Sustainability Report 2009

Transcription

1 Sustainability Report 2009

2 Report Scope This Report is the eighth annual document published by Santander on its Corporate Social Responsibility commitments and covers the period between January 1 and December 31, Since 2003, the Report has been verified by Deloitte S.L., an independent firm that also audited the Group s financial statements in these years. The Report covers the Bank s activities in Continental Europe, the United Kingdom, the United States and Latin America. The economic information was drawn up in accordance with Grupo Santander s definition for accounting purposes; the information on society and the environment was prepared on the same basis, whenever it was available. The limits on the scope of the information, when they occur, are reflected in the corresponding section of the report and in the table of performance indicators of the Global Reporting Initiative (GRI). International standards As in previous years, Santander, in drawing up this Report, continues to take into account the prevailing legal rules, guidelines and recommendations made by benchmark international organisations such as the Global Reporting Initiative (GRI), Global Compact and AccountAbility AA1000. It also includes relevant information for the socially responsible investment indices (FTSE4Good and Dow Jones Sustainability Index, DSJI) and rating agencies (Standard & Poor s, Vigeo and ISS Europe, among others). Process of preparing the Report In order to prepare this Sustainability Report, a materiality study was conducted. Prior to that the relevant stakeholders with whom we maintained a fluid dialogue during the year were identified. The details of this process, as well as the results of the materiality test, are provided on pages of this document.

3 Sustainability Report 2009 Corporate social responsibility at Banco Santander Message from the Chairman 2 Main figures 4 Banco Santander s business model 6 Sustainability at Banco Santander 8 Vision and values 9 Santander and sustainability 10 Corporate governance 16 Dialogue with stakeholders 18 Relations with stakeholders 20 Shareholders 22 Customers 26 Employees 32 Suppliers 38 Relations with the environment 40 Santander Universities 42 Society 48 The environment 54 Process of preparing the Report 60 External verification 62 GRI index contents 64

4 2 As part of its firm commitment to higher education, Santander maintains a long-term strategic alliance with universities which is unique in the world

5 Message from the Chairman 3 Despite the challenges raised by the worst economic and financial environment in decades, 2009 was another excellent year for Banco Santander, underscoring the importance of recurrent and sustainable activity that is responsible toward shareholders, employees, customers and society in general. Santander invested EUR 126 million in 2009 in corporate social responsibility projects. The crisis generated uncertainty in financial markets. In this context, Santander managed to position itself as a leading bank among international financial institutions in profitability, solvency and efficiency. It did so thanks to its retail banking-focused business model, prudence in risks, a strong balance sheet and geographical diversification. To this must be added solid corporate governance, fostered by the Board of Directors and centred on the creation of sustainable value. The centre of this model is, without a doubt, the focus on the customer. Santander is the international bank with the most branches in the world (13,660), with 92 million customers. In 2009, Santander strengthened its relation of confidence with customer. It did so by combining high quality service with innovative products tailored to customers needs. Furthermore, we also paid particular attention to groups at risk of social exclusion, with products and services designed for them and their special circumstances. The efforts and dedication of Santander s 170,000 professionals throughout the world make it possible to provide the best service every day. Santander supports them with specific policies and programmes that help them to grow not only professionally but also as persons. Our objective is to attract and retain the best talent and foment a common corporate culture that binds together all employees, with initiatives such as the Santander is you programme. Moreover, Santander maintains a firm and resolute commitment to higher education. We invested EUR 88 million in higher education in 2009, convinced that it is the best way to contribute to the economic and social development of communities. Banco Santander has a long-term strategic alliance with universities which is unique in the world. In 2009, the Bank had more than 800 cooperation and support for research agreements with universities. The programme of scholarships, work experience, study grants, and student and teachers geographical mobility benefited 16,981 university students and graduates in More than 1,100 universities from 23 countries are partners of Universia, the largest network of information and university cooperation in the Spanish-speaking world. In May 2010, Santander Universities will organise the Second Meeting of Rectors of Universia in Guadalajara, Mexico, which will give a decisive push to the Latin American Knowledge Space (in which more than 1,000 universities participate). The Bank is also implementing in each country various social action initiatives in order to contribute to the development of the communities where it is present. They are local projects adapted to each country s social and economic features and their purpose is to cover the basic needs of the least favoured and vulnerable groups. In many cases, they are also initiatives where the Bank fosters the involvement or participation of employees, which helps increase motivation and pride in belonging to the Group. The Group s foundations, meanwhile, contribute to the dissemination of art and culture and participate in strategic projects to promote social and economic development. Santander continued during 2009 to develop various actions to protect the environment. It made decisive progress in measuring consumption and emissions and in integrating social and environmental aspects into the risk analysis and decision-taking processes in financing operations and intensified its commitment to renewable energy. Furthermore, in 2009 Banco Santander developed sectoral policies for forestry, water, energy and defence. The sustainability committee, which is responsible for defining the corporate social responsibility strategy and is headed by our chief executive officer, has played a key role in all these advances. The crisis has underlined that we are a solid bank with a longterm outlook and our priority, as and how we have always shown, is to create a long-term return for our shareholders. In the sphere of sustainability, our share forms part of the most prestigious socially responsible indices, the DJSI and the FTSE4Good, which comprise the best-assessed companies internationally on the basis of their performance in corporate social responsibility matters. Santander is facing the challenges of 2010 confidently and ambitiously, and I am sure our commitment to sustainability will help to achieve them successfully. Emilio Botín, Chairman

