Banco Santander, S.A 6-K, filed Aug 1, 2024
Banco Santander, S.A. (SAN)
About this 6-K
Banco Santander, S.A filed this 6-K on August 1, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2024
Commission File Number: 001-12518
BANCO SANTANDER, S.A.
Ciudad Grupo Santander
28660 Boadilla del Monte
Madrid
Spain
(Address of principal executive offices)
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 ☒ Form 40-F ☐
EXPLANATORY NOTE
In connection with the issuance by Banco Santander, S.A. of $1,500,000,000 aggregate liquidation preference of 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities, Banco Santander, S.A. is filing the following documents solely for incorporation into the Registration Statement on Form F-3 (File No. 333-271955):
Exhibit List
SIGNATURES
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. | ||||||
| (Registrant) | ||||||
| Date: August 1, 2024 | By: | /s/ José Antonio Soler | ||||
| Name: José Antonio Soler | ||||||
| Title: Authorized Representative | ||||||
Exhibit 1.1
Execution Version
BANCO SANTANDER, S.A.
(a company with limited liability organized under
the laws of The Kingdom of Spain)
U.S.$1,500,000,000 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities
UNDERWRITING AGREEMENT
July 29, 2024
Barclays Capital Inc.
745 Seventh Avenue
New York, NY 10019
BofA Securities, Inc.
One Bryant Park
New York, NY 10036
Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013
J.P. Morgan Securities LLC
383 Madison Avenue
New York, NY 10179
Morgan Stanley & Co. LLC
1585 Broadway, 29th Floor
New York, NY 10036
Santander US Capital Markets LLC
437 Madison Avenue
New York, NY 10022
As Representatives of the Several Underwriters
named on Schedule I hereto
Ladies and Gentlemen:
Banco Santander, S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Bank”), proposes to issue and sell to the several underwriters named in Schedule I hereto (the “Underwriters”), acting severally and not jointly, the respective amounts set forth in Schedule I hereto of the securities specified in Exhibit D hereto (the “Securities”) to be issued pursuant to the resolutions
of the Bank’s general shareholders’ meeting and Board of Directors and Executive Committee approving the issuance of the Securities and the indenture dated November 21, 2023 (the “Base Indenture”) between the Bank and The Bank of New York Mellon, London Branch, as trustee (the “Trustee”) as amended and supplemented, with respect to the Securities, by a supplemental indenture to be dated on or about August 1, 2024, which together with the Base Indenture sets out the terms and rights of this particular issue of Securities (the “Second Supplemental Indenture” and the Base Indenture as supplemented, with respect to the Securities, by the Second Supplemental Indenture, and as further supplemented from time to time, the “Indenture”). Barclays Capital Inc., BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Santander US Capital Markets LLC have agreed to act as representatives of the several Underwriters (in such capacity, the “Representatives”) in connection with the offering and sale of the Securities.
The Bank has filed with the Securities and Exchange Commission (the “Commission”) a registration statement, including a prospectus (file number 333-271955), on Form F-3 relating to securities (the “Shelf Securities”), including the Securities, to be issued from time to time by the Bank. The registration statement as amended to the date of this agreement (the “Agreement”), including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as the “Registration Statement,” and the related prospectus covering the Shelf Securities dated May 16, 2023, in the form first used to confirm sales of the Securities (or in the form first made available to the Underwriters by the Bank to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Base Prospectus.” The Base Prospectus, as supplemented by the prospectus supplement specifically relating to the Securities in the form first used to confirm sales of the Securities (or in the form first made available to the Underwriters by the Bank to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is hereinafter referred to as the “Prospectus,” and the term “preliminary prospectus” means any preliminary form of the Prospectus. For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act, “Time of Sale Prospectus” means the Base Prospectus as supplemented by the preliminary prospectus, together with the free writing prospectuses, if any, each identified in Exhibit E hereto, and intended for general distribution to prospective investors, and “road show” means any road show as defined in Rule 433(h) under the Securities Act. As used herein, the terms “Registration Statement,” “Base Prospectus,” “preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein. The terms “supplement,” “amendment,” and “amend” as used herein with respect to the Registration Statement, the Base Prospectus, the Time of Sale Prospectus, any preliminary prospectus or free writing prospectus shall include all documents subsequently filed by the Bank with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are deemed to be incorporated by reference therein.
| 1. | Representations and Warranties. The Bank represents and warrants to, and agrees with, each of the Underwriters that as of the date hereof: |
| (a) | The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or threatened by the Commission. The Bank is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) eligible to use the Registration Statement as an “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act) and the Bank has not received notice that the Commission objects to the use of the Registration Statement as an automatic shelf registration statement. |
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| (b) | Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Time of Sale Prospectus or the Prospectus complied or will comply when so filed in all material respects with the Securities Act, the Exchange Act and the applicable rules and regulations of the Commission thereunder, (i) each part of the Registration Statement, when such part became effective, did not contain, and each such part, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) the Registration Statement as of the date hereof does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply, and as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iv) the Time of Sale Prospectus does not, and at the time of each sale of the Securities in connection with the offering when the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 3 below), the Time of Sale Prospectus, as then amended or supplemented by the Bank, if applicable, will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (v) each road show, if any, when considered together with the Time of Sale Prospectus, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (vi) the Prospectus does not contain and, as amended or supplemented, if applicable, at the Closing Date, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to (A) statements or omissions in the Registration Statement, the Time of Sale Prospectus or the Prospectus based upon information relating to any Underwriter furnished to the Bank in writing by such Underwriter expressly for use therein (it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 16 hereof) or (B) that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), of the Trustee. |
| (c) | The Bank is not an “ineligible issuer” in connection with the offering pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus that the Bank is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be, filed with the Commission in accordance with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder. Each free writing prospectus that the Bank has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or that was prepared by or on behalf of or used or referred to by the Bank complies or will comply in all material respects with the requirements of the |
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| Securities Act and the applicable rules and regulations of the Commission thereunder and did not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Except for the free writing prospectuses, if any, identified in Exhibit E hereto, and electronic road shows, if any, each furnished to the Representatives before first use, the Bank has not prepared, used or referred to, and will not, without the Representatives’ prior consent, prepare, use or refer to, any free writing prospectus. |
| (d) | The Bank has been duly incorporated and is validly existing as a limited liability corporation (sociedad anónima) in good standing under the laws of The Kingdom of Spain. |
| (e) | The Bank has full power and capacity to issue the Common Shares (as defined in the Prospectus) to be issued upon conversion of the Securities, to grant a public deed of issuance of the Securities (escritura pública) (the “Public Deed of Issuance”) and to undertake and perform the obligations assumed by it herein and therein, and has taken all necessary actions to approve and to authorize the same. |
| (f) | On or prior to the Closing Date, the Securities will be duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, will be entitled to the benefits of the Indenture, and will constitute valid and legally binding obligations of the Bank, enforceable against the Bank in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally or by general equity principles; the Securities will be consistent with the descriptions thereof contained in the Time of Sale Prospectus and the Prospectus, and such descriptions will conform to the rights set forth in the instruments defining the same. |
| (g) | This Agreement has been duly authorized, executed and delivered by the Bank. |
| (h) | On or prior to the Closing Date, the Indenture will have been duly qualified under the Trust Indenture Act, will have been duly authorized by the Bank and will constitute a valid and legally binding agreement of the Bank, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally or by general equity principles. |
| (i) | The execution and delivery of this Agreement and the Indenture, the issuance, delivery and sale of the Securities, the performance of this Agreement and compliance by the Bank, as applicable, with the terms of this Agreement, the Indenture and the terms of the Securities have been duly authorized by all necessary corporate action on the part of the Bank, as applicable, and, upon their execution and delivery, did not or, if applicable, will not result in any violation of the memorandum and articles of association (or similar constitutive documents) of the Bank and do not and will not conflict with, or breach, any of the terms or provisions of, or constitute a default under, (i) any indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Bank is a party or by which it may be bound or to which any of its properties may be |
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| subject or (ii) any existing applicable law, rule, regulation, judgment, order or decree of any governmental instrumentality or court having jurisdiction over the Bank or any of the properties of either of them (except, in either case, for such conflicts, breaches or defaults that would not have a material adverse effect on the financial condition of the Bank and its subsidiaries considered as one enterprise, or on the earnings or business affairs of the Bank and its subsidiaries, considered as one enterprise). |
| (j) | No consent, approval, authorization or order of any governmental instrumentality or court is required for the consummation by the Bank of the transactions contemplated hereby, except (i) such as may be required by the securities or Blue Sky laws of the various states of the United States in connection with the offer and sale of the Securities, and (ii) such approvals as have been obtained. Notwithstanding the foregoing, on or after the Closing Date, the following will need to be obtained: (i) the granting and registration with the Mercantile Registry of Cantabria of the Public Deed of Issuance, (ii) the filing of such public deed as tax exempt of stamp duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, en su modalidad de Actos Jurídicos Documentados), and (iii) the granting and registration with the Mercantile Registry of Cantabria of a public deed of disbursement (acta de cierre) (the “Public Deed of Disbursement”). In addition, upon conversion of the Securities into Common Shares, the following will need to be obtained or, as the case may be, effected: (i) the granting and registration with the Mercantile Registry of Cantabria of the public deed of issuance (escritura pública) of the Common Shares, (ii) the filing of such public deed as tax exempt of capital duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, en su modalidad de Operaciones Societarias), (iii) the filing of such public deed with Iberclear; and (iv) if the Bank’s shares are listed and admitted to trading at the time of conversion, the listing and admission to trading on the relevant stock exchange of the Common Shares issued upon conversion of the Securities. |
| (k) | Neither the Bank, nor any of its affiliates (as defined in Rule 405 under the Securities Act), nor any person acting on its or their behalf has taken or will take, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to cause or result in, the stabilization in violation of applicable laws or manipulation of the price of any security of the Bank to facilitate the sale or resale of the Securities. |
| (l) | The preliminary prospectus filed with the Commission pursuant to Rule 424 under the Securities Act on July 29, 2024 complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder. |
| (m) | The Bank calculates, reviews, assesses and estimates its individual and consolidated regulatory capital requirements as it reasonably believes is required to comply in all material respects with Applicable Banking Regulations (as defined in the Prospectus). |
| (n) | The Bank monitors, reviews, calculates, assesses and estimates the sufficiency of its distributable items as it reasonably believes is required by Applicable Banking Regulations. |
| (o) | The Bank maintains “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act). |
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| (p) | The Bank is not, and after giving effect to the offer and sale of the Securities, will not be, required to register as an “investment company,” as such term is defined in the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”). |
| (q) | The financial statements of the Bank and its consolidated subsidiaries, together with the related schedules, if any, (the “Financial Statements”) that have been included or incorporated by reference in the Registration Statement, the Time of Sale Prospectus and the Prospectus present fairly the financial position of the Bank and its consolidated subsidiaries at the dates indicated and the statement of operations, stockholders’ equity and cash flows of the Bank and its consolidated subsidiaries for the periods specified; and said Financial Statements have been prepared in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (the “IFRS-IASB”). The supporting schedules, if any, included or incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance with IFRS-IASB, the information required to be stated therein. The selected financial data and the summary financial information included or incorporated by reference in the Time of Sale Prospectus and the Prospectus present fairly, in accordance with IFRS-IASB, the information shown therein and have been compiled on a basis consistent with that of the Financial Statements incorporated by reference in the Time of Sale Prospectus and the Prospectus. |
| (r) | The Bank acknowledges and agrees that each of the Underwriters is acting solely in the capacity of an arm’s length contractual counterparty to the Bank with respect to the offering of the Securities (including in connection with determining the terms of the offering contemplated by this Agreement) and not as an agent or fiduciary to the Bank or any other person. Additionally, the Underwriters are not advising the Bank or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Bank shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of such matters, and the Underwriters shall have no responsibility or liability to the Bank or any other person with respect to such matters. Any review by the Underwriters of the Bank, the transactions contemplated by this Agreement or any other due diligence review by the Underwriters in connection with such transactions will be performed solely for the benefit of the Underwriters and shall not be on or behalf of the Bank or any other person. |
| (s) | So long as certain conditions set forth in Law 10/2014, of June 26, on organization, supervision and solvency of credit institutions (“Law 10/2014”) are met, any payments in respect of the Securities made by the Bank to a beneficial owner, who is not tax resident in Spain and does not operate with respect to the Securities through a permanent establishment in Spain, shall not be subject to taxation in Spain pursuant to Royal Legislative Decree 5/2004 of March 5, promulgating the consolidated text of the non-resident income tax law (Real Decreto Legislativo 5/2004, de 5 de Marzo, por el que se aprueba el texto refundido de la Ley del Impuesto sobre la Renta de no Residentes), and no withholding tax on account of Spanish taxes shall be required on such payments, except that payments made to beneficial owners, who are not tax resident in Spain, where the Bank has not received from the paying agent certain information about the Securities will be subject to Spanish withholding tax at the applicable rate (currently 19%). |
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| (t) | The payment obligations of the Bank under the Securities constitute direct, unconditional, unsecured and subordinated obligations (créditos subordinados) of the Bank according to Article 281.1 of the Spanish Insolvency Law (as defined in the Prospectus) and, in accordance with Additional Provision 14.3 of Law 11/2015, but subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), upon the insolvency of the Bank, for so long as the Securities constitute Additional Tier 1 Instruments (as defined in the Prospectus), rank: (a) pari passu among themselves and with (i) all other subordinated obligations (créditos subordinados) of the Bank under Additional Tier 1 Instruments and (ii) any other subordinated obligations (créditos subordinados) of the Bank which by law and/or by their terms, to the extent permitted by Spanish law, rank pari passu with the Bank’s obligations under Additional Tier 1 Instruments; (b) junior to (i) any unsubordinated obligations (créditos ordinarios) of the Bank, (ii) any subordinated obligations (créditos subordinados) of the Bank under Tier 2 Instruments (as defined in the Prospectus) and (iii) any other subordinated obligations (créditos subordinados) of the Bank which by law and/or by their terms, to the extent permitted by Spanish law, rank senior to the Bank’s obligations under Additional Tier 1 Instruments; and (c) senior to (i) any claims for the liquidation amount of the Common Shares and (ii) any other subordinated obligations (créditos subordinados) of the Bank which by law and/or by their terms, to the extent permitted by Spanish law, rank junior to the Bank’s obligations under Additional Tier 1 Instruments. |
| (u) | As of the date hereof, the Bank has not made, and will not make (without prior consent of the Representatives) any public offer of the Securities by means of Supplemental Offering Materials. For purposes of this Agreement, “Supplemental Offering Materials” means any “written communication” (within the meaning of the rules and regulations promulgated under the Securities Act) prepared by or on behalf of the Bank, or used or referred to by the Bank, that constitutes an offer to sell or a solicitation of an offer to buy the Securities (other than the free writing prospectuses identified in Exhibit E hereto, the Time of Sale Prospectus and the Prospectus), including, without limitation, any road show materials relating to the Securities that constitute such a written communication. |
| (v) | Under the laws of The Kingdom of Spain, neither the Bank, nor any of its revenues, assets or properties have any right of immunity from service of process or from the jurisdiction of competent courts of The Kingdom of Spain or the United States or the State of New York in connection with any suit, action or proceeding, attachment prior to judgment, attached in aid of execution of a judgment or execution of a judgment or from any other legal process with respect to its obligations under this Agreement, the Indenture and the Securities (together, the “Transaction Documents”). |
| (w) | The choice of the law of the State of New York as the governing law of the Transaction Documents, except for those sections or provisions which are subject to Spanish law as set forth in the Prospectus, is a valid, effective and irrevocable choice of law under the laws of The Kingdom of Spain. The Bank has the power to submit and, pursuant to the Transaction Documents to which it is a party, has legally, validly, effectively and irrevocably submitted to the non-exclusive personal jurisdiction of the United States |
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| District Court for the Southern District of New York and the Supreme Court of New York, New York County (including, in each case, any appellate courts therefrom) in any suit, action or proceeding against it arising out of or related to any of the Transaction Documents, including with respect to its obligations, liabilities or any other matter arising out of or in connection with this Agreement, and has validly and irrevocably waived any objection to the venue of a proceeding in any such court and has the power to designate, appoint and empower and pursuant to Section 13 of this Agreement has legally, validly, effectively and irrevocably designated, appointed and empowered an agent for service of process in any suit or proceeding based on or arising under this Agreement in any federal or state court in the State of New York. |
| (x) | None of the Bank or any of its Significant Subsidiaries (as such term is defined in Rule 1.02(w) of Regulation S-X under the Securities Act (“Significant Subsidiaries”)), nor, to the knowledge of the Bank, any director, officer, agent, employee, affiliate or person acting on behalf of the Bank is currently the subject of any U.S. sanctions administered by the U.S. Department of State or the Office of Foreign Assets Control of the U.S. Treasury Department or any similar European, Spanish, U.K. or Brazilian sanctions administered by the European Union, Spain, the United Kingdom or Brazil (together, “Sanctions”), and the Bank is not located, organized or resident in a country or a territory that is the subject of such sanctions; and the Bank will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person known by the Bank to be currently the subject of any Sanctions or is in Iran, North Korea, Syria, Cuba, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, the non-government controlled areas of Zaporizhzhia and Kherson, or in any other country or territory that, at the time of such funding is the subject of such sanctions, except to the extent permissible for a person required to comply with such Sanctions; nor will the Bank directly or indirectly use the transaction proceeds to contravene any Sanctions. |
| (y) | The operations of the Bank and its Significant Subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the European Union, The Kingdom of Spain, the United Kingdom, Brazil, the United States and each State thereof and the money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any European, Spanish, U.K., Brazilian or U.S., as applicable, governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Bank or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Bank, threatened (except for actions, suits or proceedings that are being or expected to be contested or appealed in good faith and which would not be material in the context of the issuance and sale of the Securities). |
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| (z) | None of the Bank or any of its Significant Subsidiaries or, to the knowledge of the Bank, any director, officer, agent, employee of the Bank or any of the Bank’s Significant Subsidiaries (i) is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), the U.K. Bribery Act or any other anti-corruption law, rule or regulation of any locality that is applicable to the Bank (“applicable anti-corruption laws”) or (ii) has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “foreign official” (as such term is defined in the FCPA) (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage. Each of the Bank and its Significant Subsidiaries has conducted its businesses in compliance with the FCPA, the U.K. Bribery Act and applicable anti-corruption laws and, to the knowledge of the Bank, its respective affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure continued compliance therewith. |
| (aa) | To the knowledge of the Bank and other than as set forth or contemplated in the Time of Sale Prospectus, there are no material legal or governmental proceedings pending or threatened involving the Bank or any of its subsidiaries and each of their properties. |
| (bb) | PricewaterhouseCoopers Auditores, S.L. is an independent registered public accounting firm as required by the Securities Act and the applicable rules and regulations of the Commission. |
| (cc) | The waiver of certain requirements under Rule 3-05 of Regulation S-X issued to the Bank by the Commission on June 14, 2017, a true copy of which has been provided to the Representatives, remains in effect as of the date of this Agreement and has not been rescinded or amended. |
| 2. | Purchase and Sale. |
| (a) | Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Bank agrees to issue and sell to each of the Underwriters and each of the Underwriters agrees, severally and not jointly, to purchase from the Bank, the aggregate liquidation preference of Securities set forth opposite such Underwriter’s name on Schedule I hereto at a purchase price of 100.000% of the liquidation preference of the U.S.$1,500,000,000 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities. The Bank hereby agrees to pay a commission of 0.600% of the aggregate liquidation preference of the U.S.$1,500,000,000 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (the “Underwriting Commission”) to the Underwriters, in consideration of the Underwriters agreeing severally, and not jointly, to purchase the Securities from the Bank subject to, and in accordance with, the terms and conditions set forth in this Agreement. The Bank agrees that: (i) 50.000% of such Underwriting Commission will be paid to Santander US Capital Markets LLC; (ii) 48.000% of such Underwriting Commission will be divided equally among the Representatives, excluding Santander US Capital Markets LLC, and (iii) 2.000% of such |
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| Underwriting Commission will be divided equally among the Co-Leads (as defined herein). The total proceeds to the Bank in an amount of U.S.$1,491,165,000 (which is equal to U.S.$1,491,000,000 of proceeds, net of fees and commissions, plus U.S.$165,000 in reimbursable expenses) will be payable on the Closing Date concurrently with the settlement of the Securities or such other date as may be agreed by the Bank and the Representatives, by wire transfer of immediately available funds to an account identified in writing by July 30, 2024. For purposes of this Section 2(a), “Co-Leads” shall mean CaixaBank, S.A. and CIBC World Markets Corp. |
