		—			324			(49	)		—		—		1,345			4,418
Swaps		374		—		(206	)		—		—			84			(49	)		—		—		66			269
Interest rate options		2,473		—		(377	)		—		—			(21	)		—			—		—		967			3.042
Index and securities options		357		—		(167	)		—		—			244			—			—		—		144			578
Other		358				(14	)		—		—			17			—			—		—		168			529
Hedging derivatives		—		—		—			—		—			7			—			—		59		19			85
Swaps		—		—		—			—		—			7			—			—		59		19			85
Other financial assets at fair value through profit or loss		2,191		3		(56	)		—		—			(167	)		—			—		—		148			2,119
Loans and advances to customers		253		—		—			—		—			14			—			—		—		104			371
Debt and equity instruments		1,938		3		(56	)		—		—			(181	)		—			—		—		44			1,748
Available-for-sale financial assets		2,306		7		(234	)		—		(202	)		—			—			42		209		1,313			3,441
TOTAL ASSETS		8,333		10		(1,176	)		—		(202	)		136			(21	)		42		268		2,884			10,274

Financial liabilities held for trading		1,727		10		(774	)		—		—			10			—			—		—		474			1,447
Trading derivatives		1,727		10		(774	)		—		—			10			—			—		—		474			1,447
Swaps		158		—		(171	)		—		—			3			—			—		—		14			4
Interest rate options		947		—		(265	)		—		—			10			—			—		—		303			995
Index and securities options		622		10		(338	)		—		—			(3	)		—			—		—		157			448
Hedging derivatives		—		—		—			—		—			(31	)		—			—		17		68			54
Swaps		—		—		—			—		—			31			—			—		17		68			54
Other liabilities at fair value through profit or loss		52		—		(31	)		—		—			24			—			—		—		(5	)		(40	)
TOTAL LIABILITIES		1,779		10		(805	)		—		—			3			—			—		17		537			1,541

16.

Explanation added for translation to English

These interim condensed consolidated financial statements are presented on the basis of the regulatory financial reporting framework applicable to the Group (see Note 1.b). Certain accounting practices applied by the Group that conform with that regulatory framework may not conform with other generally accepted accounting principles and rules.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		Banco Santander, S.A.

Date:	November 5, 2015	By:	/s/ José García Cantera
			Name:	José García Cantera
			Title:	Chief Financial Officer