6 4 Main figures Pereda building at Grupo Santander City, Boadilla del Monte, Madrid

7 Main figures Santander has attained a global leadership position on the basis of sustained growth 5 Balance sheet and income statement (Million euros) (1)(2) % 2009/ Total assets 1,110,529 1,049, ,915 Customer loans (net) 682, , ,099 Managed customer funds 900, , ,872 Shareholders funds 70,006 63, ,945 Total managed funds 1,245,420 1,168, ,063,892 Gross income 39,381 33, ,441 Net operating income 22,960 18, ,417 Results from discontinued operations 9,427 9, ,327 Attributable profit to the Group 8,943 8, ,111 Main management ratios (%) Efficiency (with amortization) ROE ROA Core capital (3) BIS ratio (3) Non-performing loan (NPL) ratio NPL coverage Dimension Number of customers (million) (4) Number of shareholders (million) Number of employees 169, , ,819 Number of branches 13,660 13,390 11,178 Significant indicators of value generation in accordance with the Global Reporting Initiative (GRI) (Million euros) Economic value generated (retained economic value+distributed) 40,575 33,047 29,856 Retained economic value (reserves+amortisations+provisions) 20,422 14,733 12,687 Economic value distributed: 20,153 18,314 17,169 Dividends 4,122 4,812 4,070 + Other administrative costs 5,935 4,447 3,958 + Tax on profits and others (5) 1,520 2,115 2,588 + Personnel costs 8,450 6,814 6,434 + Investment in corporate social responsibility (1) The information for 2007 and 2008 is different from other years because, as a result of the Group s divestment in Venezuela, the results from the consolidation of that company (Banco de Venezuela, S.A.) have been reclassified, in accordance with the prevailing accounting rules. (2) In order to facilitate comparative analysis, a pro forma statement for 2008 was drawn up in which Banco Real consolidates by global integration for the whole of the year. (3) In 2007 calculated on the basis of BIS 1 criteria. (4) The figures for 2008 and 2007 are different from those published in previous reports as they have been recalculated with the Group s current perimeter. (5) Only includes tax on profits and other taxes recorded in the year. Economic value distributed to society Million euros Investment in corporate social responsibility Million euros Distribution of investment in corporate social responsibility Million euros 20,153 18,314 17, Social and cultural actions 29%* The environment and others 1% Universities 69% (*) Brazil: EUR 15.7 million; UK: EUR 4.8 million; Grupo Santander foundations: EUR 11.6 million; rest of the Group: EUR 5.1 million

8 6 Banco Santander s business model Commercial focus Main countries Additional countries where Grupo Santander has retail banking business: Colombia, Peru, Puerto Rico, Uruguay, Norway, Sweden, Finland, Denmark, Netherlands, Belgium, Poland, Austria, Switzerland and Italy. Disciplined use of capital and financial strength Efficiency Prudence in risks Geographic diversification US - SOVEREIGN Customers (million) 1.7 Branches 722 Employees 8,847 Market share (7) 3% MEXICO Customers (million) 8.7 Branches 1,093 Employees 12,466 Market share (1) 15% Ranking (1) 3º BRAZIL Customers (million) 22.4 Branches 3,593 Employees 50,961 Market share (1) 10% Ranking (1)(6) 3º CHILE Customers (million) 3.2 Branches 498 Employees 11,751 Market share (1) 19% Ranking (1) 1º ARGENTINA Customers (million) 2.0 Branches 298 Employees 5,780 Market share (3) 10% Ranking (1)(6) 1º