| (b) | Payment of the Underwriting Commission by the Bank to the Underwriters may be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatsoever nature imposed, levied, collected, withheld or assessed by The Kingdom of Spain or any political subdivision or authority thereof or therein having power to tax, provided that the Underwriters are resident for tax purposes in a State with which The Kingdom of Spain has concluded a Tax Treaty for the Avoidance of Double Taxation which provides for a full exemption from Spanish taxes on business profits and are fully entitled to the benefits of said Tax Treaty and provided that (i) the Underwriters do not operate through a permanent establishment in Spain or through a non-cooperative jurisdiction for Spanish tax purposes (in the terms of the First Additional Provision of Law 36/2006, of 29 November, on prevention measures and actions against tax fraud, as amended through Law 11/2021, of 9 July, and as amended and restated from time to time) and (ii) they provide the Bank, before the relevant payment is due or paid (whichever occurs first), with a valid certificate of tax residence which expressly states that each such Underwriter is resident for tax purposes in the relevant jurisdiction within the meaning of the applicable Tax Treaty for the Avoidance of Double Taxation (or, as the case may be, the equivalent document regulated under the order which further develops the applicable Tax Treaty for the Avoidance of Double Taxation) which is generally valid for one year from its date of issue. For the avoidance of doubt, if any of these conditions is not met by an Underwriter, the Bank will be entitled to deduct any withholding on account of income taxes applicable pursuant to law on the Underwriting Commission payable to that Underwriter, and no additional amounts will be paid by the Bank in such a case to that Underwriter. |
| (c) | The Underwriters are not authorized to give any information or to make any representation in connection with the offering or sale of the Securities other than such information or representations consistent with the Time of Sale Prospectus and the Prospectus or otherwise approved in writing by the Bank. |
| 3. | Delivery and Payment. The global certificates for the Securities to be purchased by the Underwriters hereunder shall be delivered by or on behalf of (and at the expense of) the Bank to or upon the order of Santander US Capital Markets LLC for the accounts of the several Underwriters against payment by the Underwriters of the purchase price therefor by wire transfer of immediately available funds, payable to or upon the order of the Bank, at the offices of Linklaters LLP at 1290 Avenue of the Americas, New York, NY 10104, at 10:00 a.m. New York time, on August 1, 2024 or such later date (not later than ten New York business days thereafter) as the Representatives shall designate, which date and time may be postponed by agreement among the Representatives and the Bank (such date and time of delivery and payment for the |
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| Securities being herein called the “Closing Date”). Payment for the Securities shall be made against delivery to the Representatives for the respective accounts of the several Underwriters of the Securities registered in such names and in such denominations as the Representatives shall request in writing not later than two full New York business days prior to the date of delivery, with any transfer taxes payable in connection with the transfer of the Securities to the Representatives duly paid by the Bank. The Bank agrees that delivery of the Securities will be made on the Closing Date through the book-entry facilities of The Depository Trust Company (the “Depositary”). Upon issuance, all Securities will be represented by one or more global certificates registered in the name of a nominee of the Depositary. |
| 4. | Covenants and Agreements. The Bank agrees with each Underwriter that: |
| (a) | The Bank shall prepare and furnish to each Underwriter, without charge, a conformed copy of the Registration Statement (including exhibits thereto and documents incorporated by reference therein) in a form approved by the Representatives, and will promptly furnish the Underwriters during the period mentioned in Section 4(d) or 4(e) below with copies of the Time of Sale Prospectus, the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto or to the Registration Statement, in such quantities as the Underwriters may from time to time reasonably request, and will not publish any amendment or supplement to the Registration Statement, the Time of Sale Prospectus or the Prospectus unless they have furnished a copy to the Representatives for review and, except as required by law, will not publish any such proposed amendment or supplement to which the Representatives reasonably object. If at any time prior to completion of the distribution of the Securities (as determined by the Representatives) any event occurs as a result of which the Registration Statement, the Time of Sale Prospectus or the Prospectus as then amended or supplemented would contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Bank will promptly so notify the Representatives and will prepare and furnish to the Representatives, subject to prior review as provided above, a reasonable number of copies of an amendment or supplement to the Registration Statement, the Time of Sale Prospectus or the Prospectus which will correct such statement or omission. |
| (b) | The Bank shall furnish to each Underwriter a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred to by the Bank and not to use or refer to any proposed free writing prospectus to which an Underwriter reasonably objects. |
| (c) | Except as otherwise contemplated pursuant to this Agreement, the Bank shall not take any action that would result in an Underwriter or the Bank being required to file with the Commission pursuant to Rule 433(d) under the Securities Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder. |
| (d) | If the Time of Sale Prospectus is being used to solicit offers to buy the Securities at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement |
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| the Time of Sale Prospectus in order to make the statements therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Prospectus conflicts with the information contained in the Registration Statement then on file, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to any dealer upon request, either amendments or supplements to the Time of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or supplemented will not, in the light of the circumstances when the Time of Sale Prospectus is delivered to a prospective purchaser, be misleading or so that the Time of Sale Prospectus, as amended or supplemented, will no longer conflict with the Registration Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply with applicable law. |
| (e) | If, during such period after the first date of the public offering of the Securities as in the opinion of counsel for the Underwriters the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act) is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act) is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Underwriters will furnish to the Bank) to which Securities may have been sold by the Underwriters on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act) is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law. |
| (f) | The Bank shall endeavor to qualify the Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Underwriters shall reasonably request. |
| (g) | The Bank shall make generally available to the Bank’s security holders and to the Representatives as soon as practicable an earnings statement covering a period of at least twelve months after the effective date of the Registration Statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. |
| (h) | If the third anniversary of the initial effective date of the Registration Statement occurs before all the Securities have been sold by the Underwriters, prior to the third anniversary, the Bank shall file a new shelf registration statement and take any other action necessary to permit the public offering of the Securities to continue without interruption; references herein to the Registration Statement shall include the new registration statement declared effective by the Commission. |
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| (i) | The Bank shall prepare a final term sheet relating to the offering of the Securities, containing only information that describes the final terms of the Securities or the offering in a form consented to by the Representatives and included herein as Exhibit D, and to file such final term sheet within the period required by Rule 433(d)(5)(ii) under the Securities Act following the date the final terms have been established for the offering of the Securities. |
| (j) | The Bank will use its reasonable efforts to effect, on or as soon as practicable after the Closing Date, and in no event more than 45 days following the Closing Date, the authorization of the Securities for listing on the New York Stock Exchange, Inc. (the “NYSE”), subject only to official notice of issuance. For so long as any of the Securities are outstanding, the Bank will use its commercially reasonable efforts to maintain the listing of the Securities, and will prepare, submit, furnish and publish (as appropriate) all such documents, instruments, information, advertisements and undertakings as may be necessary or advisable for such purposes. |
| (k) | The Bank shall grant the Public Deed of Issuance prior to the Closing Date and shall use its best efforts to register it with the Mercantile Registry of Cantabria and file it as tax exempt of stamp duty (Impuesto sobre Trasmisiones Patrimoniales y Actos Jurídicos Documentados, en su modalidad de Actos Juridicos Documentados) within one month of the Closing Date. |
| (l) | The Bank shall grant the Public Deed of Disbursement before a notary public supplementing the Public Deed of Issuance and use its best efforts to register it with the Mercantile Registry of Cantabria within one month of the Closing Date. |
| (m) | The Bank shall, upon conversion of the Securities into Common Shares pursuant to a Trigger Event (as defined in the Prospectus), (i) grant the public deed of issuance of the Common Shares issued upon such conversion and use its best efforts to register it with the Mercantile Registry of Cantabria, (ii) file such public deed as tax exempt of capital duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, en su modalidad de Operaciones Societarias), (iii) file such public deed with Iberclear, (iv) deliver full legal title to the Common Shares free of third-party rights and (v) if the Bank’s shares are listed and admitted to trading at that time, apply for the listing and admission to trading of the Common Shares on the relevant stock exchanges and take all necessary steps so that the Common Shares are admitted to listing on the relevant stock exchanges as soon as possible. |
| (n) | The Bank will use its best efforts to comply at all times (and to ensure that the Securities comply with) with the applicable requirements set out under Law 10/2014 in order to benefit from the tax treatment described in the First Additional Provision of Law 10/2014. |
| (o) | From the date hereof and continuing to and including the Closing Date, the Bank will not, without the Representatives’ prior written consent (which consent shall not be unreasonably withheld), offer, sell, contract to sell or otherwise dispose of in the United States any material amount of dollar-denominated contingent convertible perpetual securities issued or guaranteed by the Bank and which are substantially similar to the Securities, except for the Bank’s customary deposit-raising activities. |
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| (p) | The Bank shall not, during the period commencing on the date of this Agreement and ending on the Closing Date, take any action which, had the Securities then been in issue, would result in an adjustment to the Floor Price in accordance with the Prospectus. |
| (q) | The Bank confirms that this Agreement has been executed and delivered in the name of the Bank by a signatory authorized by the Executive Committee of the Bank and agrees that the Securities will be executed and delivered in the name of the Bank, manually or via facsimile, by a signatory authorized by the Executive Committee of the Bank. |
| 5. | Conditions to the Obligations of the Underwriters. The obligation of the several Underwriters to purchase and pay for the Securities they have agreed to purchase hereunder on the Closing Date is subject to the accuracy of the representations and warranties of the Bank contained herein as of the date of this Agreement, at 3:34 p.m., New York City time, on July 29, 2024 or such other time as agreed by the Bank and the Representatives (the “Time of Sale”) and the Closing Date, to the accuracy of the statements of the Bank made in any certificates pursuant to the provisions hereof delivered prior to or concurrently with such purchase, to the performance by the Bank of their obligations hereunder, and to the following further conditions: |
| (a) | Each of the Underwriters, Davis Polk & Wardwell LLP, U.S. counsel for the Bank, and Linklaters LLP, U.S. counsel for the Underwriters, shall have completed their respective due diligence investigations in accordance with procedures customary for a transaction such as the offering of the Securities pursuant to the terms and conditions of this Agreement. |
| (b) | At the Closing Date, (i) since the date of the latest balance sheet included or incorporated by reference in the Time of Sale Prospectus and the Prospectus, there shall not have been any material adverse change (other than as set forth in or contemplated in the Time of Sale Prospectus or the Prospectus) in the financial condition or in the earnings, affairs or business prospects of the Bank and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business; (ii) the Bank shall have complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and (iii) the representations and warranties of the Bank set forth in Section 1 shall be accurate in all material respects as though expressly made at and as of the Closing Date. At the Closing Date, the Representatives shall have received a certificate, dated as of the Closing Date, from the Bank signed by the principal financial or accounting officer of the Bank, certifying, the matters set forth in clauses (i), (ii) and (iii) of this Section 5(b). |
| (c) | At the Closing Date, the Representatives shall have received a signed opinion, dated as of the Closing Date, of the internal counsel to the Bank, substantially in the form set forth in Exhibit A. |
| (d) | At the Closing Date, the Representatives shall have received a signed opinion, dated as of the Closing Date, of Uría Menéndez Abogados, S.L.P., Spanish counsel to the Bank, substantially in the form set forth in Exhibit B. |
| (e) | At the Closing Date, the Representatives shall have received a signed opinion, dated as of the Closing Date, of Davis Polk & Wardwell LLP, U.S. counsel to the Bank, substantially in the form set forth in Exhibit C. |
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| (f) | At the Closing Date, the Representatives shall have received a signed opinion, dated as of the Closing Date, of Linklaters, S.L.P., Spanish counsel to the Underwriters, as to such matters as the Representatives may reasonably request. |
| (g) | At the Closing Date, the Representatives shall have received a signed opinion, dated as of the Closing Date, of Linklaters LLP, U.S. counsel to the Underwriters, as to such matters as the Representatives may reasonably request. |
| (h) | At the Closing Date, a copy of the Public Deed of Issuance shall have been received by the Representatives. |
| (i) | On the date hereof, the Representatives shall have received from PricewaterhouseCoopers Auditores, S.L. a letter dated such date, to the effect that (i) it is an independent accountant with respect to the Bank and its subsidiaries within the meaning of the Securities Act; (ii) it is its opinion that the Financial Statements included or incorporated by reference in the Time of Sale Prospectus and the Prospectus and covered by its opinion therein comply as to form in all material respects, except as stated in such report, with the applicable accounting requirements of the Securities Act for foreign private issuers; (iii) nothing has come to its attention that any Financial Statements included or incorporated by reference in the Time of Sale Prospectus and the Prospectus and not covered by its opinion do not comply as to form in all material respects with the accounting requirements of the Securities Act for foreign private issuers; (iv) based upon limited procedures set forth in detail in such letter, nothing has come to its attention which causes it to believe that at a specified date not more than three New York business days prior to the date of such letter, there was any decrease in the capital stock, as compared with the amounts shown in the most recent consolidated balance sheet included or incorporated by reference in the Time of Sale Prospectus and the Prospectus; and (v) in addition to the examination referred to in its opinion and the limited procedures referred to in clause (iv) above, it has carried out certain specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are included in the Time of Sale Prospectus and the Prospectus and which are specified by the Representatives, and has found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Bank and its subsidiaries identified in such letter. At the Closing Date, the Representatives shall have received a letter from PricewaterhouseCoopers Auditores, S.L., dated as of the Closing Date, confirming the information given in its letter dated the date of the Time of Sale Prospectus and the Prospectus. |
| (j) | The Securities shall be eligible for clearance and settlement through the Depositary. |
| (k) | If any of the conditions specified in this Section 5 shall not have been fulfilled when and as required by this Agreement to be fulfilled, this Agreement may be terminated by the Representatives on notice to the Bank at any time at or prior to the Closing Date, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 6 herein. Notwithstanding any such termination, the provisions of Sections 7, 8, 9, 13 and 14 herein shall remain in effect. |
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| 6. | Payment of Expenses. |
| (a) | The Bank will, except as set forth in subsection (b) below, pay and bear all costs and expenses incident to the performance of the Bank’s obligations under this Agreement, including (i) the preparation and filing of the Registration Statement, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free writing prospectus prepared by or on behalf of, or used by or referred to by the Bank, and any amendments or supplements to any of the foregoing, including the filing fees payable to the Commission relating to the Securities (within the time required by Rule 456(b)(1), if applicable), (ii) the preparation and distribution of this Agreement and the Indenture, (iii) the preparation and delivery of the Securities, (iv) the fees and disbursements of the counsel and accountants for the Bank (other than the cost of the comfort letters provided by PricewaterhouseCoopers Auditores, S.L., dated as of the Time of Sale and the Closing Date), (v) the costs and charges of the Trustee incurred in connection with the transactions contemplated in this Agreement, (vi) all costs and expenses incurred by the Bank in connection with any road show conducted in connection with the transaction contemplated by this Agreement, and (vii) all initial and on-going expenses and listing fees in connection with the listing of the Securities on the NYSE. |
| (b) | Notwithstanding subsection (a) above, each Underwriter, individually and not jointly, agrees to pay severally on a pro rata basis (i) the fees and disbursements of U.S. and Spanish counsels to the Underwriters, (ii) the cost of the comfort letters provided by PricewaterhouseCoopers Auditores, S.L., dated as of the Time of Sale and the Closing Date, and (iii) all costs and expenses incurred by the Underwriters in connection with any road show conducted in connection with the transaction contemplated by this Agreement. For the avoidance of doubt, no Underwriter will be liable for any initial or on-going expenses after payment has been made in accordance with this Section 6 and each amount identified in this Section 6(b) (i), (ii) and (iii) above will be divided pro rata among each Underwriter. |
| 7. | Indemnification. |
| (a) | The Bank agrees to indemnify and hold harmless each Underwriter and its directors, officers, employees and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereto, any preliminary prospectus, the Time of Sale Prospectus, the Prospectus (or any amendment or supplement to the Time of Sale Prospectus or the Prospectus), any free writing prospectus, any road show slides used in a road show conducted in connection with the transaction contemplated by this Agreement or any Supplemental Offering Materials, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim |
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| whatsoever, based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Bank, which consent shall not be unreasonably withheld; and (iii) against any and all expense whatsoever, as incurred (including fees and disbursements of counsel chosen by the Underwriters), reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under clause (i) or (ii) above; provided, however, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished in writing to the Bank by the Underwriters expressly for use in the Time of Sale Prospectus or the Prospectus (or any amendment or supplement to the Time of Sale Prospectus or the Prospectus), any free writing prospectus, any road show slides used in a road show conducted in connection with the transaction contemplated by this Agreement or any Supplemental Offering Materials (it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 16 hereof). |
| (b) | Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Bank, and its directors, officers and each person, if any, who controls the Bank, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 7(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Time of Sale Prospectus and the Prospectus (or any amendment or supplement to the Time of Sale Prospectus and the Prospectus), any free writing prospectus, any road show slides used in a road show conducted in connection with the transaction contemplated by this Agreement or any Supplemental Offering Materials, in each case in reliance upon and in conformity with information furnished in writing to the Bank by such Underwriter expressly for use in the Time of Sale Prospectus and the Prospectus (or any amendment or supplement to the Time of Sale Prospectus and the Prospectus), any free writing prospectus, any road show slides used in a road show conducted in connection with the transaction contemplated by this Agreement or any Supplemental Offering Materials (it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 16 hereof). |
| (c) | Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. |
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| 8. | Contribution. In order to provide for just and equitable contribution in circumstances under which the indemnity provided for in Section 7 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Bank, on the one hand, and the Underwriters, on the other hand, shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such indemnity incurred by the Bank and the Underwriters, as incurred, in such proportions that (a) the Underwriters are responsible for that portion represented by the percentage that the total discounts and commissions received by the Underwriters bears to the aggregate offering price of the Securities and (b) the Bank is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as an Underwriter, and each director of the Bank and each person, if any, who controls the Bank within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Bank. The Underwriters’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the aggregate liquidation preference of the Securities set forth opposite their respective names in Schedule I hereto and not joint. |
| 9. | Representations and Indemnities to Survive. The representations, warranties, indemnities, agreements and other statements of the Underwriters and the Bank and their officers set forth in or made pursuant to this Agreement will remain operative and in full force and effect regardless of any investigation made by or on behalf of the Bank or the Underwriters or controlling persons and will survive delivery of and payment for the Securities. |
| 10. | Termination of Agreement. |
| (a) | The Representatives may terminate this Agreement, by notice to the Bank, at any time at or prior to the Closing Date (i) if there has been, since the date hereof, any material adverse change (otherwise than as set forth in or contemplated by the Time of Sale Prospectus or the Prospectus) in the financial condition or in the earnings, business affairs or business prospects of the Bank and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if, since the execution and delivery of this Agreement (A) there has occurred any outbreak or escalation of hostilities or other calamity or crisis, including, without limitation, an act of terrorism, the effect of which on the financial markets of the United States are such as to make it, in the judgment of the Representatives, impracticable or inadvisable to market the Securities or (B) trading in any securities of the Bank has been suspended by the Commission, the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores) or the NYSE, or if trading generally on the NYSE or in the over-the-counter market has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required by such exchange or by order of the Commission, or any other governmental authority, or (C) a banking moratorium has been declared by Spanish, U.S. or New York authorities, or (D) there has occurred any change or any development involving a prospective change in national or international political, financial or economic conditions or exchange |
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| controls which, in the judgment of the Representatives, is likely to have a material adverse effect on the market for the Securities, or (E) any rating of the Bank’s contingent convertible securities shall have been lowered by Moody’s Investors Service Inc., Fitch Ratings Ltd. or Standard & Poor’s Ratings Services, a division of The McGraw-Hill Company, Inc., or any of such rating agencies have publicly announced it has under surveillance or review with possible negative implications any rating of the Bank’s contingent convertible securities (provided, however, that this clause (E) shall not apply if a lowering of any such rating or any such public announcement occurs as a result of the lowering of any rating by any such rating agency of obligations of The Kingdom of Spain or as a result of a public announcement by any such rating agency that it has under surveillance or review with possible negative implications obligations of The Kingdom of Spain), or (F) there has occurred a material disruption in commercial banking or securities settlement or clearance services in the United States or with respect to the Depositary. The Representatives agree that they will notify the Bank of the occurrence of any event described in clauses (A) through (F) as soon as they shall become aware of such occurrence. |
| (b) | If this Agreement is terminated pursuant to this Section 10, such termination shall be without liability of any party to any other party, except to the extent provided in Section 6. Notwithstanding any such termination, the provisions of Sections 6, 7, 8, 9, 13 and 14 shall remain in effect. |
| 11. | Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if delivered, mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representatives at the following addresses: |
Barclays Capital Inc.
745 Seventh Avenue
New York, NY 10019
Attn: Syndicate Registration
Fax: +1 (646) 834-8133
BofA Securities, Inc.
114 W 47th St., NY8-114-07-01
New York, NY 10036
Fax: +1 (646) 855-5958
Attention: High Grade Transaction Management/Legal
Citigroup Global Markets Inc.
388 Greenwich Street
New York, NY 10013
Fax: (646) 291-1469
Attention: General Counsel
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J.P. Morgan Securities LLC
383 Madison Avenue
New York, NY 10179
Attention: High Grade Syndicate Desk
Fax: +1 (212) 834-6081
Morgan Stanley & Co. LLC
1585 Broadway, 29th Floor
New York, NY 10036
Attention: Investment Banking
Santander US Capital Markets LLC
437 Madison Avenue
New York, NY 10022
Attention: Debt Capital Markets
Facsimile: +1 (212) 407-0930
Notices to the Bank shall be directed to them at:
Grupo Santander, S.A.
Ciudad Grupo Santander
Avda. Cantabria s/n
Edificio Encinar, planta 1
28660 Boadilla del Monte
Madrid
Spain
Attention: División Financiera
Fax: +34 91 257 2059
| 12. | Parties. This Agreement is made solely for the benefit of the Underwriters and the Bank and, to the extent expressed, any person controlling the Bank or the Underwriters, and their respective executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include any purchaser, as such purchaser, from the Underwriters of the Securities. |
| 13. | Submission to Jurisdiction. The Bank irrevocably agrees that any suit, action or proceeding against the Bank brought by the Underwriters or by any person who controls the Underwriters, arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, and, to the extent permitted by law, irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding, and irrevocably submits to the nonexclusive jurisdiction of such courts in any such suit, action or proceeding. The Bank has irrevocably appointed Banco Santander, S.A., New York Branch as its Authorized Agent (the “Authorized Agent”) upon whom process may be served in any such suit, action or proceeding arising out of or based on this Agreement or the transactions contemplated hereby which may be instituted in any state or federal court in the Borough of Manhattan, The City of New York, New York, by the Underwriters or by any person who controls the Underwriters and the Bank each expressly consents to the jurisdiction of any such court in respect of any such |
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| suit, action or proceeding, and waives any other requirements of or objections to personal jurisdiction with respect thereto. The Bank represents and warrants that the Authorized Agent has agreed to act as said agent for service of process, and the Bank agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to the Bank, as the case may be, shall be deemed, in every respect, effective service of process upon the Bank. Notwithstanding the foregoing, any suit, action or proceeding based on this Agreement may be instituted by an Underwriter in any competent court in The Kingdom of Spain. |
| 14. | Judgment Currency. The Bank agrees to indemnify each of the Underwriters against any loss incurred by the Underwriters as a result of any judgment or order being given or made for any amount due hereunder and such judgment or order being expressed and paid in a currency (the “Judgment Currency”) other than U.S. dollars and as a result of any variation as between (i) the rate of exchange at which the U.S. dollar amount is converted into the Judgment Currency for the purpose of such judgment or order and (ii) the rate of exchange at which each Underwriter is able to purchase U.S. dollars with the amount of the Judgment Currency actually received by each Underwriter. The foregoing indemnity shall constitute a separate and independent obligation of each Underwriter and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The parties hereto agree that, to the fullest extent permitted by law, the “rate of exchange” used shall be the rate at which, in accordance with normal banking procedures, each Underwriter could purchase such Judgment Currency in The City of New York on the business day preceding that on which final judgment is given. The term “rate of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency. |
| 15. | Default by One of the Underwriters. If any Underwriter or Underwriters default in their obligations to purchase Securities hereunder on the Closing Date and the aggregate number of Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total number of Securities that the Underwriters are obligated to purchase on the Closing Date, the Underwriters may make arrangements satisfactory to the Bank for the purchase of such Securities by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Securities that such defaulting Underwriters agreed but failed to purchase on the Closing Date. If any Underwriter or Underwriters so default and the aggregate number of Securities with respect to which such default or defaults occur exceeds 10% of the total number of Securities that the Underwriters are obligated to purchase on the Closing Date and arrangements satisfactory to the Underwriters and the Bank for the purchase of such Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Bank, except as provided in Sections 7 and 8. As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section 15. Nothing herein will relieve a defaulting Underwriter from liability for its default. |
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| 16. | Underwriters’ Information. Each of the Bank and the Underwriters acknowledge and agree, for the purposes of this Agreement, that the only information that the Underwriters have furnished to the Bank expressly for use in the Registration Statement, the Time of Sale Prospectus and the Prospectus (or any amendment or supplement to the Time of Sale Prospectus or the Prospectus), free writing prospectuses or any Supplemental Offering Materials are the respective names of the Underwriters and the information set forth under the heading “Underwriting (Conflicts of Interest) — Stabilization Transactions and Short Sales” in the Time of Sale Prospectus and the Prospectus. |
| 17. | Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. |
| 18. | Recognition of bail-in. Notwithstanding any other term of this Agreement or any other agreements, arrangements, or understanding between the Bank and the Underwriters, each Underwriter acknowledges, accepts, and agrees to be bound by, to the extent that the relevant exercise of the Bail-in Power by the Relevant Resolution Authority is permitted by the law and regulation applicable in Spain: |
| (a) | the effect of the exercise of the Bail-in Power by the Relevant Resolution Authority in relation to any BRRD Liability of the Bank to such Underwriter under this Agreement, that (without limitation) may include and result in any of the following, or some combination thereof: (1) the reduction of all, or a portion, of the BRRD Liability or outstanding amounts due thereon; (2) the conversion of all, or a portion, of the BRRD Liability into shares, other securities or other obligations of the Bank or another person, and the issue to or conferral on such Underwriter of such shares, securities or obligations; (3) the cancellation of the BRRD Liability; and (4) the amendment or alteration of any interest, if applicable, thereon, the maturity, or the dates on which any payments are due, including by suspending payment for a temporary period; and |
| (b) | the variation of the terms of this Agreement, as deemed necessary by the Relevant Resolution Authority, to give effect to the exercise of the Bail-in Power by the Relevant Resolution Authority. |
As used in this Section 18:
“BRRD” means Directive 2014/59/EU of 15 May, establishing a framework for the recovery and resolution of credit institutions and investment firms or such other directive as may come into effect in place thereof, as amended from time to time.
“BRRD Liability” means any liability, commitment, duty, responsibility or other obligation arising from, or related to, the Agreement which may be subject to the exercise of the Bail-in Power by the Relevant Resolution Authority.
“Law 11/2015” means Law 11/2015, of 18 June, on recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended or replaced from time to time.
“RD 1012/2015” means Royal Decree 1012/2015, of November 6, implementing Law 11/2015, of 18 June, on the recovery and resolution of credit institutions and investment firms (Real Decreto 1012/2015, de 6 de noviembre, por el que se desarrolla la Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended or replaced from time to time.
22
“Regulated Entity” means any entity to which BRRD, as implemented in the Kingdom of Spain (including but not limited to, Law 11/2015, RD 1012/2015, and any other implementing regulations), or any other Spanish law relating to the Bail-in Power, applies, which includes certain credit institutions, investment firms, and certain of their parent or holding companies.
“Relevant Resolution Authority” means the Spanish Fund for the Orderly Restructuring of Banks, the Bank of Spain, the European Single Resolution Board, as the case may be, according to Law 11/2015, and any other entity with the authority to exercise the Bail-in Power or any other resolution power from time to time.
“Bail-in Power” means any power existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of BRRD, including its article 48 and, when applicable, its article 59 (therefore, the write-down capital conversion power at the point of non-viability) (including but not limited to Law 11/2015, RD 1012/2015, and any other implementing regulations), (ii) the SRM Regulation and (iii) the instruments, rules or standards created thereunder, pursuant to which any obligation of a Regulated Entity (or an affiliate of such Regulated Entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other obligations of such Regulated Entity (or affiliate of such Regulated Entity).
“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund, as amended or replaced from time to time.
| 19. | Recognition of the U.S. Special Resolution Regimes. In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Underwriting Agreement, and any interest and obligation in or under this Underwriting Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Underwriting Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States. In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Underwriting Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States. |
As used in this Section 19:
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
23
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
| 20. | Compliance with USA PATRIOT Act. In accordance with the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law on October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Bank, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients. |
| 21. | Counterparts. This Agreement may be executed in one or more counterparts and, when a counterpart has been executed by each party, all such counterparts taken together shall constitute one and the same agreement. Delivery of an executed Agreement by one party to any other party may be made by facsimile, electronic mail (including any electronic signature complying with the New York Electronic Signatures and Records Act (N.Y. State Tech. §§ 301-309), as amended from time to time, or other applicable law) or other transmission method, and the parties hereto agree that any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes |
| 22. | Entire Agreement; Amendment. This Agreement supersedes all prior agreements and undertakings, both written and oral, of the parties hereto, or any of them, with respect to the subject matter hereof and constitute the entire understanding of the parties hereto with respect to the subject matter hereof. This Agreement may not be waived, amended or modified except in writing signed by each party to be bound hereby. |
24
If the foregoing is in accordance with the Underwriters’ understanding of our agreement, please sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement between the Bank and the Underwriters in accordance with its terms.
Very truly yours,
| BANCO SANTANDER, S.A. | ||
| By | /s/ Juan Urigoen Irusta | |
| Name: Juan Urigoen Irusta | ||
| Title: Authorized Signatory | ||
[The rest of this page is intentionally left blank]
The foregoing Agreement is hereby confirmed and accepted as of the date first written above.
| BARCLAYS CAPITAL INC. | ||
| By | /s/ Jake Hartmann | |
| Name: Jake Hartmann | ||
| Title: Director | ||
UA Signature Page for Barclays Capital Inc.
| BOFA SECURITIES, INC. | ||
| By | /s/ Sandeep Chawla | |
| Name: Sandeep Chawla | ||
| Title: Managing Director | ||
UA Signature Page for BofA Securities, Inc.
| CITIGROUP GLOBAL MARKETS INC. | ||
| By | /s/ Adam D. Bordner | |
| Name: Adam D. Bordner | ||
| Title: Managing Director | ||
UA Signature Page for Citigroup Global Markets Inc.
| J.P MORGAN SECURITIES LLC | ||
| By | /s/ Stephen L. Sheiner | |
| Name: Stephen L. Sheiner | ||
| Title: Executive Director | ||
UA Signature Page for J.P. Morgan Securities LLC
| MORGAN STANLEY & CO. LLC | ||
| By | /s/ Hector Vazquez | |
| Name: Hector Vazquez | ||
| Title: Executive Director | ||
UA Signature Page for Morgan Stanley & Co. LLC
| SANTANDER US CAPITAL MARKETS LLC | ||
| By | /s/ Richard Zobkiw | |
| Name: Richard Zobkiw | ||
| Title: Executive Director | ||
UA Signature Page for Santander US Capital Markets LLC
SCHEDULE I
| Name of Underwriter |
Liquidation Preference of U.S.$1,500,000,000
8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities |
|||
| Santander US Capital Markets LLC |
$ | 750,000,000 | ||
| Barclays Capital Inc. |
$ | 144,000,000 | ||
| BofA Securities, Inc. |
$ | 144,000,000 | ||
| Citigroup Global Markets Inc. |
$ | 144,000,000 | ||
| J.P. Morgan Securities LLC |
$ | 144,000,000 | ||
| Morgan Stanley & Co. LLC |
$ | 144,000,000 | ||
| CaixaBank, S.A. |
$ | 15,000,000 | ||
| CIBC World Markets Corp. |
$ | 15,000,000 | ||
|
|
|
|||
| Total |
$ | 1,500,000,000 | ||
Schedule I-1
EXHIBIT A
FORM OF OPINION OF INTERNAL COUNSEL
A-1
EXHIBIT B
FORM OF OPINION OF URÍA MENÉNDEZ ABOGADOS, S.L.P.
B-1
EXHIBIT C
FORM OF OPINION OF DAVIS POLK & WARDWELL LLP
C-1
EXHIBIT D
PRICING TERM SHEET
PRICING TERM SHEET
U.S.$1,500,000,000 8.000% NON-STEP-UP NON-CUMULATIVE CONTINGENT CONVERTIBLE PERPETUAL PREFERRED TIER 1 SECURITIES (THE “NOTES”)
| Issuer: |
Banco Santander, S.A.
| |
| Legal Entity Identifier: | 5493006QMFDDMYWIAM13
| |
| Issuer Ratings*: | [***]
| |
| Expected Securities Ratings*: | [***]
| |
| Instrument: | Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities
| |
| Series Number: | 16
| |
| Principal Amount: | U.S.$1,500,000,000
| |
| Form of Issuance: | SEC Registered
| |
| Ranking: | Unless previously converted into Common Shares as set forth in “Description of Contingent Convertible Capital Securities—Conversion Upon Trigger Event” in the prospectus dated July 29, 2024 (the “Prospectus”), the payment obligations of Banco Santander under the Notes constitute direct, unconditional, unsecured and subordinated obligations (créditos subordinados) of Banco Santander according to Article 281.1 of the Spanish Insolvency Law and, in accordance with Additional Provision 14.3 of Law 11/2015, but subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), upon the insolvency of Banco Santander, for so long as the Notes constitute Additional Tier 1 Instruments, rank: (a) pari passu among themselves and with (i) all other subordinated obligations (créditos subordinados) of Banco Santander under Additional Tier 1 Instruments and (ii) any other
| |
D-1
| subordinated obligations (créditos subordinados) of Banco Santander which by law and/or by their terms, to the extent permitted by Spanish law, rank pari passu with Banco Santander’s obligations under Additional Tier 1 Instruments; (b) junior to (i) any unsubordinated obligations (créditos ordinarios) of Banco Santander, (ii) any subordinated obligations (créditos subordinados) of Banco Santander under Tier 2 Instruments and (iii) any other subordinated obligations (créditos subordinados) of Banco Santander which by law and/or by their terms, to the extent permitted by Spanish law, rank senior to Banco Santander’s obligations under Additional Tier 1 Instruments; and (c) senior to (i) any claims for the liquidation amount of the Common Shares and (ii) any other subordinated obligations (créditos subordinados) of Banco Santander which by law and/or by their terms, to the extent permitted by Spanish law, rank junior to Banco Santander’s obligations under Additional Tier 1 Instruments. | ||
| Maturity: | Perpetual | |
| Currency: | U.S. dollar (“U.S.$”) | |
| Pricing Date: | July 29, 2024 | |
| Settlement Date**: | August 1, 2024 (T+3) | |
| Reset Date: | August 1, 2034 (the “First Reset Date”) and each subsequent date falling on the fifth anniversary of the preceding reset date | |
| Benchmark Treasury: | 10 year UST (4.375% due May 15, 2034) | |
| Spread to Benchmark Treasury: | T+391.1 bps | |
| Benchmark Treasury Yield: | 4.169% | |
| Re-offer Yield: | 8.000% quarterly
8.080% s.a. | |
| Initial Margin: | 391.1 bps | |
| Price to Public: | 100.000% | |
| Underwriting Discount / Commission: | 0.600% | |
| Proceeds to Issuer (after deducting Underwriting Discount / Commission): | 99.400% (U.S.$1,491,000,000). This amount is before deducting other expenses incurred in connection with this offering. Additionally, the Underwriters have agreed to reimburse the Issuer for $165,000 of such expenses. | |
| Distribution Payment Dates: | Quarterly in arrears on February 1, May 1, August 1 and November 1, of each year, commencing on November 1, 2024 | |
| Distributions: | Distributions will accrue (i) in respect of the period from (and including) the Settlement Date to (but excluding) the First Reset Date at the rate of 8.000% per annum, and (ii) in respect of each Reset Period, at the rate per annum, converted to a quarterly rate in accordance with market convention, equal to the aggregate of the Initial Margin (3.911% per annum) and the 5-year UST for such Reset Period. Such Distributions will be payable quarterly in arrears on each Distribution Payment Date. | |
D-2
| 5-year UST: | In relation to a Reset Date and the Reset Period commencing on that Reset Date, an interest rate expressed as a percentage determined by the Calculation Agent to be the per annum rate equal to the yield to maturity for U.S. Treasury securities with a maturity of five years as published in the most recent H.15.
“H.15” means the daily statistical release designated as such and published by the Board of Governors of the United States Federal Reserve System under the caption “Treasury constant maturities,” or any successor or replacement publication, as determined by Banco Santander, that establishes yield on actively traded U.S. Treasury securities adjusted to constant maturity, and “most recent H.15” means, in respect of any Reset Period, the H.15 which includes a yield to maturity for U.S. Treasury securities with a maturity of five years published closest in time but prior to the Reset Determination Date.
“Calculation Agent” means the Trustee or such other person authorized by Banco Santander as the party responsible for calculating the Distributions and/or such other amount(s) from time to time in relation to the Notes. | |
| Day Count Fraction: | 30/360 (following, unadjusted) | |
| Business Days: | New York City, London, and T2 | |
| Liquidation Preference: | U.S.$200,000 | |
| Distributions Discretionary and Restrictions on Payments: | Banco Santander may elect, in its sole and absolute discretion, to cancel the payment of any Distribution in whole or in part at any time that it deems necessary or desirable, and for any reason.