9 7 Geographical diversification Means having a leadership position in 9 main markets. Commercial focus Means placing the customer at the centre of the activity of the entire Bank. Efficiency Means transforming cost savings into more value for customers and shareholders. Disciplined use of capital Means being one of the world s most solid banks, both in terms of the size and quality of shareholders funds. Prudence in risks Means maintaining levels of nonperforming loans and coverage better than the banking sector s average. UNITED KINGDOM Customers (million) 25.6 Branches 1,322 Employees 22,949 Market share (1) 10% Ranking (5) 3º GERMANY Customers (million) 6.0 Branches 144 Employees 3,336 Market share (2) 15% Ranking (4) 1º PORTUGAL Customers (million) 1.9 Branches 763 Employees 6,294 Market share (1) 10% Ranking (1)(6) 4º SPAIN Customers (million) 14.7 Attributable profit by geographic areas % of total operating areas Branches 4,865 Employees 33,262 Market share (1) 16% Rest of Latin America 16% 26% Retail Networks Spain Ranking (1) 1º (1) Loans, deposits and mutual funds (2) Estimated share in auto finance (3) Share in lending (4) Leader in financing durable goods and the leading independent finance institution (5) By deposits (6) Excluding public institutions (7) In its zone of influence Brazil UK 20% 11% Rest of Europe Retail 16% 11% Global businesses Europe Continental Europe 48%

10 8 Sustainability at Banco Santander New Centre for visitors: El Faro at Grupo Santander City, Boadilla del Monte, Madrid

11 9 Vision A global bank Santander is a large international financial group, which strives to satisfy all the financial needs of its customers and provide an increasingly high return to its shareholders. To achieve this, it has a strong presence in nine main markets, which it combines with corporate policies and global reach. Values Dynamism - Initiative and agility in identifying and exploiting business opportunities before our competitors and flexibility to adapt to changes in the market. Strength - The robustness of our balance sheet and prudent risk management are the best guarantees of our capacity to grow and generate shareholder value in the long term. Innovation - Constant search for products, services and processes which satisfy the customer s needs and enable us to outperform our competitors in profitability. Leadership - Our purpose is to be leaders in all markets where we do business, founded on high quality professionals and a permanent focus on the customer and results. Commercial vocation - The customer is the focal point of our strategy. We are continuously improving customer capturing, satisfaction and linkage through a wide range of products and services, as well as an increasingly better quality of service. Professional ethics and sustainability - Over and above strict compliance with the laws, the codes of conduct and internal rules, all Banco Santander s professionals are required to work on the basis of sustainability criteria, characterised by the highest ethical standards both in their relations with society as well as with the environment.

12 10 Santander and sustainability For Banco Santander sustainability is the performance of its business activity, contributing, moreover, to the economic progress of communities and taking into account its impact on society and on the environment Sustainability For Banco Santander sustainability combines the development of its business activity and the economic progress of the communities where it operates taking into account its impact on society and on the environment. This commitment to sustainability means: Integrating ethical, social and environmental criteria into its business model. Taking the long-term view when carrying out its activities and stable and lasting relations with its stakeholders. Having the best corporate governance. Anticipating the challenges of the changing environment. Having the will to identify and dialogue with its main stakeholders: shareholders, customers, employees, suppliers and society as a whole in order to understand their expectations and respond to them. All of this influences the Bank s performance in the markets where it operates. Santander s conduct in the crisis In a difficult economic and financial context, Banco Santander has stood out and become one of the top international financial institutions in profit, shareholder remuneration and maintaining jobs. All of this was made possible by a management focused on generating value and employment in a sustainable way, guided by clear corporate policies and executed by a well prepared team of professionals whose compliance is guaranteed by a solid and balanced board of directors with a long-term outlook. The Santander share once again forms part of the most relevant stock market indices, such as the Dow Jones Sustainability Index (DJSI) and the FTSE4Good, among others, that analyse and assess the corporate social responsibility activities of companies. These indices are increasingly valued by analysts and investors. Of note in 2009 was the improvement in the Bank s total score in the DJSI which put it among the leaders in sustainability in its sector with a bronze rating. Another important reflection of this recognition is that prestigious magazines named Santander the best managed bank in the world, in the case of Euromoney, and Global Bank of the Year, in the case of The Banker, as without doubt, it is the international bank that has best come through the crisis and taken advantage of the opportunities that have arisen from it. The financial sector s main institutional investors have also highlighted Banco Santander, through various measurements made during 2009 by external organisations, such as the bestmanaged bank. Furthermore, in the last few years, Banco Real in Brazil (now Grupo Santander Brazil) has been classified the world s most sustainable bank. The excellent performance together with the strength of Banco Santander s business model has made possible increasing investment in corporate social responsibility, even in the current context of crisis. In 2009, the Bank s investment was EUR 126 million. Of the total elements that comprise sustainability for the Bank, the following sections mainly refer to those that specifically define the focus of Santander s corporate social responsibility. The international market has known how to recognise this excellent performance, reflected in the Bank s share price which has clearly outperformed the rest of European banking stocks.