Payments of Distributions in any financial year of Banco Santander shall be made only out of Available Distributable Items. To the extent that (i) Banco Santander has insufficient Available Distributable Items to make Distributions on the Notes scheduled for payment in the then current financial year and any equivalent payments scheduled to be made in the then current financial year in respect of any other Parity Securities or Common Equity Tier 1 Instruments then outstanding to the extent permitted by the Applicable Banking Regulations, in each case excluding any portion of such payments already accounted for in determining the Available Distributable Items, and/or (ii) the relevant Regulator in accordance with Applicable Banking Regulations, requires Banco Santander to cancel the relevant Distribution in whole or in part, then Banco Santander will, without prejudice to the right above to cancel at its discretion the payment of any such Distributions on the Notes at any time, make partial or, as the case may be, no payment of the relevant Distribution on the Notes.
No Distribution will be made on the Notes until the Maximum Distributable Amount (if required) is calculated and if and to the extent that such payment would cause the Maximum Distributable Amount (if any) then applicable to Banco Santander and/or the Group to be exceeded. No payment will be made on the Notes (whether by way of a | |
D-3
| repayment of the Liquidation Preference, the payment of any Distribution or otherwise) if and to the extent that such payment would cause a breach of any regulatory restriction or prohibition on payments on Additional Tier 1 Instruments pursuant to Applicable Banking Regulations (including, without limitation, any such restriction or prohibition relating to any Maximum Distributable Amount applicable to Banco Santander and/or the Group).
Distributions on the Notes will be non-cumulative.
If Banco Santander does not pay a Distribution or part thereof on the relevant Distribution Payment Date in respect of the Notes, such non-payment shall evidence the cancellation of such Distribution (or relevant part thereof) or, as appropriate, Banco Santander’s exercise of its discretion to cancel such Distribution (or relevant part thereof) and accordingly, such Distribution shall not in any such case be due and payable. | ||
| Optional Redemption: | The Notes may be redeemed, in whole but not in part, at the option of Banco Santander, on (i) any calendar day during the six-month period commencing on (and including) February 1, 2034 to (and including) the First Reset Date and (ii) any Distribution Payment Date thereafter, in each case at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force, as set forth under “Description of the Notes—Redemption and Repurchase—Optional Redemption” in the Prospectus. | |
| Redemption Price: | The Liquidation Preference, plus, if applicable, where not cancelled pursuant to, or otherwise subject to the limitations on payment set forth in “Description of the Notes—Distribution” in the Prospectus, an amount equal to the accrued and unpaid Distributions for the then current Distribution Period to (but excluding) the date fixed for redemption of the Notes. | |
| Redemption due to a Capital Event: | If, on or after the Settlement Date, there is a Capital Event, the Notes may be redeemed, in whole but not in part, at the option of Banco Santander at any time, at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force. | |
| Capital Event: | Means a change in Spanish law, Applicable Banking Regulations or any change in the application or official interpretation thereof that results or is likely to result in any outstanding aggregate Liquidation Preference of the Notes ceasing to be included in, or counting towards, the Group’s or Banco Santander’s Tier 1 Capital. | |
D-4
| Redemption Due to a Tax Event: | If, on or after the Settlement Date, there is a Tax Event, the Notes may be redeemed, in whole but not in part, at the option of Banco Santander at any time, at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force. | |
| Tax Event: | Means that as a result of any change in the laws or regulations of Spain or in the official interpretation or administration of any such laws or regulations which becomes effective on or after the Settlement Date, (a) Banco Santander would not be entitled to claim a deduction in computing taxation liabilities in Spain in respect of any Distribution to be made on the next Distribution Payment Date or the value of such deduction to Banco Santander would be materially reduced, or (b) Banco Santander would be required to pay Additional Amounts, or (c) the applicable tax treatment of the Notes changes in a material way that was not reasonably foreseeable at the Settlement Date. | |
| Clean-up Redemption: | If 75% or more of the initial aggregate Liquidation Preference of the Notes (which, for the avoidance of doubt, includes any additional issuances issued subsequently and constituting a single series of securities under the Base Indenture as described under “Description of Contingent Convertible Capital Securities—Additional Issuances” in the Prospectus) have been redeemed or purchased by, or on behalf of, Banco Santander and cancelled, Banco Santander may, on any date that is a Distribution Payment Date, at its option, redeem in whole but not in part the outstanding Notes at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force. | |
| Substitution / Variation: | If a Capital Event or a Tax Event occurs and is continuing, Banco Santander may substitute all (but not some) of the Notes or modify the terms of all (but not some) of the Notes, without any requirement for the consent or approval of the holders of the Notes, so that they are substituted for, or varied to, become, or remain, Qualifying Notes, subject to having given not less than five (5) nor more than 30 days’ notice to the holders of the Notes in accordance with the terms described under “Description of Contingent Convertible Capital Securities—Notices” in the Prospectus and to the Trustee (which notice shall be irrevocable and shall specify the date for substitution or, as applicable, variation) and subject to obtaining the Regulator’s prior consent therefor, as required under Applicable Banking Regulations. | |
D-5
| Qualifying Notes: | At any time, any securities issued directly by Banco Santander that have terms not otherwise materially less favorable to the holders of the Notes than the terms of the Notes.
For further terms, cf. preliminary prospectus supplement. | |
| Agreement to and Acknowledgement of Statutory Bail-in: | By its acquisition of any Notes, each holder (including each holder of a beneficial interest in the Notes) acknowledges, accepts, consents and agrees to be bound by the terms of the Notes related to the exercise of the Bail-In Power. | |
| Agreement and acknowledgement of Subordination Provisions: | Banco Santander agrees with respect to the Notes and each holder of Notes, by his or her acquisition of a Note, will be deemed to have agreed to the subordination provisions described in the preliminary prospectus supplement. Each such holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of the Notes. In addition, each holder of Notes by his or her acquisition of the Notes authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the Notes as provided in the Base Indenture, as amended and supplemented by the Second Supplemental Indenture and as summarized herein, and appoints the Trustee as his or her attorney-in-fact for any and all such purposes. | |
| Trigger Event: | Means if, at any time, the CET1 ratio of Banco Santander or the Group calculated in accordance with Applicable Banking Regulations is less than 5.125%, as determined by Banco Santander or the Regulator. | |
| Conversion: | In the event of the occurrence of the Trigger Event, the Notes are mandatorily and irrevocably convertible into newly issued Common Shares at the Conversion Price. | |
| Conversion Price: | Means, if the Common Shares are (a) then admitted to trading on a Relevant Stock Exchange, the higher of: (i) the Current Market Price (as set forth in the preliminary prospectus supplement) of a Common Share (converted into U.S. dollars at the Prevailing Rate); (ii) the Floor Price, subject to the adjustments in accordance with “Description of Contingent Convertible Capital Securities—Conversion Upon Trigger Event—Anti-Dilution Adjustment of the Floor Price” in the Prospectus; and (iii) the nominal value of a Common Share (converted into U.S. dollars at the Prevailing Rate) (being EUR0.50 on the Settlement Date); in each case on the Trigger Event Notice Date; or (b) not then admitted to trading on a Relevant Stock Exchange, the higher of (ii) and (iii) above. For the avoidance of doubt, the conversion into U.S. dollars at the Prevailing Rate described above shall in no circumstances imply that any Common Share will be issued at a price of less than its nominal value expressed in the Share Currency. | |
D-6
| Floor Price: | USD Floor price: USD 3.247 per common Share, approx. 66% of share price at July 26, 2024 closing. (EUR 4.530; exchange rate of 1.086 EUR/USD, July 26, 2024.) | |
| Pre-emptive Rights: | The Notes do not grant holders of the Notes pre-emption rights in respect of any possible future issues of Parity Securities or any other securities by Banco Santander or any Subsidiary. | |
| Waiver of Set-Off: | Subject to applicable law, neither any holder or beneficial owner of the Notes nor the Trustee acting on behalf of the holders of the Notes may exercise, claim or plead any right of set-off, compensation, netting or retention in respect of any amount owed to it by Banco Santander in respect of, or arising under, or in connection with, the Notes or the Base Indenture, as amended and supplemented by the Second Supplemental Indenture, and each holder and beneficial owner of the Notes, by virtue of its holding of any Notes or any interest therein, and the Trustee acting on behalf of the holders of the Notes, shall be deemed to have waived all such rights of set-off, compensation, netting, retention or counterclaim. If, notwithstanding the above, any amounts due and payable to any holder or beneficial owner of a Note or any interest therein by Banco Santander in respect of, or arising under, the Notes are discharged by set-off, such holder or beneficial owner shall, subject to applicable law, immediately pay an amount equal to the amount of such discharge to Banco Santander (or, if a Liquidation Event shall have occurred, the liquidator or administrator of Banco Santander, as the case may be) and, until such time as payment is made, shall hold an amount equal to such amount in trust (where possible) or otherwise for Banco Santander (or the liquidator or administrator of Banco Santander, as the case may be) and, accordingly, any such discharge shall be deemed not to have taken place. | |
| Enforcement Events and Remedies: | There are no events of default under the Notes. In addition, under the terms of the Base Indenture, as amended and supplemented by the Second Supplemental Indenture, neither the Trigger Conversion nor the exercise of the Bail-in Power or the exercise of a resolution tool or a resolution power by the Relevant Resolution Authority or any action in compliance therewith will be an Enforcement Event.
The Notes are perpetual securities in respect of which there is no fixed redemption date or maturity date. Holders of the Notes may not require any redemption of the Notes at any time. | |
| U.S. Federal Income Tax Considerations: | For a discussion of the material U.S. federal income tax considerations for the ownership and disposition of the Notes by U.S. investors, see “Taxation—U.S. Federal Income Tax Considerations—Taxation of Contingent Convertible Capital Securities” in the preliminary prospectus supplement and the Prospectus. That discussion does not describe all of the tax consequences that may be relevant in the light of a U.S. investor’s particular circumstances. | |
D-7
| Listing: | New York Stock Exchange | |
| Trustee, Paying and Conversion Agent, Calculation Agent and Principal Paying Agent: | The Bank of New York Mellon, London Branch | |
| Governing Law: | New York law, except that the authorization and execution by Banco Santander, S.A. of the Base Indenture, Second Supplemental Indenture and the Notes and certain provisions of the Notes, the Base Indenture and the Second Supplemental Indenture related to the subordination of the Notes, as well as the price at which Notes can be issued, certain minimum requirements with respect to the conversion price and the legal regime applicable for the exclusion of the pre-emptive rights shall be governed and construed in accordance with Spanish Law. | |
| Risk Factors: | Investors should read the Risk Factors in the preliminary prospectus supplement dated July 29, 2024. | |
| Use of Proceeds: | General corporate purposes, including, without limitation, managing potential refinancing of existing capital securities. See “Use of Proceeds” in the preliminary prospectus supplement. | |
| Selling Restrictions: | In addition to the Prohibition of Sales to EEA and UK Retail Investors, there are restrictions on the offer, sale and transfer of the Notes in Canada, EEA, United Kingdom, Hong Kong, Italy, Japan, People’s Republic of China (excluding Hong Kong, Macau and Taiwan), Republic of Korea, Taiwan, Singapore, Switzerland and Australia. No publicity or marketing nor public offering which requires the registration of a prospectus in Spain. | |
| Conflict of Interest: | Santander US Capital Markets LLC is a subsidiary of Banco Santander, S.A. Therefore, Santander US Capital Markets LLC is deemed to have a “conflict of interest” under FINRA Rule 5121 and, accordingly, the offering of the Notes will comply with the applicable requirements of FINRA Rule 5121. | |
| CUSIP / ISIN: | 05964H BH7 / US05964HBH75 | |
| Sole Global Coordinator: | Santander US Capital Markets LLC | |
| Joint Bookrunners: | Barclays Capital Inc.
BofA Securities, Inc.
Citigroup Global Markets Inc.
J.P. Morgan Securities LLC
Morgan Stanley & Co. LLC
Santander US Capital Markets LLC | |
| Co-Leads: | CaixaBank, S.A.
CIBC World Markets Corp. | |
D-8
| * | Any ratings obtained will reflect only the views of the respective rating agency and should not be considered a recommendation to buy, sell or hold the Notes. The ratings assigned by the rating agencies are subject to revision or withdrawal at any time by such rating agencies in their sole discretion. Each rating should be evaluated independently of any other rating. |
| ** | It is expected that delivery of the Notes will be made against payment therefore on or about August 1, 2024, which is the third day following the date hereof (such settlement cycle being referred to as “T+3”). Under Rule 15c6-1 under the Securities Exchange Act of 1934, as amended, trades in the secondary market are generally required to settle in one business day, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes prior to the business day preceding the settlement date will be required, by virtue of the fact that the Notes initially settle in T+3, to specify an alternative settlement cycle at the time of any such trade to prevent failed settlement and should consult their own advisors. |
Banco Santander has filed a registration statement (including a base prospectus and a related preliminary prospectus supplement) with the U.S. Securities and Exchange Commission (SEC) for this offering. Before you invest, you should read the preliminary prospectus supplement, the base prospectus in that registration statement, and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by searching the SEC online database (EDGAR®) at www.sec.gov.
Alternatively, you may obtain a copy of the base prospectus and the preliminary prospectus supplement from Barclays Capital Inc. by calling toll free 1-888-603-5847, BofA Securities, Inc. by calling toll free 1-800-294-1322, Citigroup Global Markets Inc. by calling toll free 1-800-831-9146, J.P. Morgan Securities LLC by calling toll free 1-866-803-9204, Morgan Stanley & Co. LLC by calling toll free 1-212-761-6691 and Santander US Capital Markets LLC by calling toll free 1-855-403-3636.
Capitalized terms used but not defined in this term sheet have the meanings set forth in the base prospectus as supplemented by the preliminary prospectus supplement.
The distribution of this term sheet and the offering of the securities to which this term sheet relates (the “Notes”) may be restricted by law in certain jurisdictions and therefore persons into whose possession this term sheet comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions could result in a violation of the laws of any such jurisdiction.
PROHIBITION ON MARKETING AND SALES TO RETAIL INVESTORS: The Notes are complex financial instruments with high risk and are not a suitable or appropriate investment for all investors. Each of the Underwriters has represented and agreed that the offers of the Notes in the European Economic Area (“EEA”) and in the United Kingdom (“UK”) shall only be made to eligible counterparties and professional clients, as defined in the UK Financial Conduct Authority Conduct of Business Sourcebook (“COBS”), Directive 2014/65/EU on markets in financial instruments (as amended, “MiFID II”) and Regulation (EU) No. 600/2014 as it forms part of UK domestic law by virtue of the EUWA (as defined below) (“UK MiFIR”).
EU PRIIPs Regulation / PROHIBITION OF SALES TO EEA RETAIL INVESTORS: The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (11) of Article 4(1) of MiFID II; (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, (the “IDD”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II ; or (iii) not a qualified investor as defined in the Prospectus Regulation. Consequently, no key information document required by Regulation (EU) No. 1286/2014 (the “EU PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the EU PRIIPs Regulation.
UK PRIIPs Regulation / PROHIBITION OF SALES TO UK RETAIL INVESTORS: The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the UK. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No. 2017/565 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement IDD, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of UK MiFIR; or (iii) not a qualified investor as defined in Article 2 of the Prospectus Regulation as it forms part of UK domestic law by virtue of the EUWA. Consequently, no key information document required by Regulation (EU) No. 1286/2014 as it forms part of UK domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.
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This term sheet is not an offer of securities or investments for sale nor a solicitation of an offer to buy securities or investments in any jurisdiction where such offer or solicitation would be unlawful. No action has been taken that would permit an offering of the Notes or possession or distribution of this term sheet in any jurisdiction where action for that purpose is required. Persons into whose possession this term sheet comes are required to inform themselves about and to observe any such restrictions.
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EXHIBIT E
| 1. | The Final Term Sheet included in Exhibit D. |
E-1
Exhibit 4.1
BANCO SANTANDER, S.A.
as Issuer,
THE BANK OF NEW YORK MELLON,
London Branch
as Trustee, Paying and Conversion Agent, Calculation Agent and Principal Paying Agent
and
THE BANK OF NEW YORK MELLON SA/NV,
Luxembourg Branch
as Contingent Convertible Capital Securities Registrar
SECOND SUPPLEMENTAL INDENTURE
dated as of August 1, 2024
to
CONTINGENT CONVERTIBLE CAPITAL SECURITIES INDENTURE
dated as of November 21, 2023
SECOND SUPPLEMENTAL INDENTURE (“Second Supplemental Indenture”), dated as of August 1, 2024, among BANCO SANTANDER, S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Company”), having its principal executive office located at Ciudad Grupo Santander, Avenida de Cantabria s/n, 28660 Boadilla del Monte, Madrid, Spain, as issuer, THE BANK OF NEW YORK MELLON, London Branch, a banking corporation duly organized and existing under the laws of the State of New York, as trustee (the “Trustee,” which term includes any successor Trustee), paying and conversion agent (the “Paying and Conversion Agent,” which term includes any successor Paying and Conversion Agent), calculation agent (the “Calculation Agent,” which term includes any successor Calculation Agent) and principal paying agent (the “Principal Paying Agent,” which term includes any successor Principal Paying Agent), having its Corporate Trust Office at 160 Queen Victoria Street, London EC4V 4LA, United Kingdom, and THE BANK OF NEW YORK MELLON SA/NV, Luxembourg Branch, a société anonyme/naamloze vennootschap, incorporated under the laws of Belgium, as Contingent Convertible Capital Securities Registrar (the “Contingent Convertible Capital Securities Registrar”), having its principal office at 2-4 Rue Eugène Ruppert, L-2453 Luxembourg, Luxembourg.
WITNESSETH
WHEREAS, the Company and the Trustee have executed and delivered a Contingent Convertible Capital Securities Indenture dated as of November 21, 2023 (as heretofore supplemented and amended, the “Base Indenture” and, as amended and supplemented by this Second Supplemental Indenture, the “Contingent Convertible Capital Securities Indenture”) to provide for the issuance of the Company’s contingent convertible capital securities (the “Contingent Convertible Capital Securities”), including the Tier 1 Notes (as defined below).
WHEREAS, Section 10.01(e) of the Base Indenture permits the Company and the Trustee to change or eliminate any provisions of the Base Indenture without the consent of Holders of the Tier 1 Notes, subject to certain conditions;
WHEREAS, Section 10.01(g) of the Base Indenture permits the Company and the Trustee to enter into a supplemental indenture to establish the forms or terms of Contingent Convertible Capital Securities of any series as permitted under Sections 2.01 and 3.01 of the Base Indenture without the consent of Holders of the Tier 1 Notes;
WHEREAS, there are no Outstanding Contingent Convertible Capital Securities of any series created prior to the execution of this Second Supplemental Indenture that are entitled to the benefit of the provisions set forth herein or that would be adversely affected by such provisions;
WHEREAS, the Executive Committee of the Company has authorized the entry into this Second Supplemental Indenture and the establishment of the Tier 1 Notes, as required by Section 10.01 of the Base Indenture;
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WHEREAS, the parties hereto desire to establish a series of Contingent Convertible Capital Securities to be known as the Series 16 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (the “Tier 1 Notes”) pursuant to Sections 2.01 and 3.01 of the Base Indenture. The Tier 1 Notes may be issued from time to time, and any Tier 1 Notes issued as part of the series created herein will constitute a single series of Contingent Convertible Capital Securities under the Contingent Convertible Capital Securities Indenture and shall be included in the definition of “Tier 1 Notes,” where the context requires;
WHEREAS, the Company has requested and hereby requests that the Trustee execute and deliver this Second Supplemental Indenture, and the Company has provided the Trustee with a Board Resolution authorizing the execution of this Second Supplemental Indenture;
WHEREAS, all actions required by the Company to be taken in order to make this Second Supplemental Indenture a valid, binding and enforceable instrument in accordance with its terms, have been taken and performed, and the execution and delivery of this Second Supplemental Indenture has been duly authorized in all respects; and
WHEREAS, where indicated, this Second Supplemental Indenture shall amend and supplement the Base Indenture; and to the extent that the terms of the Base Indenture are inconsistent with such provisions of this Second Supplemental Indenture, the terms of this Second Supplemental Indenture shall govern.
NOW, THEREFORE, the Company and the Trustee mutually covenant and agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definition of Terms. For all purposes of this Second Supplemental Indenture:
(a) a term defined anywhere in this Second Supplemental Indenture has the same meaning throughout;
(b) capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the Base Indenture;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do not affect interpretation; and
(e) for the purposes of this Second Supplemental Indenture and the Base Indenture, the term “series” shall mean a series of the Contingent Convertible Capital Securities.
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ARTICLE 2
FORM OF TIER 1 NOTES
Section 2.01. Terms of the Tier 1 Notes. The following terms relating to the Tier 1 Notes are hereby established pursuant to Section 3.01 of the Base Indenture:
(a) The Tier 1 Notes shall be designated as the Series 16 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities;
(b) The price at which the Tier 1 Notes shall be issued is 100.000% of the aggregate Liquidation Preference thereof;
(c) The aggregate Liquidation Preference of the Tier 1 Notes that may be authenticated and delivered under the Contingent Convertible Capital Securities Indenture shall not exceed $1,500,000,000, except as otherwise provided in the Contingent Convertible Capital Securities Indenture, including Section 2.01(y) hereof;
(d) The Tier 1 Notes shall be perpetual Contingent Convertible Capital Securities and shall have no stated maturity in respect of the Liquidation Preference;
(e) The Tier 1 Notes shall be issued in global registered form on August 1, 2024 and shall accrue non-cumulative cash Distributions from and including August 1, 2024, payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year (each, a “Distribution Payment Date”), commencing on November 1, 2024, subject to the conditions set forth under Section 2.01 hereof. The distribution rate on the Tier 1 Notes is set forth in Section 2.01(k) of this Second Supplemental Indenture. Distributions on the Tier 1 Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such month. The Regular Record Date for the Tier 1 Notes will be the close of business 15 calendar days immediately preceding the relevant Distribution Payment Date, whether or not a Business Day;
(f) The Tier 1 Notes shall carry a Liquidation Preference of $200,000 per Tier 1 Note;
(g) The Liquidation Preference of and any Distributions on the Tier 1 Notes shall be paid to the Holder through The Bank of New York Mellon, as Principal Paying Agent of the Company having offices in London, United Kingdom and the Borough of Manhattan, The City of New York;
(h) The Tier 1 Notes shall not be redeemable except as provided in Article 12 of the Contingent Convertible Capital Securities Indenture;
(i) The Company shall have no obligation to redeem or purchase the Tier 1 Notes pursuant to any sinking fund or analogous provision;
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(j) The Tier 1 Notes shall be issued only in minimum denominations of $200,000 and integral multiples of $200,000 in excess thereof;
(k) The Tier 1 Notes accrue Distributions at the following rate: (i) in respect of the period from (and including) the Closing Date to (but excluding) the First Reset Date at the rate of 8.000% per annum; and (ii) in respect of each Reset Period, at the rate per annum equal to the aggregate of the Initial Margin and the 5-year UST (expressed as an annual rate) for such Reset Period, such aggregate converted to a quarterly rate in accordance with market convention (rounded to four decimal places, with 0.00005 rounded down), all as determined by the Calculation Agent on the relevant Reset Determination Date.
(l) Subject as provided in the Contingent Convertible Capital Securities Indenture, such Distributions will be payable quarterly in arrears on each Distribution Payment Date.
(m) If a Distribution is required to be paid in respect of a Tier 1 Note on any date other than a Distribution Payment Date, it shall be calculated by the Calculation Agent by applying the relevant Distribution Rate to the Liquidation Preference in respect of each Tier 1 Note, multiplying the product by (i) the actual number of days in the period from (and including) the date from which Distributions began to accrue (the “Accrual Date”) to (but excluding) the date on which Distributions fall due divided by (ii) the actual number of days from (and including) the applicable Accrual Date to (but excluding) the next following Distribution Payment Date multiplied by four, and rounding the resulting figure to the nearest cent (half a cent being rounded upwards).
(n) If any scheduled Distribution Payment Date is not a Business Day, the Company shall pay Distributions on the next Business Day, but Distributions on that payment will not accrue during the period from and after the scheduled Distribution Payment Date. If the date of redemption or repayment is not a Business Day, the Company may pay Distributions and the Liquidation Preference on the next succeeding Business Day, but Distributions on that payment will not accrue during the period from and after the date of redemption or repayment.
(o) If the Company does not pay a Distribution or part thereof on the relevant Distribution Payment Date in respect of the Tier 1 Notes in accordance with this Section 2.01, such non-payment shall evidence the cancellation of such Distribution (or relevant part thereof) or, as appropriate, the Company’s exercise of its discretion to cancel such Distribution (or relevant part thereof) and accordingly, such Distribution shall not in any such case be due and payable.
(p) The Calculation Agent will at or as soon as practicable after the relevant time on each Reset Determination Date at which the relevant Distribution Rate is to be determined, determine the relevant Distribution Rate for the relevant Reset Period. The Calculation Agent will cause the relevant Distribution Rate for each Reset Period to be notified to the Company in accordance with Section 1.06 of the Contingent Convertible Capital Securities Indenture as soon as possible after its determination but in no event later than the fourth Business Day after each Reset Determination Date.
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(q) For the avoidance of doubt, the Calculation Agent shall not be responsible to the Company, Holders or any third party as a result of the Calculation Agent having relied upon any quotation, ratio or other information provided to it by any person for the purposes of making any determination hereunder, which subsequently may be found to be incorrect or inaccurate in any way or for any losses arising by virtue thereof.
(r) All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this section by the Calculation Agent, shall be binding (in the absence of willful default, bad faith or manifest error) on the Company, the Principal Paying Agent, the Trustee, the other Paying and Conversion Agents and all Holders, and no liability to the Company or the Holders of the Tier 1 Notes shall attach (in the absence of willful default, bad faith or manifest error) to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretion pursuant to such provisions. None of the Principal Paying Agent, the Trustee nor the Paying and Conversion Agents shall have any responsibility to determine whether or not manifest error has occurred.
(s) Additional Amounts in respect of the Tier 1 Notes shall be payable as set forth in the Contingent Convertible Capital Securities Indenture;
(t) The Tier 1 Notes shall be denominated in, and payments thereon shall be made in, U.S. Dollars only;
(u) The Tier 1 Notes will be issued in the form of one or more global securities in registered form, without coupons attached, and initially registered in the name of Cede & Co., as nominee of The Depository Trust Company;
(v) The Tier 1 Notes will not be initially issued in definitive form;
(w) The Company agrees with respect to the Tier 1 Notes and each Holder of the Tier 1 Notes, by his or her acquisition of a Tier 1 Note, will be deemed to have agreed to the subordination described in Section 13.01 of the Contingent Convertible Capital Securities Indenture. Each such Holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of the Tier 1 Notes. In addition, each Holder of the Tier 1 Notes, by his or her acquisition of a Tier 1 Note, authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of the Tier 1 Notes as provided in the Contingent Convertible Capital Securities Indenture, and appoints the Trustee as his or her attorney-in-fact for any and all such purposes;
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(x) The form of the Tier 1 Notes to be issued on the date hereof shall be substantially in the form of Exhibit A hereto;
(y) The Company may issue additional Contingent Convertible Capital Securities (“Additional Tier 1 Notes”) after the date hereof having the same ranking and same distribution rate, redemption terms and other terms, except for the price to the public, original Distribution accrual date, issue date and first Distribution Payment Date, as the Tier 1 Notes; provided, however, that such Additional Tier 1 Notes will not have the same CUSIP, ISIN or other identifying number as the outstanding Tier 1 Notes unless the Additional Tier 1 Notes are fungible with the Tier 1 Notes for U.S. federal income tax purposes. Any such Additional Tier 1 Notes, together with the Tier 1 Notes, will constitute a single series of securities under the Contingent Convertible Capital Securities Indenture;
(z) The Company appoints The Bank of New York Mellon, London Branch, as the initial Paying and Conversion Agent, Calculation Agent and Principal Paying Agent for the Tier 1 Notes. The initial Calculation Agent for the Tier 1 Notes shall be The Bank of New York Mellon, London Branch pursuant to the terms of a calculation agency agreement dated as of the date hereof between The Bank of New York Mellon, London Branch and the Company (the “Calculation Agency Agreement”);
(aa) The Company appoints The Bank of New York Mellon SA/NV, Luxembourg Branch, as the initial Contingent Convertible Capital Securities Registrar for the Tier 1 Notes pursuant to Section 3.05 of the Base Indenture;
(ab) If a Capital Event or a Tax Event occurs and is continuing, the Company may substitute all (but not some) of the Tier 1 Notes or modify the terms of all (but not some) of the Tier 1 Notes, as provided for in Section 9.04 of the Contingent Convertible Capital Securities Indenture;
(ac) Subject to applicable law, neither any Holder or beneficial owner of the Tier 1 Notes nor the Trustee acting on behalf of the Holders of the Tier 1 Notes may exercise, claim or plead any right of set-off, netting, compensation or retention in respect of any amount owed to it by the Company in respect of, or arising under, or in connection with, the Tier 1 Notes as provided for in Section 13.02 of the Contingent Convertible Capital Securities Indenture;
(ad) Each Holder of the Tier 1 Notes acknowledges, accepts, consents to and agrees to be bound by the effect of the exercise of the Bail-in Power by the Relevant Resolution Authority as provided for in Article 14 of the Contingent Convertible Capital Securities Indenture; and
(ae) The Bank of New York Mellon, London Branch, as the Paying and Conversion Agent, Calculation Agent, Principal Paying Agent and The Bank of New York Mellon SA/NV, Luxembourg Branch, as the Contingent Convertible Capital Securities Registrar for the Tier 1 Notes, acknowledge, accept, consent to and agree to be bound by the effect of the exercise of the Bail-in Power by the Relevant Resolution Authority as provided for in Article 14 of the Contingent Convertible Capital Securities Indenture.
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ARTICLE 3
ADDITIONAL TERMS APPLICABLE TO THE TIER 1 NOTES
Section 3.01. Addition of Definitions. With respect to the Tier 1 Notes only, Section 1.01 of the Base Indenture is amended to include the following definitions (which shall be deemed to arise in Section 1.01 in their proper alphabetical order):
“5-year UST” means, in relation to a Reset Date and the Reset Period commencing on that Reset Date, an interest rate expressed as a percentage determined by the Calculation Agent to be the per annum rate equal to the yield to maturity for U.S. Treasury securities with a maturity of five years as published in the most recent H.15.
“Accrual Date” shall have the meaning set forth in Section 2.01(m) hereof.
“Closing Date” means August 1, 2024, being the date of the initial issue of the Tier 1 Notes.
“First Reset Date” means August 1, 2034 (ten years after the Closing Date).
“H.15” means the daily statistical release designated as such and published by the Board of Governors of the United States Federal Reserve System under the caption “Treasury constant maturities,” or any successor or replacement publication, as determined by the Company, that establishes yield on actively traded U.S. Treasury securities adjusted to constant maturity, and “most recent H.15” means, in respect of any Reset Period, the H.15 which includes a yield to maturity for U.S. Treasury securities with a maturity of five years published closest in time but prior to the Reset Determination Date.
“Reset Date” means the First Reset Date and every fifth anniversary thereafter.
“Reset Determination Date” means, in relation to each Reset Date, the second Business Day immediately preceding such Reset Date.
“Reset Period” means each period from (and including) a Reset Date to (but excluding) the next succeeding Reset Date.
“Tier 1 Notes” means a series of Contingent Convertible Capital Securities to be known as the Series 16 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities.
Section 3.02. Replacement of Definitions. With respect to the Tier 1 Notes only, Section 1.01 of the Base Indenture is amended to replace in their entirety the following definitions:
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“Bail-in Power” means any power existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of the BRRD, including its article 48 and, when applicable, its article 59 (therefore, the write-down capital conversion power at the point of non-viability) (including but not limited to, Law 11/2015, RD 1012/2015 and any other implementing regulations), (ii) the SRM Regulation and (iii) the instruments, rules or standards created thereunder, pursuant to which any obligation of a Regulated Entity (or an affiliate of such Regulated Entity) can be reduced, cancelled, suspended, modified, or converted into shares, other securities, or other obligations of such Regulated Entity (or affiliate of such Regulated Entity).
“BRRD” means Directive 2014/59/EU of 15 May establishing a framework for the recovery and resolution of credit institutions and investment firms or such other directive as may come into effect in place thereof, as amended from time to time.
“Business Day” means any day, other than Saturday or Sunday, that is not a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of New York or London nor a day when the T2 real-time gross settlement (RTGS) system, owned and operated by the Eurosystem, or any successor thereto, is closed for business.
“Calculation Agent” means the Trustee or such other person authorized by the Company as the party responsible for calculating the Distributions and/or such other amount(s) from time to time in relation to the Tier 1 Notes.
“CRD IV Directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms or such other directive as may come into effect in place thereof, as amended from time to time.
“CRR” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on the prudential requirements for credit institutions and investment firms or such other regulation as may come into effect in place thereof, as amended from time to time.
“Distribution Payment Date” means February 1, May 1, August 1 and November 1 of each year.
“Distribution Rate” means the rate at which the Tier 1 Notes accrue Distributions in accordance with Section 2.01(k) hereof.
“Floor Price” means $3.247 per Common Share, subject to adjustment in accordance with Section 4.03 of the Contingent Convertible Capital Securities Indenture.
“Initial Margin” means 3.911% per annum.
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“Law 10/2014” means Law 10/2014, of June 26, on the regulation, supervision and solvency of credit institutions (Ley 10/2014, de 26 de junio, de ordenación, supervisión y solvencia de entidades de crédito) as amended or replaced from time to time.
“Liquidation Preference” means $200,000 per Tier 1 Note.
“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organization, state or agency of a state or other entity, whether or not having separate legal personality.
“RD 1012/2015” means Royal Decree 1012/2015, of 6 November, implementing Law 11/2015, of 18 June, on the recovery and resolution of credit institutions and investment firms (Real Decreto 1012/2015, de 6 de noviembre, por el que se desarrolla la Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended or replaced from time to time.
“Regular Record Date” means the close of business on the 15th calendar day immediately preceding the relevant Distribution Payment Date, whether or not a Business Day.
“Spanish Companies Act” means the consolidated text of the Spanish Companies Act (Ley de Sociedades de Capital), approved by the Royal Decree Legislative 1/2010, of 2 July 2010, as amended or replaced from time to time.
“Spanish Insolvency Law” means the restated text of the Spanish Insolvency Law (Ley Concursal) approved by the Royal Decree-Legislative 1/2020, of 5 May, as amended or replaced from time to time.
“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund, as amended or replaced from time to time.
“Tax Event” means that as a result of any change in the laws or regulations of Spain or in the official interpretation or administration of any such laws or regulations which becomes effective on or after the Closing Date the Company shall determine that (a) the Company would not be entitled to claim a deduction in computing taxation liabilities in Spain (as set forth in Section 11.04 of the Contingent Convertible Capital Securities Indenture) in respect of any Distribution to be made on the next Distribution Payment Date or the value of such deduction to the Company would be materially reduced, or (b) the Company would be required to pay Additional Amounts pursuant to Section 11.04 of the Contingent Convertible Capital Securities Indenture, or (c) the applicable tax treatment of the Tier 1 Notes changes in a material way that was not reasonably foreseeable at the Closing Date.
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“Tier 1 Capital” means tier 1 capital (capital de nivel 1) in accordance with Chapters 1, 2 and 3 (Tier 1 Capital, Common Equity Tier 1 Capital and Additional Tier 1 Capital) of Title I (Elements of own funds) of Part Two (Own Funds and Eligible Liabilities) of the CRR and/or Applicable Banking Regulations at any time, including any applicable transitional, phasing in or similar provisions.
Section 3.03. Replacement of Provisions with Respect to Governing Law. With respect to the Tier 1 Notes only, Section 1.13 of the Base Indenture is hereby replaced with the following:
Governing Law. This Contingent Convertible Capital Securities Indenture and the Tier 1 Notes shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to the choice of law provisions), except for Section 13.01(a) of this Contingent Convertible Capital Securities Indenture and the status provisions of the Tier 1 Notes, as well as the price at which the Tier 1 Notes can be issued, the minimum value at which the ordinary shares resulting from the contingent conversion could be issued and the legal regime applicable for the exclusion of the preemptive rights, which shall be governed by and construed in accordance with the laws of the Kingdom of Spain, and except that the authorization and execution by the Company and the Trustee of the Contingent Convertible Capital Securities Indenture and the Tier 1 Notes shall be governed by (in addition to the laws of the State of New York relevant to execution) the respective jurisdictions of organization of the Company and the Trustee, as the case may be.
Section 3.04. Payment. Notwithstanding Section 3.07 of the Base Indenture, payments of Distributions, if any, and any Additional Amounts on the Tier 1 Notes may be made by wire transfer of immediately available funds.
Section 3.05. Deletion of Satisfaction and Discharge Provisions. With respect to the Tier 1 Notes only, Article 5 of the Base Indenture is deleted in its entirety.
Section 3.06. Replacement of Provisions with Respect to Enforcement Events. With respect to the Tier 1 Notes only, paragraph (b) of Section 6.01 of the Base Indenture is hereby replaced with the following:
(b) Neither a cancellation of the Tier 1 Notes, a reduction, in part or in full, of the Liquidation Preference on the Tier 1 Notes, the conversion thereof into another security or obligation of the Company or another person, in each case as a result of the exercise of the Bail-in Power by the Relevant Resolution Authority with respect to the Company, nor the exercise of any Bail-on Power by the Relevant Resolution Authority with respect to the Tier 1 Notes (including moratorium) will be an Enforcement Event or otherwise constitute non-performance of a contractual obligation, or entitle the holders of such securities to any remedies, which are hereby expressly waived.
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Section 3.07. Deletion of Provisions with Respect to Selection by the Trustee of Contingent Convertible Capital Securities to be Redeemed. With respect to the Tier 1 Notes only, the first paragraph of Section 12.03 of the Base Indenture is deleted in its entirety.