13 Banco Santander s elements of corporate social responsibility Self- Aspects evaluation Observations Corporate governance Shareholders rights Pioneers in full equality of shareholders Functioning of the Board Balanced Board, dedicated and professional Transparent information Front-running the highest standards Stakeholders Shareholders Return on the share Higher than the sector s average Sustainable stock market indices Presence in the DJSI (bronze class) and the FTSE4Good Customers Customer satisfaction High satisfaction ratios Soundness and confidence World s best bank, according to The Banker magazine Specialised training of commercial teams External accreditation in some countries Sustainable products and services and Local micro credit programmes for vulnerable groups and programmes for immigrants Socially responsible investment Local SRI products (Brazil and Spain). Signing of the PRI in Financial education Detailed programmes. New initiatives for Employees Job stability 99% of the Group s contracts are permanent. Talent management 7.72 million hours of training in all the Group Human rights In line with the best international practices. Specific HR policy to be formalised. Diversity and life balance Pioneering initiatives and programmes adapted to local circumstances. Evaluation and remuneration Global remuneration policy based on objetive criteria of evaluation. Occupational health and security Corporate programmes in all countries. Corporate volunteering Local initiatives. Scheduled development of corporate initiatives. Suppliers Equality of opportunity Homologation criteria unified. Transparent procurement processes E-platform for purchases, tendering electronically and management. Social and environmental requirement Global Compact compliance requirement, in products and services tendered and approved by suppliers. Society and environment Universities Support for higher education Unique alliance with universities in the world. Scholarship programme and first job 17,000 scholarships and access to the labour market by more than 175,000 university students and graduates. Innovation and transfer of knowledge EUR 20 million invested. Society Support for local communities Social initiatives adapted to local circumstances. Development cooperation Local projects of cooperation. Environment Social and environmental risk management Application in project finance, Brazil and Retail Banking Spain. Sectoral policies. Financial products committed Leaders in financing and promoting renewable to protect the environment energy in project finance and seed capital. Measurement and management Group s environmental footprint measured. of own emissions and consumptions Reduction plan scheduled. Conservation and recovery of the environment Many local programmes Training and awareness Campaigns of awareness. Banco Santander Foundation forums. 11 Level of achievement: High Medium Low

14 12 Santander and sustainability The organisation of sustainability In order to integrate sustainability into its business model, Banco Santander has a sustainability committee chaired by the CEO and comprising representatives from different business and support areas. This committee, which meets every six months, defines the corporate social responsibility strategy and the Bank s general and sectoral policies in sustainability matters, and presents them to the Group s Board Directors for approval. The committee s secretary is the director of corporate social responsibility. The committee vouches for the implementation and management of the different policies, as well as the establishment of multidirectional communication mechanisms within the Bank and its stakeholders. Other committees, of multidisciplinary composition, have also been created, which support the sustainability committee in aspects such as management of the environmental impact of the Bank s activity as well as incorporating social and environmental aspects into the processes for granting loans. The corporate social responsibility area, part of the communication, corporate marketing and research division, is responsible for managing sustainability and fomenting and coordinating the various initiatives conducted in this sphere within the Group. Santander Brazil and Santander United Kingdom, both of which have an excellent positioning in corporate social responsibility, also carry out important work in fostering and contributing decisively to disseminating the best practices within the Group. Of particular note is the executive council of sustainability in Brazil, chaired by the country head of Grupo Santander Brazil, which meets every three months. Structure of the sustainability function in Grupo Santander Secretary general Approval of CSR strategic plans, corporate policies and Sustainability Report Board of Directors Risk Human resources Technology and operations Universities Communication, corporate marketing and research Grupo Santander Brazil Global wholesale banking Multidisciplinary committees Coordination Secretary general CSR committees UK SUSTAINABILITY COMMITTEE Chaired by the CEO Corporate social responsibility (Secretary of the sustainability committee: CSR director) Coordination CSR committees Brazil Coordination Local CSR committees other countries