Section 3.08. Addition of Provisions with Respect to Redemption Procedures; Notice of Redemption. With respect to the Tier 1 Notes only, the following is hereby added as new paragraph (g) at the end of Section 12.04 of the Base Indenture:
(g) As of the date of this Contingent Convertible Capital Securities Indenture, Article 78(1) of the CRR provides that the relevant Regulator will give its consent to a redemption or repurchase of the Tier 1 Notes provided that either of the following conditions is met (subject in any event to any alternative or additional conditions or requirements as may be applicable from time to time under the Applicable Banking Regulations):
(i) on or before such redemption of the Tier 1 Notes, the Company replaces the Tier 1 Notes with instruments qualifying as Tier 1 Capital of an equal or higher quality on terms that are sustainable for the income capacity of the Company; or
(ii) The Company has demonstrated to the satisfaction of the relevant Regulator that its Tier 1 Capital and Tier 2 Capital and its eligible liabilities would, following such redemption, exceed the requirements laid down in the CRD IV and BRRD by a margin that the relevant Regulator considers necessary.
Section 3.09. Replacement of Provisions with Respect to Redemption Due to Changes in Tax Treatment. With respect to the Tier 1 Notes only, Section 12.08 of the Base Indenture is hereby replaced with the following:
Redemption Due to Changes in Tax Treatment. If, on or after the Closing Date, there is a Tax Event, the Tier 1 Notes may be redeemed, in whole but not in part, at the option of the Company, at any time, at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force.
Section 3.10. Replacement of Provisions with Respect to Redemption Due to a Capital Event. With respect to the Tier 1 Notes only, Section 12.09 of the Base Indenture is hereby replaced with the following:
Redemption Due to Capital Event. If, on or after the Closing Date, there is a Capital Event, the Tier 1 Notes may be redeemed, in whole but not in part, at the option of the Company, at any time, at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force.
11
Section 3.11. Replacement of Provisions with Respect to Repurchase of Contingent Convertible Capital Securities. With respect to the Tier 1 Notes only, the first paragraph of Section 12.10 of the Base Indenture is hereby replaced with the following:
Repurchase of Contingent Convertible Capital Securities. (a) The Company and any of its subsidiaries or any third party designated by any of them, may only purchase or otherwise acquire the Tier 1 Notes in the open market or otherwise at any price, in accordance with Applicable Banking Regulations in force at the relevant time, including the applicable limits referred to in the CRR and subject to the prior consent of the relevant Regulator as required.
Section 3.12. Replacement of Provisions with Respect to Optional Redemption. With respect to the Tier 1 Notes only, Section 12.11 of the Base Indenture is hereby replaced with the following:
Optional Redemption. The Tier 1 Notes may be redeemed at the Company’s option, in whole but not in part, on (i) any calendar day during the six-month period commencing on (and including) February 1, 2034 to (and including) the First Reset Date and (ii) any Distribution Payment Date thereafter, in each case at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force.
Section 3.13. Replacement of Provisions with Respect to Cancelled Distributions Not Payable Upon Redemption. With respect to the Tier 1 Notes only, Section 12.12 of the Base Indenture is hereby replaced with the following:
Cancelled Distributions Not Payable Upon Redemption. Any Distributions that have been cancelled or deemed cancelled pursuant to Sections 3.08 or 3.09 of this Contingent Convertible Capital Securities Indenture shall not be payable if the Contingent Convertible Capital Securities are redeemed pursuant to Sections 12.08, 12.09, 12.11 or 12.13 hereof.
Section 3.14. Addition of Provisions with Respect to Clean-up Redemption. With respect to the Tier 1 Notes only, the following paragraph is hereby added as new Section 12.13 of the Base Indenture:
Clean-up Redemption. If 75% or more of the initial aggregate Liquidation Preference of the Tier 1 Notes (which, for the avoidance of doubt, includes any additional issuances issued subsequently and constituting a single series of Tier 1 Notes under this Contingent Convertible Capital Securities Indenture, in accordance with Section 3.16 of this Contingent Convertible Capital Securities Indenture) have been redeemed or purchased by, or on behalf of, the Company and cancelled, the Company may, on any date that is a Distribution Payment Date, at
12
its option, redeem in whole but not in part the outstanding Tier 1 Notes at the Redemption Price, in accordance with Articles 77 and 78 of CRR, Article 29 of the Commission Delegated Regulation (EU) No. 241/2014 (including the prior consent of the Regulator as required) and/or any other Applicable Banking Regulations then in force.
Section 3.15. Addition of Provisions with Respect to Contingent Convertible Capital Securities Subordinate to Senior Claims. With respect to the Tier 1 Notes only, the following is hereby added as new paragraph (d) at the end of Section 13.01 of the Base Indenture:
(d) No security or guarantee of whatever kind is, or shall at any time be, provided by the Company or any other person securing the rights of the Holders under the Tier 1 Notes.
Section 3.16. Replacement of Provisions with Respect to Agreement and Acknowledgment with Respect to the Exercise of the Bail-in Power. With respect to the Tier 1 Notes only, paragraph (a) of Section 14.01 of the Base Indenture is hereby replaced with the following:
(a) Notwithstanding any other term of the Tier 1 Notes or any other agreements, arrangements, or understandings between the Company and any Holder of the Tier 1 Notes, by its acquisition of the Tier 1 Notes, each Holder (which, for the purposes of this Section 14.01 of the Contingent Convertible Capital Securities Indenture, includes each holder of a beneficial interest in the Tier 1 Notes) acknowledges, accepts, consents to and agrees:
(i) to be bound by the effect of the exercise of the Bail-in Power by the Relevant Resolution Authority, which may include and result in any of the following, or some combination thereof:
| • | the reduction of all, or a portion, of the Amounts Due on a permanent basis; |
| • | the conversion of all, or a portion, of the Amounts Due into Common Equity Tier 1 Instruments, other securities or other obligations of the Company or another person (and the issue to the Holder of such Common Equity Tier 1 Instruments, securities or obligations), including by means of an amendment, modification or variation of the terms of the Tier 1 Notes, in which case the Holder agrees to accept in lieu of its rights under such Tier 1 Notes any such Common Equity Tier 1 Instruments, other securities or other obligations of the Company or another person; |
| • | the cancellation of the Contingent Convertible Capital Securities or Amounts Due; |
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| • | the amendment of the Distribution payable on the Tier 1 Notes, or the date on which the Distribution becomes payable, including by suspending payment for a temporary period; and |
(ii) that the terms of the Tier 1 Notes are subject to, and may be varied, if necessary, to give effect to, the exercise of the Bail-in Power by the Relevant Resolution Authority.
ARTICLE 4
MISCELLANEOUS
Section 4.01. Effect of Supplemental Indenture. Upon the execution and delivery of this Second Supplemental Indenture by each of the Company and the Trustee, the Base Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Base Indenture for all purposes in respect of the Tier 1 Notes or otherwise as applicable.
Section 4.02. Confirmation of Indenture. The Base Indenture, as amended and supplemented by this Second Supplemental Indenture with respect to the Tier 1 Notes or otherwise as applicable, is in all respects ratified and confirmed, and the Base Indenture, this Second Supplemental Indenture and all other indentures supplemental thereto shall, in respect of the Tier 1 Notes or otherwise as applicable, be read, taken and construed as one and the same instrument. This Second Supplemental Indenture constitutes an integral part of the Contingent Convertible Capital Securities Indenture and, where applicable, with respect to the Tier 1 Notes. In the event of a conflict between the terms and conditions of the Base Indenture and the terms and conditions of this Second Supplemental Indenture, the terms and conditions of this Second Supplemental Indenture shall prevail where applicable.
Section 4.03. Concerning the Trustee. The Trustee does not make any representations as to the validity, sufficiency or adequacy of this Second Supplemental Indenture or the Tier 1 Notes. The recitals and statements herein and in the Tier 1 Notes are deemed to be those of the Company and not the Trustee. In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Base Indenture relating to the conduct of or affecting the liability of or affording protection to the Trustee.
Section 4.04. Governing Law. The Contingent Convertible Capital Securities Indenture and the Tier 1 Notes shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to the choice of law provisions), except for Section 13.01(a) of the Contingent Convertible Capital Securities Indenture and Section 2.01(w) of this Second Supplemental Indenture and the status provisions of the Tier 1 Notes, as well as the price at which the Tier 1 Notes can be issued, the minimum value at which the ordinary shares resulting from the contingent conversion could be issued and the legal regime applicable for the exclusion of the preemptive rights, which shall be governed by and construed in accordance with the laws of the Kingdom of Spain, and except that the authorization and execution by the Company and the Trustee of the Contingent Convertible Capital Securities Indenture and the Tier 1 Notes shall be governed by (in addition to the laws of the State of New York relevant to execution) the respective jurisdictions of organization of the Company and the Trustee, as the case may be.
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Section 4.05. Separability. In case any provision contained in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 4.06. Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile, email or other electronic format (e.g., “pdf,” “tif” or “jpg”) transmission and other electronically imaged signatures (including, without limitation, DocuSign and AdobeSign) shall constitute effective execution and delivery of this Second Supplemental Indenture as to the parties hereto and may be used in lieu of the original Second Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, email or other electronic format (e.g., “pdf,” “tif” or “jpg”) shall be deemed to be their original signatures for all purposes. This Second Supplemental Indenture and any indenture supplemental hereto and any other document, certificate or opinion delivered in connection with this Second Supplemental Indenture, such supplemental indenture or the issuance and delivery of the Tier 1 Notes may be signed by or on behalf of the Company and the Trustee by manual, facsimile or pdf or other electronically imaged signature (including, without limitation, DocuSign and AdobeSign).
Section 4.07. Electronic Means. The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Second Supplemental Indenture and related financing documents and delivered using email, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder (collectively, the “Electronic Means”); provided, however, that the Company shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate shall be amended by the Company whenever a person is to be added or deleted from the listing. If the Company elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions shall be deemed controlling. The Company understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Company shall be responsible for ensuring
15
that only Authorized Officers transmit such Instructions to the Trustee and that the Company and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Company. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Company agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Company; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
Section 4.08. Recognition of Bail-In. Recognition of Bail-In. Notwithstanding and to the exclusion of any other term of this Second Supplemental Indenture or any other agreements, arrangements, or understanding between the Contingent Convertible Capital Securities Registrar and the Company or any Holder, the Company and each Holder acknowledges and accepts that a BRRD Liability arising under this Second Supplemental Indenture may be subject to the exercise of Bail-in Powers by the Relevant Resolution Authority, and acknowledges, accepts, and agrees to be bound by:
(a) the effect of the exercise of Bail-in Powers by the Relevant Resolution Authority in relation to any BRRD Liability of the Contingent Convertible Capital Securities Registrar to the Company or to any Holder under this Second Supplemental Indenture, that (without limitation) may include and result in any of the following, or some combination thereof:
(i) the reduction of all, or a portion, of the BRRD Liability or outstanding amounts due thereon;
(ii) the conversion of all, or a portion, of the BRRD Liability into shares, other securities or other obligations of the Contingent Convertible Capital Securities Registrar or another person, and the issue to or conferral on the Company or on any Holder of such shares, securities or obligations;
(iii) the cancellation of the BRRD Liability;
(iv) the amendment or alteration of any interest, if applicable, thereon, the maturity or the dates on which any payments are due, including by suspending payment for a temporary period;
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(b) the variation of the terms of this Second Supplemental Indenture, as deemed necessary by the Relevant Resolution Authority, to give effect to the exercise of Bail-in Powers by the Relevant Resolution Authority in respect of the Contingent Convertible Capital Securities Registrar.
Solely as used in this Section 4.08:
“Bail-in Legislation” means in relation to a member state of the European Economic Area which has implemented, or which at any time implements, the BRRD, the relevant implementing law, regulation, rule or requirement as described in the EU Bail-in Legislation Schedule from time to time.
“Bail-in Powers” means any Write-down and Conversion Powers (as defined in the EU Bail-in Legislation Schedule), in relation to the relevant Bail-in Legislation.
“BRRD” means Directive 2014/59/EU of 15 May establishing a framework for the recovery and resolution of credit institutions and investment firms or such other directive as may come into effect in place thereof, as amended from time to time.
“BRRD Liability” means a liability in respect of which the relevant Write-down and Conversion Powers (as defined in the EU Bail-in Legislation Schedule) in the applicable Bail-in Legislation may be exercised.
“EU Bail-in Legislation Schedule” means the document described as such, then in effect, and published by the Loan Market Association (or any successor person) from time to time at http://www.lma.eu.com/pages.aspx?p=499.
“Relevant Resolution Authority” means the resolution authority with the ability to exercise any Bail-in Powers in relation to the Contingent Convertible Capital Securities Registrar.
[Signature Pages Follow]
17
IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first written above.
| BANCO SANTANDER, S.A., as Issuer | ||
| By: | /s/ Juan Urigoen Irusta | |
| Name: Juan Urigoen Irusta | ||
| Title: Authorized Signatory | ||
[Signature Page to Second Supplemental Indenture]
| THE BANK OF NEW YORK MELLON, London Branch, as Trustee, Paying and Conversion Agent, Calculation Agent and Principal Paying Agent | ||
| By: | /s/ Gregory Dale | |
| Name: Gregory Dale | ||
| Title: Authorised Signatory | ||
[Signature Page to Second Supplemental Indenture]
| THE BANK OF NEW YORK MELLON SA/NV, Luxembourg Branch, as Registrar | ||
| By: | /s/ Gregory Dale | |
| Name: Gregory Dale | ||
| Title: Authorised Signatory | ||
[Signature Page to Second Supplemental Indenture]
EXHIBIT A
FORM OF GLOBAL NOTE
THIS NOTE IS A GLOBAL SECURITY AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY AS THE DEPOSITARY (AS DEFINED IN THE CONTINGENT CONVERTIBLE CAPITAL SECURITIES INDENTURE GOVERNING THIS NOTE), OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO THE BASE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.05 OF THE BASE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 3.13 OF THE BASE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR TIER 1 NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE SUBORDINATION OF THIS NOTE IS SET FORTH IN SECTION 13.01(a) OF THE CONTINGENT CONVERTIBLE CAPITAL SECURITIES INDENTURE AND SECTION 2.01(w) OF THE SECOND SUPPLEMENTAL INDENTURE, AND THIS NOTE IS ISSUED SUBJECT TO THE PROVISIONS OF SUCH SECTIONS 13.01(a) AND 2.01(w), RESPECTIVELY, AND THE HOLDER OF THIS NOTE, BY ACCEPTING THE SAME, AGREES TO AND SHALL BE BOUND BY SUCH PROVISIONS. THE PROVISIONS OF SECTION 13.01(a) OF THE CONTINGENT CONVERTIBLE CAPITAL SECURITIES INDENTURE, SECTION 2.01(w) OF THE SECOND SUPPLEMENTAL INDENTURE AND THE TERMS OF THIS PARAGRAPH, AS WELL AS THE PRICE AT WHICH THE TIER 1 NOTES CAN BE ISSUED, THE MINIMUM VALUE AT WHICH THE ORDINARY SHARES RESULTING FROM THE CONTINGENT CONVERSION COULD BE ISSUED AND THE LEGAL REGIME APPLICABLE FOR THE EXCLUSION OF THE PREEMPTIVE RIGHTS, ARE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE KINGDOM OF SPAIN.
A-1
CUSIP No. 05964H BH7
ISIN No. US05964HBH75
SERIES 16 8.000% NON-STEP-UP NON-CUMULATIVE CONTINGENT CONVERTIBLE
PERPETUAL PREFERRED TIER 1 SECURITIES
Issued by
BANCO SANTANDER, S.A.
| No. | $ |
BANCO SANTANDER, S.A., a sociedad anónima, incorporated under the laws of the Kingdom of Spain (herein called the “Company,” which term includes any successor person under the Contingent Convertible Capital Securities Indenture (as defined on the reverse hereof)), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the Liquidation Preference of $ ( dollars) if and to the extent due, and to pay Distributions thereon, if any, in accordance with the terms hereof and the Contingent Convertible Capital Securities Indenture. The Series 16 8.000% Non-step-up Non-cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (the “Tier 1 Notes”) shall have no fixed maturity or fixed redemption date.
This Tier 1 Note will accrue non-cumulative cash distributions (“Distributions”) (i) in respect of the period from (and including) August 1, 2024 (the “Closing Date”) to (but excluding) August 1, 2034 (ten years after the Closing Date) (the “First Reset Date”) at the rate of 8.000% per annum, and (ii) in respect of each period from (and including) the First Reset Date and every fifth anniversary thereof (each a “Reset Date”) to (but excluding) the next succeeding Reset Date (each such period, a “Reset Period”), at the rate per annum equal to the aggregate of 3.911% per annum and the 5-year UST for the relevant Reset Period, with such rate per annum converted to a quarterly rate in accordance with market convention (rounded to four decimal places, with 0.00005 rounded down), all as determined by the Calculation Agent on the relevant Reset Determination Date. Subject as provided in the Contingent Convertible Capital Securities Indenture, such Distributions will be payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year (each a “Distribution Payment Date”), commencing on November 1, 2024.
Payments of Distributions on this Tier 1 Note shall be computed on the basis of a 360-day year consisting of twelve 30-day months and, in the case of an incomplete month, on the basis of the actual number of days elapsed in such month.
The Company will have the sole and absolute discretion at all times and for any reason to cancel in whole or in part any Distribution. If the Company does not pay a Distribution or part thereof on the relevant Distribution Payment Date in respect of the Tier 1 Notes in accordance
A-2
with the Contingent Convertible Capital Securities Indenture, such non-payment shall evidence the cancellation of such Distribution (or relevant part thereof) or, as appropriate, the Company’s exercise of its discretion to cancel such Distribution (or relevant part thereof) and accordingly, such Distribution shall not in any such case be due and payable.
Payment of the Distributions of this Tier 1 Note will be made by wire transfer of immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Such payment shall be made to the Holder including through a Paying Agent of the Company for collection by the Holder. If the date of payment of any Distribution is not a Business Day, then (subject as provided in the Contingent Convertible Capital Securities Indenture) such payment shall be made on the next Business Day with the same force and effect as if made on such date for payment, but Distributions on that payment will not accrue during the period from and after the scheduled Distribution Payment Date. If the date of redemption or repayment is not a Business Day, the Company may pay Distributions and the Liquidation Preference on the next succeeding Business Day, but Distributions on that payment will not accrue during the period from and after the date of redemption or repayment.
The Tier 1 Notes are issuable in minimum denominations of $200,000 and integral multiples of $200,000 in excess thereof.
For informational purposes only, without any substantive effect whatsoever and solely in order to comply with Article 413(d) of the Spanish Companies Law (Ley de Sociedades de Capital), approved by Royal Decree 1/2010, of July 2, to the extent applicable, it is hereby noted that the initial aggregate Liquidation Preference of the Tier 1 Notes, i.e., $1,5000,000,000, was equivalent to approximately €1,381,215,469.61 (at the Bloomberg reference exchange rate as of July 26, 2024 of US $1.086 per €1.00).
Amounts due on this Tier 1 Note shall not under any circumstances whatsoever be payable in any currency other than U.S. Dollars.
Prior to due presentment of this Tier 1 Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Tier 1 Note is registered as the owner of such Tier 1 Note for the purpose of receiving payment of the Liquidation Preference and Distributions, if any, on and any Additional Amounts with respect to such Tier 1 Note and for all other purposes whatsoever, whether or not such Tier 1 Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
Reference is hereby made to the further provisions of this Tier 1 Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee referred to on the reverse hereof by manual, PDF or other electronically imaged signature (including, without limitation, DocuSign and AdobeSign), this Tier 1 Note shall not be entitled to any benefit under the Contingent Convertible Capital Securities Indenture or be valid or obligatory for any purpose.