15 13 International initiatives which Banco Santander adheres to or is present in Global compact of the United Nations UNEP Finance Initiative Equator Principles State Council of Corporate Social Responsibility of the Spanish Government Carbon Disclosure Project Forge Group Brazilian Institute of Governance Roundtable on Responsible Soy Wolfsberg Group Main performance benchmarks In order to ensure that its performance is in line with the best standards in ethical, corporate governance, environmental and social criteria, Banco Santander has various internal rules, among which are: General code of conduct. Code of conduct in the securities markets. Social and environmental policy. Sectoral policies in defence, energy, water and forestry. Banco Santander s compliance with international standards such as the Equator Principles, or the finance initiative of the United Nations programme for the environment (UNEP FI), is in line with integrating social and environmental criteria in its activity. Corporate reputation and brand Santander is the global brand that reflects the Bank s identity and represents its corporate culture and international positioning. It symbolises the Bank s essence, personality and corporate values. Moreover, the Group s slogan, The Value from Ideas reflects the constant demand we impose on ourselves to keep innovating, with foresight, always seeking the best ideas. Innovative ideas and the capacity to carry them out, which create value and provide soundness for the future of our customers, shareholders and employees. The brand is consistently managed throughout the Group and continues to be committed to a single positioning in all markets where the Bank is present with a long-term vision. For Santander, corporate reputation and brand go hand in hand and are a strategic priority. The results, the business model, management of the brand and the corporate social responsibility policy are hallmarks of the bank and generated an excellent international reputation which has positioned Banco Santander among the world s most respected companies. Banco Santander's branch at Easter Island

16 14 Santander and sustainability Reputational risk Prudence in risks has been a hallmark of Banco Santander during its more than 150 years. This focus has been a decisive factor in the recurrent growth of its results and for generating value for its stakeholders. The Risk Committee is responsible for global management of risk at the Bank, as well as proposing to the Board, for its approval, the Group s risks policy and, in particular, identifying and assessing the various types of risk (credit, market, operational and reputational are the main ones). Grupo Santander defines reputational risk as that linked to the perception of the Bank by its various stakeholders, both internal and external, of its activity, and which could have an adverse impact on results, capital or business development expectations. This risk includes juridical, economic-financial, ethical, social and environmental aspects, among others. Various of the Group s governance structures are involved in reputational risk management, depending on where the risk comes from. The Audit and Compliance Committee helps the Board to supervise compliance with the Group s code of conduct in the securities markets, the manuals and the procedures to prevent money-laundering and, in general, the Bank s rules of governance and compliance. It formulates the proposals needed for their improvement. A new corporate framework was created, which strengthens in the Group the compliance function as an area of control. This established a corporate area of compliance and reputational risk, which is responsible for globally managing reputational, compliance and money-laundering risks. Under this new corporate framework for the compliance function, a corporate project of product sales was launched in 2009, which will reinforce even more: the policies for marketing products and services which cover all its phases (admission, pre-sale, sale and monitoring) with a corporate scope; the procedures for authorising and monitoring products: the Global Committee of New Products was strengthened and a Corporate Committee of product sales created and assigned powers of approval as well as those for tracking products after they have been sold. Lastly, a Global Consultative Committee was established comprising representatives of areas that contribute vision of regulatory and market risks. This committee can recommend the review of products which are affected by changes in markets, deterioration of solvency (country, sectors and companies) or by changes in the Group s view of markets in the medium and long term.

17 15 Banco Santander s risk management principles Independence of the risks function, without detriment to supporting business development Collective decision-making, so that decisions taken by individuals do not compromise results Medium-low risks profile, with a particular emphasis on monitoring risks Santander has developed a corporate school of risks whose objective is to help consolidate the corporate culture of risk management in the Bank and ensure that all professionals who carry out this function are trained and developed with the same criteria. The new corporate framework of the compliance function, together with the aforementioned reputational risks related to the marketing of products and services, also deals with regulatory compliance and prevention of money laundering with a risk management focus as it considers that their materialization could adversely affect results, the capital or the Bank s business expectations and development. A reputational risk office began to operate in 2009 whose objective is to provide the corresponding governing bodies with the information needed to conduct: (i) adequate analysis of risk in the approval process, with a two-pronged approach: impact on the Bank and effect on the customer; and (ii) monitoring of products during their life cycle. the systems and processes, whose improvement will help to adapt some marketing processes to the new commercial policies and permit, at the same time, automated and remote monitoring of their compliance. Social and environmental risk Social and environmental risk is an aspect that has assumed increasing importance in the last few years in the sphere of management of reputational risk. Analysing social and environmental risks is one of the objectives of Banco Santander s social and environmental policy. The Bank assumes the commitment to assess and take into account the social and environmental risks of project finance operations and so it only grants loans for those projects that can prove the social and environmental impacts will be appropriately managed. This helps to protect biodiversity, to contribute to the use of renewable resources, and adequate management of waste, to protect human health, and prevent population movements. The section on the environment explains in detail the measures that involve fulfilling this commitment. Detailed information on risk management can be found on pages 136 to 194 of the 2009 Annual Report and also at in the sustainability section. Social and environmental policy Recently revised and accessible on the Bank s website is the reference document on the Bank s social and environmental performance. It has a global scope and two purposes. Establish a framework of action that integrates the principles of social and environmental responsibility into the Group s global strategy. Provide the Bank with the necessary mechanisms for analysing social and environmental risks and taking decisions on project finance. This policy is based on the prevailing best practices, which include conventions, protocols, codes of conduct and international guidelines. Of note among them are: The Equator Principles. The United Nations declaration of human rights. The UN Global Compact. The UNEP Finance Initiative. The code of conduct in the European Union for companies operating in developing countries. The OECD guidelines for multinationals. The tripartite declaration of the International Labour Organisation (ILO) on multinationals and social policy. The Kyoto protocol on climate change. The Principles for Responsible Management Education (PRME), promoted by the UN Global compact. The Bank has also developed specific policies that set the criteria to be followed by activity related to the defence, energy, water and forestry sectors, which identify the social and environmental impact of these activities.

18 16 Corporate governance Board of directors Executive committee Risks committee Audit and compliance committee Appointments and remuneration committee International committee Technology, productivity and quality committee Corporate governance Banco Santander s corporate governance complies with the highest international standards and guarantees long-term sustainable management. The board of directors is the Bank s top governing body and consists of 19 directors of recognised capacity, integrity and independence of mind. The board is organised into various committees: executive, risks, audit and compliance, appointments and remuneration, international and technology, productivity and quality. Most directors are members of one or more committees. An important feature that sets Banco Santander apart is the time and dedication that its directors assign to their functions and, in particular, to supervising and managing risks. Among the general policies and strategies that the Board s regulations (article 3) reserve exclusively for its approval is corporate social responsibility. To continue at the forefront of the best good governance practices via self-regulation, Banco Santander will submit, for the first time, to a consultative shareholder vote at its next Annual General Meeting the report on the policy of directors' remuneration which is part of the report of the appointments and remuneration committee. The report on the policy of directors' remuneration spells out the criteria and factors used in determining remuneration for board members in 2009 and Director Lord Terence Burns Director Mr. Rodrigo Echenique Gordillo Director Mr. Luis Ángel Rojo Duque Director Mr. Abel Matutes Juan Director Mr.Antonio Basagoiti García-Tuñón Full information on corporate governance is available on pages 52 to 79 of the 2009 Annual Report, the Annual Report on Corporate Governance, the Report of the Audit and Compliance Committee and the report of the Appointments and Remuneration Committee, all of which can be found at Number of meetings of the executive committee, the risk committee and the audit and compliance committee Committees Executive Director Mr. Guillermo de la Dehesa Romero Director Ms. Ana Patricia Botín-Sanz de Sautuola y O Shea Fourth vice-chairman Mr. Manuel Soto Serrano Risk Audit and compliance Total meetings