A-3
Notwithstanding any other term of this Tier 1 Note or any other agreements, arrangements, or understandings between the Company and any Holder of this Tier 1 Note, by its acquisition of this Tier 1 Note, each Holder (which includes each holder of a beneficial interest in this Tier 1 Note) acknowledges, accepts, consents to and agrees:
(i) to be bound by the effect of the exercise of the Bail-in Power by the Relevant Resolution Authority, which may include and result in any of the following, or some combination thereof:
| • | the reduction of all, or a portion, of the Amounts Due on a permanent basis; |
| • | the conversion of all, or a portion, of the Amounts Due into Common Equity Tier 1 Instruments, other securities or other obligations of the Company or another person (and the issue to the Holder of such Common Equity Tier 1 Instruments, securities or obligations), including by means of an amendment, modification or variation of the terms of the Tier 1 Notes, in which case the Holder agrees to accept in lieu of its rights under this Tier 1 Note, any such Common Equity Tier 1 Instruments, other securities or other obligations of the Company or another person; |
| • | the cancellation of this Tier 1 Note or Amounts Due; |
| • | the amendment of the Distribution payable on this Tier 1 Note, or the date on which the Distribution becomes payable, including by suspending payment for a temporary period; and |
(ii) that the terms of this Tier 1 Note are subject to, and may be varied, if necessary, to give effect to, the exercise of the Bail-in Power by the Relevant Resolution Authority.
“Amounts Due” means the Liquidation Preference, together with any accrued but unpaid Distributions, and Additional Amounts, if any, due on the Tier 1 Notes. References to such amounts will include amounts that have become due and payable, but which have not been paid, prior to the exercise of the Bail-in Power by the Relevant Resolution Authority.
“Bail-in Power” means any power existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of the BRRD, including its article 48 and, when applicable, its article 59 (therefore, the write-down capital conversion power at the point of non-viability) (including but not limited to, Law 11/2015, RD 1012/2015 and any other implementing regulations), (ii) the SRM Regulation and (iii) the instruments, rules or standards created thereunder, pursuant to which any obligation of a Regulated Entity (or an affiliate of such Regulated Entity) can be reduced, cancelled, suspended, modified, or converted into shares, other securities, or other obligations of such Regulated Entity (or affiliate of such Regulated Entity).
“BRRD” means Directive 2014/59/EU of 15 May establishing a framework for the recovery and resolution of credit institutions and investment firms or such other directive as may come into effect in place thereof, as amended from time to time.
A-4
“Business Day” means any day, other than Saturday or Sunday, that is not a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in the City of New York or London nor a day when the T2 real-time gross settlement (RTGS) system, owned and operated by the Eurosystem, or any successor thereto, is closed for business.
“CET1 Capital” means at any time, the common equity tier 1 capital of the Company or the Group, respectively, as calculated in accordance with Chapter 2 (Common Equity Tier 1 Capital) of Title I (Elements of own funds) of Part Two (Own Funds and Eligible Liabilities) of the CRR and/or Applicable Banking Regulations (as each of such terms is defined in the Contingent Convertible Capital Securities Indenture) at such time, including any applicable transitional, phasing in or similar provisions.
“Common Equity Tier 1 Instruments” means instruments qualifying as CET1 Capital.
“Law 11/2015” means Law 11/2015, of 18 June, on recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión) as amended or replaced from time to time.
“RD 1012/2015” means Royal Decree 1012/2015, of 6 November, implementing Law 11/2015, of 18 June, on the recovery and resolution of credit institutions and investment firms (Real Decreto 1012/2015, de 6 de noviembre, por el que se desarrolla la Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended or replaced from time to time.
“Regulated Entity” means any entity to which BRRD, as implemented in the Kingdom of Spain (including but not limited to, Law 11/2015, RD 1012/2015 and any other implementing regulations), or any other Spanish law relating to the Bail-in Power, applies, which includes, certain credit institutions, investment firms, and certain of their parent or holding companies.
“Relevant Resolution Authority” means the Spanish Fund for the Orderly Restructuring of Banks, the Bank of Spain, the European Single Resolution Board, as the case may be, according to Law 11/2015, and any other entity with the authority to exercise the Bail-in Power or any other resolution power from time to time.
“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund, as amended or replaced from time to time.
The public deed of issuance (escritura de emisión) related to the Tier 1 Notes represented hereby was executed on July 30, 2024 before the Notary Public of Madrid, Mr. Miguel Ruiz-Gallardón, with the number 4,503 of his records.
A-5
IN WITNESS WHEREOF, the Company has caused this Tier 1 Note to be duly executed.
Dated: August , 2024
| BANCO SANTANDER, S.A., as Issuer | ||
| By: |
| |
| Name: | ||
| Title: | ||
[Global Note Signature Page]
A-6
CERTIFICATE OF AUTHENTICATION
This is one of the Contingent Convertible Capital Securities of the series designated herein referred to in the within-mentioned Contingent Convertible Capital Securities Indenture.
Dated: August , 2024
| THE BANK OF NEW YORK MELLON, | ||
| London Branch, as Trustee | ||
| By: |
| |
| Name: | ||
| Title: | ||
[Global Note Signature Page]
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[REVERSE OF SECURITY]
This Note is one of a duly authorized issue of securities of the Company of the series designated Series 16 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (herein called the “Tier 1 Notes”) issued and to be issued in one or more series under the Contingent Convertible Capital Securities Indenture, dated as of November 21, 2023 (herein called the “Base Indenture”), between the Company, as issuer and The Bank of New York Mellon, London Branch, as trustee (herein called the “Trustee,” which term includes any successor trustee under the Base Indenture), as amended and supplemented by the Second Supplemental Indenture, dated as of August 1, 2024, among the Company, the Trustee, as Trustee, Paying and Conversion Agent, Calculation Agent and Principal Paying Agent, and The Bank of New York Mellon SA/NV, Luxembourg Branch, as Contingent Convertible Capital Securities Registrar (the “Second Supplemental Indenture,” and the Base Indenture, as amended and supplemented by the Second Supplemental Indenture, the “Contingent Convertible Capital Securities Indenture”) to which Contingent Convertible Capital Securities Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company and the Trustee and the Holders of the Tier 1 Notes and of the terms upon which the Tier 1 Notes are, and are to be, authenticated and delivered. Capitalized terms used herein are used as defined in the Contingent Convertible Capital Securities Indenture unless otherwise indicated. The terms of this the Tier 1 Notes include those stated in the Contingent Convertible Capital Securities Indenture. The Tier 1 Notes are subject to all such terms, and Holders are referred to the Contingent Convertible Capital Securities Indenture for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Tier 1 Note and the terms of the Contingent Convertible Capital Securities Indenture, the terms of the Contingent Convertible Capital Securities Indenture will control.
This Tier 1 Note is one of the series designated on the face hereof, initially limited in aggregate Liquidation Preference of $1,500,000,000; provided, that the Company may, from time to time, without the consent of the Holders of the Tier 1 Notes, issue additional Contingent Convertible Capital Securities (“Additional Tier 1 Notes”) under the Contingent Convertible Capital Securities Indenture, having the same ranking and same Distribution Rate, redemption terms and other terms, except for the price to the public, original Distribution accrual date, issue date and first Distribution Payment Date, as this Tier 1 Note; provided, however, that such Additional Tier 1 Notes will not have the same CUSIP, ISIN or other identifying number as the outstanding Tier 1 Notes unless the Additional Tier 1 Notes are fungible with the Tier 1 Notes for U.S. federal income tax purposes. Any such Additional Tier 1 Notes, together with the Tier 1 Notes, will constitute a single series of securities under the Contingent Convertible Capital Securities Indenture and shall be included in the definition of “Contingent Convertible Capital Securities” in the Base Indenture where the context requires.
Unless previously converted into Common Shares, the payment obligations of the Company under this Tier 1 Note constitute direct, unconditional, unsecured and subordinated obligations (créditos subordinados) of the Company according to Article 281.1 of the Spanish Insolvency Law and, in accordance with Additional Provision 14.3 of Law 11/2015, but subject to any other ranking that may apply as a result of any mandatory provision of law (or otherwise), upon the insolvency of the Company, for so long as the Tier 1 Notes constitute Additional Tier 1 Instruments, rank: (i) pari passu among themselves and with (a) all other subordinated
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obligations (créditos subordinados) of the Company under Additional Tier 1 Instruments and (b) any other subordinated obligations (créditos subordinados) of the Company which by law and/or by their terms, to the extent permitted by Spanish law, rank pari passu with the Company’s obligations under Additional Tier 1 Instruments; (ii) junior to (a) any unsubordinated obligations (créditos ordinarios) of the Company, (b) any subordinated obligations (créditos subordinados) of the Company under Tier 2 Instruments and (c) any other subordinated obligations (créditos subordinados) of the Company which by law and/or by their terms, to the extent permitted by Spanish law, rank senior to the Company’s obligations under Additional Tier 1 Instruments; and (iii) senior to (a) any claims for the liquidation amount of the Common Shares and (b) any other subordinated obligations (créditos subordinados) of the Company which by law and/or by their terms, to the extent permitted by Spanish law, rank junior to the Company’s obligations under Additional Tier 1 Instruments.
The obligations of the Company under this Tier 1 Note are subject to the Bail-in Power.
“Additional Tier 1 Capital” means additional tier 1 capital (capital de nivel 1 adicional) in accordance with Chapter 3 (Additional Tier 1 capital) of Title I (Elements of own funds) of Part Two (Own Funds and Eligible Liabilities) of the CRR and/or Applicable Banking Regulations at any time, including any applicable transitional, phasing in or similar provisions.
“Additional Tier 1 Instrument” means any instrument of the Company qualifying as Additional Tier 1 Capital in whole or in part from time to time.
“Law 11/2015” means Law 11/2015, of 18 June, on recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión) as amended or replaced from time to time.
“Spanish Insolvency Law” means the restated text of the Spanish Insolvency Law (Ley Concursal) approved by the Royal Decree-Legislative 1/2020, of 5 May, as amended or replaced from time to time.
“Tier 2 Capital” means tier 2 capital (capital de nivel 2) in accordance with Chapter 4 (Tier 2 capital) of Title I (Elements of own funds) of Part Two (Own Funds and Eligible Liabilities) of the CRR and/or Applicable Banking Regulations at any time, including any applicable transitional, phasing in or similar provisions.
“Tier 2 Instrument” means any instrument of the Company qualifying as Tier 2 Capital in whole or in part from time to time.
The provisions of Section 13.01 of the Contingent Convertible Capital Securities Indenture and Section 2.01(w) of the Second Supplemental Indenture shall apply only to rights or claims payable with respect to the Tier 1 Notes and nothing herein shall affect or prejudice the payment of the costs, charges, expenses, liabilities, indemnity or remuneration of the Trustee, the first lien rights of the Trustee under Section 7.08 of the Base Indenture, or the rights and remedies of the Trustee in respect thereof.
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The Company agrees with respect to this Tier 1 Note and each Holder of this Tier 1 Note, by his or her acquisition of this Tier 1 Note, will be deemed to have agreed to the above-described subordination. Each such Holder will be deemed to have irrevocably waived his or her rights of priority which would otherwise be accorded to him or her under the laws of Spain, to the extent necessary to effectuate the subordination provisions of this Tier 1 Note. In addition, each Holder of this Tier 1 Note by his or her acquisition of this Tier 1 Note authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to effectuate the subordination of this Tier 1 Note as provided in the Contingent Convertible Capital Securities Indenture and as summarized herein and appoints the Trustee as his or her attorney-in-fact for any and all such purposes.
Notwithstanding any other term of this Tier 1 Note or any other agreements, arrangements, or understandings between the Company and any Holder of this Tier 1 Note, by its acquisition of this Tier 1 Note, each Holder (which includes each holder of a beneficial interest in this Tier 1 Note) acknowledges, accepts, consents to and agrees:
(i) to be bound by the effect of the exercise of the Bail-in Power by the Relevant Resolution Authority, which may include and result in any of the following, or some combination thereof:
| • | the reduction of all, or a portion, of the Amounts Due on a permanent basis; |
| • | the conversion of all, or a portion, of the Amounts Due into Common Equity Tier 1 Instruments, other securities or other obligations of the Company or another person (and the issue to the Holder of such Common Equity Tier 1 Instruments, securities or obligations), including by means of an amendment, modification or variation of the terms of the Tier 1 Notes, in which case the Holder agrees to accept in lieu of its rights under this Tier 1 Note, any such Common Equity Tier 1 Instruments, other securities or other obligations of the Company or another person; |
| • | the cancellation of this Tier 1 Note or Amounts Due; |
| • | the amendment of the Distribution payable on this Tier 1 Note, or the date on which the Distribution becomes payable, including by suspending payment for a temporary period; and |
(ii) that the terms of this Tier 1 Note are subject to, and may be varied, if necessary, to give effect to, the exercise of the Bail-in Power by the Relevant Resolution Authority.
“Amounts Due” means the Liquidation Preference, together with any accrued but unpaid Distributions, and Additional Amounts, if any, due on the Tier 1 Notes. References to such amounts will include amounts that have become due and payable, but which have not been paid, prior to the exercise of the Bail-in Power by the Relevant Resolution Authority.
“Bail-in Power” means any power existing from time to time under, and exercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of the BRRD, including its article 48 and, when applicable, its
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article 59 (therefore, the write-down capital conversion power at the point of non-viability) (including but not limited to, Law 11/2015, RD 1012/2015 and any other implementing regulations), (ii) the SRM Regulation and (iii) the instruments, rules or standards created thereunder, pursuant to which any obligation of a Regulated Entity (or an affiliate of such Regulated Entity) can be reduced, cancelled, suspended, modified, or converted into shares, other securities, or other obligations of such Regulated Entity (or affiliate of such Regulated Entity).
“BRRD” means Directive 2014/59/EU of 15 May establishing a framework for the recovery and resolution of credit institutions and investment firms or such other directive as may come into effect in place thereof, as amended from time to time.
“CET1 Capital” means at any time, the common equity tier 1 capital of the Company or the Group, respectively, as calculated in accordance with Chapter 2 (Common Equity Tier 1 Capital) of Title I (Elements of own funds) of Part Two (Own Funds and Eligible Liabilities) of the CRR and/or Applicable Banking Regulations (as each of such terms is defined in the Contingent Convertible Capital Securities Indenture) at such time, including any applicable transitional, phasing in or similar provisions.
“Common Equity Tier 1 Instruments” means instruments qualifying as CET1 Capital.
“Law 11/2015” means Law 11/2015, of 18 June, on recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión) as amended or replaced from time to time.
“RD 1012/2015” means Royal Decree 1012/2015, of 6 November, implementing Law 11/2015, of 18 June, on the recovery and resolution of credit institutions and investment firms (Real Decreto 1012/2015, de 6 de noviembre, por el que se desarrolla la Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión), as amended or replaced from time to time.
“Regulated Entity” means any entity to which BRRD, as implemented in the Kingdom of Spain (including but not limited to, Law 11/2015, RD 1012/2015 and any other implementing regulations), or any other Spanish law relating to the Bail-in Power, applies, which includes, certain credit institutions, investment firms, and certain of their parent or holding companies.
“Relevant Resolution Authority” means the Spanish Fund for the Orderly Restructuring of Banks, the Bank of Spain, the European Single Resolution Board, as the case may be, according to Law 11/2015, and any other entity with the authority to exercise the Bail-in Power or any other resolution power from time to time.
“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund, as amended or replaced from time to time.
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No repayment or payment of the Amounts Due, if any, on the Tier 1 Notes, will become due and payable or be paid after the exercise of any Bail-in Power by the Relevant Resolution Authority if and to the extent such amounts have been reduced, converted, cancelled, amended or altered as a result of such exercise.
For the avoidance of doubt, the potential write-down or cancellation of all or a portion of the Liquidation Preference of—or Distributions on—this Tier 1 Note or the conversion of this Tier 1 Note into Common Equity Tier 1 Instruments, other security or other obligations in connection with the exercise of any Bail-in Power by the Relevant Resolution Authority is separate and distinct from a conversion following a Trigger Event although these events may occur consecutively. Neither a reduction or cancellation, in part or in full of the Amounts Due on, the conversion thereof into another security or obligation of the Company or another person, as a result of the exercise of the Bail-in Power by the Relevant Resolution Authority with respect to the Company, nor the exercise of the Bail-in Power by the Relevant Resolution Authority with respect to the Tier 1 Notes (including moratorium) will be an Enforcement Event.
By its acquisition of this Tier 1 Note, each Holder of this Tier 1 Note (which, for the purposes of this clause, includes each Holder of a beneficial interest in this Tier 1 Note), to the extent permitted by the Trust Indenture Act of 1939, as amended (“Trust Indenture Act”), will waive any and all claims, in law and/or in equity, against the Trustee for, agree not to initiate a suit against the Trustee in respect of, and agree that the Trustee will not be liable for, any action that the Trustee takes, or abstains from taking, in either case in accordance with the exercise of the Bail-in Power by the Relevant Resolution Authority with respect to this Tier 1 Note.
Additionally, by its acquisition of this Tier 1 Note, each Holder of this Tier 1 Note acknowledges and agrees that, upon the exercise of the Bail-in Power by the Relevant Resolution Authority:
(i) the Trustee will not be required to take any further directions from the Holders of the Tier 1 Notes with respect to any portion of the Tier 1 Notes that are written-down, converted to equity and/or cancelled under the Contingent Convertible Capital Securities Indenture, which authorizes Holders of a majority in aggregate outstanding Liquidation Preference of the outstanding Tier 1 Notes to direct certain actions relating to the Tier 1 Notes; and
(ii) the Contingent Convertible Capital Securities Indenture will not impose any duties upon the Trustee whatsoever with respect to the exercise of the Bail-in Power by the Relevant Resolution Authority;
provided, however, that notwithstanding the exercise of the Bail-in Power by the Relevant Resolution Authority, so long as the Tier 1 Notes remain outstanding, there will at all times be a Trustee for the Tier 1 Notes in accordance with the Contingent Convertible Capital Securities Indenture, and the resignation and/or removal of the Trustee and the appointment of a successor Trustee will continue to be governed by the Base Indenture, including to the extent no additional supplemental indenture or amendment is agreed upon in the event the Tier 1 Notes remain outstanding following the completion of the exercise of the Bail-in Power.
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By its acquisition of this Tier 1 Note, each Holder of this Tier 1 Note acknowledges and agrees that neither a cancellation or deemed cancellation of the Liquidation Preference or Distributions (in each case, in whole or in part), nor the exercise of the Bail-in Power by the Relevant Resolution Authority with respect to the Tier 1 Notes will give rise to a default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act.
Each Holder of this Tier 1 Note that acquires such Tier 1 Note in the secondary market (including each beneficial owner) shall be deemed to acknowledge, agree to be bound by and consent to the same provisions specified herein to the same extent as the Holders of this Tier 1 Note that acquire this Tier 1 Note upon their initial issuance, including, without limitation, with respect to the acknowledgment and agreement to be bound by and consent to the terms of this Tier 1 Note, including in relation to the Bail-in Power.
By purchasing this Tier 1 Note, each Holder (including each beneficial owner) of this Tier 1 Note shall be deemed to have authorized, directed and requested DTC and any direct participant in DTC or other intermediary through which it holds this Tier 1 Note to take any and all necessary action, if required, to implement the exercise of the Bail-in Power with respect to the Tier 1 Notes as it may be imposed, without any further action or direction on the part of such Holder.