19 17 Our corporate governance, in the vanguard Full equality of shareholders rights The principle of one share, one dividend, one vote No anti-takeover measures in the corporate By-laws Encourage the informed participation of shareholders in Meetings Maximum transparency Foment from the Board maximum transparency, particulary regarding remuneration A balanced board Consisting of people of independence of thought, recognised prestige and professional success Director Ms.Isabel Tocino Biscarolasaga Director Mr. Luis Alberto Salazar-Simpson Bos Director Mr. Antonio Escámez Torres Second vice-chairman and chief executive officer Mr. Alfredo Sáenz Abad Director Mr. Javier Botín-Sanz de Sautuola y O Shea Director Mr. Juan Rodríguez Inciarte Director Assicurazioni Generali S.p.A. (Mr. Antoine Bernheim) First vice-chairman Mr. Fernando de Asúa Álvarez Chairman Mr. Emilio Botín-Sanz de Sautuola y García de los Ríos Third vice-chairman Mr. Matías Rodríguez Inciarte Director Mr. Francisco Luzón López Secretary general and of the board Mr. Ignacio Benjumea Cabeza de Vaca

20 18 Dialogue with stakeholders One of the key elements of Banco Santander s corporate social responsibility policy is the relation with stakeholders. Every year Santander launches new consultation processes in order to know the opinion and expectations of its stakeholders. Their responses and opinions enable the Bank to know which aspects are for them the most relevant in the sphere of corporate social responsibility. During 2009, the corporate social responsibility area in Spain held regular meetings with various stakeholders, and there were also meetings in other countries. The Sustainability Report is the Group s main Communications tool in the corporate social responsibility sphere. It forms part of Banco Santander s report together with the annual report, the activities report, the consolidated financial statements and the reports of the audit and compliance and appointments and remuneration committees. The objective of this report is to transmit as faithfully as possible the Bank s principles and actions in sustainability issues and in its relations with stakeholders. This information is complemented online ( and by reports of the Group in other countries. The sections that now follow develop those issues that have been identified as relevant, in accordance with the Bank s strategy and stakeholders expectations and demands. All those who want to can give their opinion and contribute to improving this report at rsc@gruposantander.com.

21 19 Banco Santander is involved with all its stakeholders through various channels of dialogue Channels of dialogue Shareholders General Meeting of Shareholders Shareholder Attention Office Shareholder Forum Shareholder web and mailbox Quarterly and annual reports Investor s Day Customers Branches Surveys and studies of satisfaction Systems to receive and monitor complaints Customer attention lines Website Customer ombudsman Employees Santander Today (corporate intranet) Executives portal Suggestions and surveys box Internal communiqués and inhouse magazines Conventions and meetings of employees and executives Local intranet Suppliers portal Suppliers Dialogue forums Society Annual reports Corporate websites Seminars and conferences Solidarity portal Proposals box Dialogue forums

22 20 Relations with stakeholders

23 21 Shareholders 3.1 million shareholders, who represent a great strength but also an enormous responsibility Customers 92 million customers, who are the main focus of the Bank s activity Employees 170,000 professionals with talent, commitment and values Suppliers 4,000 suppliers, who form part of the Group s value chain

24 22 Shareholders Profitability, transparency and equality of rights are the Bank s essential commitments to its shareholders Commitment To create long-term value with maximum transparency in information via fluid channels of dialogue and to encourage the participation of every shareholder in the Bank s performance. Main activities in 2009 The international bank that assigned the largest amount to dividends in the whole world. The bank with the second largest shareholder return in Santander Scrip Dividend programme: 81% of shareholders opted to receive the amount equivalent to the second interim dividend in shares. Launch of the Shareholder Office and website in the US and Brazil. Launch of yosoyaccionista.santander.com, a website solely for Santander shareholders. Launch of the Platinum Shareholder Card. Capacitas scholarship programme for the socio-labour integration of disabled shareholders. Objectives in 2010 Maintain the dividend pay-out policy at around 50% of the Group s attributable profit. Continue to open shareholder offices in those countries where the Bank is present: Chile and Portugal. Continue to foment the informed participation of shareholders in the Bank s 2010 ordinary general meeting of shareholders. Profile of Banco Santander s shareholders The Bank had 3,062,633 shareholders at the end of The Board held 281,460,101 shares, a high level compared to other banks which contributes to aligning the Board s interests with those of shareholders. Individual shareholders held 32.60% and institutional investors 63.98%. Of the total capital stock, 84.63% is in Europe, 15.10% in the Americas and 0.27% in the rest of the world. Structure of the capital stock Shares % Board 281,460, Institutional investors 5,264,898, Individuals 2,682,467, Total 8,228,826, Capital stock Europe 84.63% Rest of the world 0.27% Americas 15.10%