Each Holder of this Tier 1 Note also acknowledges and agrees that the foregoing description of the Bail-in Power and its exercise is exhaustive on the matters described herein to the exclusion of any other agreements, arrangements or understandings relating to the application of any Bail-in Power to this Tier 1 Note.
Additional terms of this Tier 1 Note, including but not limited to Distributions, redemption, conversion, Enforcement Events, remedies, payment of additional amounts in respect of withholding tax, substitution and variation of this Tier 1 Note upon certain events, and amendment are set forth in the Contingent Convertible Capital Securities Indenture.
The Contingent Convertible Capital Securities Indenture and this Tier 1 Note shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to the choice of law provisions), except for Section 13.01(a) of the Contingent Convertible Capital Securities Indenture, Section 2.01(w) of the Second Supplemental Indenture and the status of the Tier 1 Notes, as well as the price at which the Tier 1 Notes can be issued, the minimum value at which the ordinary shares resulting from the contingent conversion could be issued and the legal regime applicable for the exclusion of the preemptive rights, which shall be governed by and construed in accordance with the laws of the Kingdom of Spain, and except that the authorization and execution by the Company and the Trustee of the Contingent Convertible Capital Securities Indenture and this Tier 1 Note shall be governed by (in addition to the laws of the State of New York relevant to execution) the respective jurisdictions of organization of the Company and the Trustee, as the case may be.
The Tier 1 Notes and this Tier 1 Note have been issued in the State of New York.
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Exhibit 5.1
Tel. (d): +34 91 586 07 96
Fax (d): +34 91 586 04 71
carolina.albuerne@uria.com
Banco Santander, S.A.
Ciudad Grupo Santander, Avenida de Cantabria, s/n
28660, Boadilla del Monte (Madrid)
Spain
Madrid, 1 August 2024
Dear Sirs,
U.S.$ 1,500,000,000 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities
We write to you as Spanish counsel to Banco Santander, S.A. (the “Bank”) for the purposes of, among others, issuing a legal opinion in connection with the issuance by the Bank of U.S.$ 1,500,000,000 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (the “Notes”) pursuant to the Bank’s registration statement on Form F-3 dated 16 May 2023 filed with the United States Securities and Exchange Commission (the “SEC”) under the United States Securities Act of 1933, as amended (the “Registration Statement”).
| A. | Documents and information reviewed |
In arriving at our opinions, we have reviewed the documents and information listed in the Schedule 1 (the “Documents”).
| B. | Assumptions |
Our opinions are based on the following assumptions:
| (a) | All signatures, stamps and seals on the Documents are genuine. |
| (b) | The original Documents we have received are authentic and complete. Any copies we have received are complete and correspond to the originals. |
| (c) | The drafts of the Documents reviewed are the same as the Documents that were executed and approved. |
| (d) | All the parties to the Documents (other than the Bank) have been duly organized and validly exist under the laws of their respective countries of incorporation. |
| (e) | All the parties to the Documents (other than the Bank) have the corporate power to perform the transactions and be a party to the contracts contemplated under the Documents and the contracts have been signed by an individual or individuals who have sufficient capacity to validly and effectively bind the parties to the same and compliance with that established in the contracts is within the legal capacity of each of the parties thereto (other than the Bank). |
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| (f) | Each person who signed the Documents on behalf of the Bank had the legal capacity (capacidad de obrar) to do so at that time. |
| (g) | All the documents that should have been filed with the Commercial Registry of Cantabria by the Bank had been filed and registered on or before the date of our search, and subsequent to this no other documents that bear any relation to the opinions expressed in this legal opinion have been filed or registered. |
The content of the commercial registry excerpt issued by the Commercial Registry of Cantabria in relation to the Bank on 24 July 2024 and the information issued electronically by the website of the Spanish Central Commercial Registry (www.rmc.es) on the date of this legal opinion accurately reflect the registered information about the Bank.
The information held at the Commercial Registry is assumed to be correct and valid pursuant to article 7 of the Commercial Registry Rules (Reglamento del Registro Mercantil).
| (h) | The certificates of the corporate resolutions reviewed are true and accurate and correspond to resolutions that have been validly approved in duly convened, constituted and quorate meetings. |
| (i) | There are no contractual or other limitations that bind any of the parties to the Documents and that are included in any document that we have not reviewed but that could affect this opinion, nor are there any agreements between any of the parties to the Documents which fully or partially annul, modify or supersede the content of the Documents. |
There are no decisions or resolutions of the governing bodies of the Bank that revoke or amend the decisions and resolutions reviewed.
There are no factual circumstances that have not been disclosed to us and that could affect this legal opinion.
| (j) | The articles of association (estatutos sociales) of the Bank that we have reviewed are those in force on the date of this legal opinion. |
| (k) | The Transaction Documents and the Notes (including the Global Notes) governed by the laws of a jurisdiction other than Spain create legal, valid, binding and enforceable obligations for each party to the Transaction Documents and the Notes under such laws. |
| (l) | The obligations deriving from the Transaction Documents and the Notes (including the Global Notes) that must be complied with in a jurisdiction other than Spain, or that could be affected in any way by the laws of such other jurisdiction, will not be invalid or ineffective by virtue of the said laws, or contrary to its public policy. |
| (m) | The transactions described in, contemplated in, or financed under the Transaction Documents and the Notes are deemed to be in the Bank’s corporate interest (interés social) and the Bank’s directors have not breached their duty of care (deberes de diligencia y lealtad) in relation to the transaction; and the issue of the Notes and the disapplication of the Bank’s shareholders pre-emptive rights in respect thereto are justified in the best corporate interest (interés social) of the Bank. |
| (n) | (i) The center of main interests of the Bank is located in Spain; (ii) the Bank is not unable to pay its debts as per article 2 of the Insolvency Law (Ley Concursal), which restated text was approved by Royal Legislative Decree 1/2020 of 5 May (the “Insolvency Law”); (iii) the Bank will not be unable |
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| to pay its respective debts as per article 2 of the Insolvency Law as a consequence of performing its obligations under the Transaction Documents and the Notes; (iv) no petition for insolvency (concurso) has been filed in relation to the Bank; (v) no insolvency, administrative receiver or the like have been appointed, or their appointment sought, to oversee any of the assets of the Bank; (vi) the Bank does not fall under any ground for winding-up as set out in article 363 of the Spanish Companies Law (Ley de Sociedades de Capital), which restated text was approved by Royal Legislative Decree 1/2010 of 2 July; and (vii) the Bank is not in a situation that could determine the application of early intervention or resolution measures pursuant to Law 11/2015, of June 18, for the recovery and resolution of credit institutions and investment firms (Ley 11/2015, de 18 de junio, de recuperación y resolución de entidades de crédito y empresas de servicios de inversión). |
| (o) | The Global Notes have been issued, authenticated and deposited in the State of New York. |
| (p) | The Notes will be admitted to trading on the New York Stock Exchange LLC prior to their first interest payment date and will not be admitted to trading on any Spanish market. |
| (q) | The Notes will not be offered, distributed or sold in Spain in any manner that is inconsistent with the Prospectus. |
| (r) | The Notes will be originally registered with a clearing and settlement system located outside Spain that is recognized by Spanish law or by the law of another OECD country. |
Where we have not independently verified facts material to the opinions, we have examined and relied on certificates issued by duly authorised representatives of the Bank.
| C. | Opinion |
We do not represent ourselves to be familiar with the laws of any jurisdiction other than Spain as they stand at present and therefore express no opinion on matters arising under any laws other than the laws of Spain currently in force. This legal opinion is issued on the basis that all related-matters will be governed by, and construed in accordance with Spanish law, and that all matters between the addressees of this legal opinion and ourselves (in particular, those regarding interpretation) will be brought before the Spanish courts.
Our involvement in the transaction described has been limited to our role as Spanish counsel to the Bank, and we therefore assume no obligation to advise any other party to the transaction. Furthermore, we assume no obligation to advise the Bank or any other party of any changes to the law or facts that may occur after today’s date, regardless of whether they affect the legal analysis or conclusions in this legal opinion.
Legal concepts are expressed in some of the documents in English terms and may not be identical or equivalent to the Spanish legal terms used.
Based on the above, and subject to the additional exceptions, limitations and qualifications set out below, it is our opinion that:
| 1. | Valid existence |
The Bank was duly incorporated and validly exists as a “sociedad anónima” under the laws of Spain.
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| 2. | Corporate power |
The Bank has the required corporate power to issue the Notes.
| 3. | Corporate approvals |
The issuance of the Notes has been duly authorised by all the necessary corporate actions of the Bank.
| 4. | Issuance of ordinary shares of the Bank upon conversion of the Notes |
Upon conversion of the Notes in accordance with the terms of the Indenture (as defined below), the issuance of the ordinary shares of the Bank to be delivered as a consequence of such conversion, when duly authorized by the competent governing body of the Bank, will be duly authorized and validly issued, fully paid and non-assessable.
| D. | Qualifications |
The opinions above are subject to the following:
| (i) | In the absence of case law or even settled academic doctrine on certain matters, it is impossible to rule out the possibility that a Spanish court would have a different interpretation. |
| (ii) | Our opinions are issued subject to the effects and outcome of transactions that may derive from insolvency, the recovery and resolution proceedings of credit institutions and investment firms, pre-insolvency mechanisms or any other similar proceedings that generally affect the rights of all or some creditors, including those that do not fall under judicial insolvency proceedings (in particular, but not limited to, transactions that may derive from the insolvency regulations with respect to claw back actions), as well as to any principles of public policy (orden público). |
| (iii) | The information available from the website www.rmc.es may not be entirely accurate or up to date. |
| (iv) | We offer no opinion as to the financial or economic reasonableness of the Transaction Documents or the transaction described herein. |
This legal opinion is rendered to the addressee identified in this letter and in connection with the transactions described above. This legal opinion is not to be used, circulated, quoted or referred to in any other way or for any other purpose, and no persons other than its addressees may make decisions based on it, nor may they claim any liability for its content without our prior written consent. Notwithstanding the foregoing, we hereby consent to the filing of this opinion as an exhibit to a current information report on Form 6-K, to be incorporated by reference in the Registration Statement and to the use of our name under the caption “Legal Opinions” in the Base Prospectus and in the Prospectus Supplement. In giving this consent, we do not admit that we are experts under the Securities Act or the rules and regulations of the SEC issued thereunder with respect to any part of the Registration Statement, including this opinion.
This opinion shall be governed exclusively by Spanish law and the courts of the city of Madrid (Spain) shall have exclusive jurisdiction to settle any dispute relating to this opinion.
Very truly yours,
/s/ Carolina Albuerne
Carolina Albuerne
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Schedule 1.- Documents and information reviewed
| (a) | The information on the Bank publicly available on the website of the Spanish Central Commercial Registry (www.rmc.es), dated as of the date hereof; |
| (b) | a copy of the articles of association (estatutos sociales) of the Bank as publicly available at the website of the Bank (www.santander.com), dated as of the date hereof; |
| (c) | a copy of a notarial deed granted on 12 May 2023 before the Notary Public of Madrid Mr. Rafael Martínez Díe under the number 2,400 of his records by virtue of which, among others, the resolutions adopted by the Executive Committee of the Bank on 8 May 2023 approving the registration of the Registration Statement and the execution of the documents to which the Bank is a party in connection thereto (including the Base Indenture as defined below) are raised to public; |
| (d) | a commercial registry excerpt with respect to the Bank regarding its due existence and the current directors of the Bank issued by the Commercial Registry of Cantabria on 24 July 2024; |
| (e) | a copy of the certificate of the resolution of the General Shareholders’ Meeting of the Bank held on 22 March 2024 authorizing the Board of Directors, among others, to issue share capital and of the resolutions adopted by the Board of Directors of the Bank on 22 March 2024 granting on the Executive Committee, among others, the power to issue share capital; |
| (f) | a copy of the certificate of the resolution of the General Shareholders’ Meeting of the Bank held on 31 March 2023 authorizing the Board of Directors, among others, to issue convertible preferred shares (participaciones preferentes convertibles) and of the resolutions adopted by the Board of Directors of the Bank on 31 March 2023 granting on the Executive Committee, among others, the power to issue convertible preferred shares (participaciones preferentes convertibles); |
| (g) | a copy of the certificate of the resolutions adopted by the Executive Committee of the Bank on 15 July 2024 approving the issuance of the Notes and the execution of the documents to which the Bank is a party in connection thereto; |
| (h) | a copy of the certificate of the resolutions adopted by the Executive Committee of the Bank on 15 July 2024 approving the directors’ report (Informe de Administradores) prepared in relation to the issue of the Notes; |
| (i) | a copy of the minutes of decisions taken by Ms. Silvana Borgatti Casale on 29 July 2024, determining, among others, the definitive principal amount of the issuance and the applicable interest rates; |
| (j) | a copy of the notarial deed of issuance of the Notes (escritura pública de emisión) granted on 30 July 2024, before the Notary Public of Madrid, Mr. Miguel Ruiz-Gallardón under the number 4,503 of his records, by the Bank; |
| (k) | a copy of the underwriting agreement executed on 29 July 2024 by the Bank and Barclays Capital Inc., BofA Securities Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Santander US Capital Markets LLC (the “Underwriting Agreement”); |
| (l) | a copy of the contingent convertible capital securities indenture dated 21 November 2023 entered into by the Bank and The Bank of New York Mellon, London Branch, as Trustee (the “Base Indenture”); |
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| (m) | a copy of the supplemental indenture to the Base Indenture dated 1 August 2024 entered into by the Bank and The Bank of New York Mellon, London Branch, as Trustee, (the “Supplemental Indenture” and together with the Base Indenture, the “Indenture”); |
| (n) | a copy of the global notes evidencing the Notes dated 1 August 2024 (the “Global Notes”); |
| (o) | a copy of the Registration Statement which includes a base prospectus (the “Base Prospectus”) dated 16 May 2023; |
| (p) | a copy of the preliminary prospectus supplement prepared in connection with the issuance of the Notes dated 29 July 2024 (the “Preliminary Prospectus Supplement”); |
| (q) | a copy of the final prospectus supplement prepared in connection with the issuance of the Notes dated 29 July 2024 (this document together with the Preliminary Prospectus Supplement, the “Prospectus Supplement”); and |
| (r) | a copy of the other relevant information notice (comunicación de otra información relevante) filed by the Bank with the CNMV on 29 July 2024, with entry registry number 29976 regarding the issue and offering of the Notes. |
The Underwriting Agreement and the Indenture will be hereinafter collectively referred to as the “Transaction Documents”.
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Exhibit 5.2
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+1 212 450 4000 davispolk.com |
Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 |
| August 1, 2024 |
Banco Santander, S.A.
Ciudad Grupo Santander
Avenida de Cantabria s/n
28660 Boadilla del Monte, Madrid, Spain
Ladies and Gentlemen:
Banco Santander, S.A., a sociedad anónima incorporated under the laws of The Kingdom of Spain (the “Company”), has filed with the Securities and Exchange Commission a Registration Statement on Form F-3 (File No. 333-271955) (the “Registration Statement”) and the related prospectus (the “Prospectus”) for the purpose of registering under the Securities Act of 1933, as amended (the “Securities Act”), certain securities, including $1,500,000,000 aggregate liquidation preference of the Company’s 8.000% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (the “Securities”). The Securities are to be issued pursuant to the provisions of the contingent convertible capital securities indenture dated November 21, 2023 (the “Base Indenture”), between the Company and The Bank of New York Mellon, London Branch, as trustee (the “Trustee”), as supplemented by the second supplemental indenture dated as of the date hereof, among the Company, The Bank of New York Mellon, London Branch, as trustee, paying and conversion agent, calculation agent and principal paying agent, and The Bank of New York Mellon SA/NV, Luxembourg Branch, as contingent convertible capital securities registrar (the “Second Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). The Securities are convertible on the terms set forth in the Indenture into newly issued ordinary shares, fifty euro cents (€0.50) par value per share, of the Company. The Securities are to be sold pursuant to the underwriting agreement dated July 29, 2024 (the “Underwriting Agreement”) among the Company and the several underwriters named therein (the “Underwriters”).
We, as your counsel, have examined originals or copies of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary or advisable for the purpose of rendering this opinion.
In rendering the opinions expressed herein, we have, without independent inquiry or investigation, assumed that (i) all documents submitted to us as originals are authentic and complete, (ii) all documents submitted to us as copies conform to authentic, complete originals, (iii) all signatures on all documents that we reviewed are genuine, (iv) all natural persons executing documents had and have the legal capacity to do so, (v) all statements in certificates of public officials and officers of the Company that we reviewed were and are accurate and (vi) all representations made by the Company as to matters of fact in the documents that we reviewed were and are accurate.
Based upon the foregoing, and subject to the additional assumptions and qualifications set forth below, we advise you that, in our opinion, assuming that the Securities have been duly authorized, executed and delivered by the Company insofar as Spanish law is concerned, the Securities (other than the terms thereof expressed to be governed by Spanish law, as to which we express no opinion), when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to the Underwriting Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and equitable principles of general applicability and may be subject to possible judicial or regulatory actions giving effect to governmental actions or foreign laws affecting creditors’ rights.
In connection with the opinion expressed above, we have assumed that the Company is validly existing as a corporation under the laws of Spain. In addition, we have assumed that the Indenture and the Securities (collectively, the “Documents”) are valid, binding and enforceable agreements of each party thereto, except to the extent expressly covered above with respect to the Company. We have also assumed that the execution, delivery and performance by each party to each Document to which it is a party (a) are within its corporate powers, (b) do not contravene, or constitute a default under, the certificate of incorporation or bylaws or other constitutive documents of such party, (c) require no action by or in respect of, or filing with, any governmental body, agency or official and (d) do not contravene, or constitute a default under, any provision of applicable law, regulation or any judgment, injunction, order or decree or any agreement or other instrument binding upon such party.
We express no opinion as to (i) the provisions in the Documents relating to bail-in, (ii) any provisions in the Indenture that purport to waive objections to venue, claims that a particular jurisdiction is an inconvenient forum or the like, (iii) the effectiveness of any service of process made other than in accordance with applicable law, (iv) whether a New York State or United States federal court would render or enforce a judgment in a currency other than U.S. Dollars or (v) the exchange rate that such a court would use in rendering a judgment in U.S. Dollars in respect of an obligation in any other currency.
We are members of the Bar of the State of New York and the foregoing opinion is limited to the laws of the State of New York and the federal laws of the United States, except that we express no opinion as to any law, rule or regulation that is applicable to the Company, the Documents or such transactions solely because such law, rule or regulation is part of a regulatory regime applicable to any party to any of the Documents or any of its affiliates due to the specific assets or business of such party or such affiliate. Insofar as the foregoing opinion involves matters governed by Spanish law, we have relied, without independent inquiry or investigation, on the opinion of Uría Menéndez, special legal counsel in Spain for the Company, dated as of August 1, 2024, to be filed as an exhibit to a report on Form 6-K to be filed by the Company on the date hereof concurrently with this opinion.
We hereby consent to the filing of this opinion as an exhibit to a report on Form 6-K to be filed by the Company on the date hereof and its incorporation by reference into the Registration Statement and further consent to the reference to our name under the caption “Legal Opinions” in the prospectus supplement which is a part of the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,
/s/ Davis Polk & Wardwell LLP
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