25 23 Key figures in 2009 EUR 4,900 million in dividends EUR 0.6 nominal dividend per share 8 th largest bank in the world by market capitalisation 1 st in the euro zone EUR 95,043 million market value at the end of million shareholders Channels for shareholders and investors The Bank communicates with its three million individual shareholders via the Shareholders area whose functions are to provide the maximum transparency in information and stimulate the interest and participation of shareholders in the Bank s issues. The investor relations area, meanwhile, facilitates information to Spanish and foreign institutional investors and analysts. During 2009, 628 meetings were held with investors and permanent relations maintained with analysts and rating agencies. This meant personally contacting more than 1,300 investors/analysts. The Investor Relations area was chosen for the second year running by both investors and analysts as Europe s best IR team in the financial sector, according to the survey conducted by the magazine Institutional Investor. Between September and October the area actively participated (attending more than 100 meetings with investors) in the capital increase successfully carried out at the subsidiary in Brazil. The corporate social responsibility area and the area of investor relations also held many personal meetings to inform the main investors and analysts of the Group s CSR policies. Communication channels for shareholders Activities in 2009 Telephone attention lines in Spain, the UK, Mexico, and the US 261,697 consultations Shareholder mail box 100,847 shareholders subscribed 17,513 s answered Shareholder forum 142 forums held in Spain, the UK France, Switzerland, Mexico and the US (11,573 people attended) Shareholder website Launch of yosoyaccionista.santander.com Shareholder office 520,647 letters tended to SMS alerts 40,684 sent Distance voting 18.42% of the capital stock Comparative performance of share prices December 31, 2008= Santander DJ Eurostoxx Banks IBEX 35 DJSI World (Euros) Dec. 08 Feb. 09 Apr. 09 Jun. 09 Aug. 09 Oct. 09 Dec. 09 Source: Thomsom Datastream

26 24 Shareholders The Santander share and shareholder remuneration Santander consolidated itself as the euro zone s largest bank and the world s eighth biggest by market value (EUR 95,000 million at the end of 2009). The Santander share ended 2009 at EUR 11.55, 71.1% higher than a year earlier. Its rise was much more than the 47% increase in the Dow Jones Stoxx Banks, the European banking sector index, and the 30% growth in the Ibex-35. During 2009, Santander was one of the few international banks whose total shareholder return increased, thanks to its good results. The Bank paid EUR 4,919 million in dividends, 2% more than in 2008 and in line with its pay-out policy of allocating around 50% of the Group s attributable profit to dividends. The nominal dividend per share in 2009 will be EUR 0.60, 7.8% less than in 2008 although, since September 2008, the number of the Bank s shares increased 32%. Santander also launched in 2009 its new shareholder remuneration programme, Santander Scrip Dividend. This initiative allows shareholders to opt to receive the second dividend either in cash or in new Santander shares. The Bank thus provides the maximum flexibility in remuneration, enabling a large part of its shareholders to benefit from tax advantages. Of the total capital stock, 81% opted to receive the dividend in shares. Fomenting participation in the general meeting of shareholders Banco Santander has taken significant steps over the last few years to foment the informed participation of shareholders in meetings. All these measures have been incorporated into the Bank s internal regulations: Possibility/right of attendance at meetings owning just one share. No system to block shares in order to identify those who can attend the meeting. The requirement is to register in the name of the shareholder any number of shares five days before the meeting is held. Attendance at a distance by telematic means and exercise of the right to vote by post, physical means or electronically. Convening of the meeting by shareholders who represent at least 5% of the Bank s capital stock. They can request an appendix be published to the calling which must be accessible via the Bank s website page- and which includes one or more points of the agenda. Separate voting on issues such as the appointment of directors, changing articles of the corporate By-laws or the regulations of the meeting. Total shareholder return Million euros 4,812 4,919 4,070 3, * (*) Includes Santander Dividendo Elección

27 25 General meeting of shareholders, June 19, Santander, Spain Presence in sustainability stock market indices Santander is present in the leading stock market indices, such as the Dow Jones Sustainability Index (DJSI), where the Bank has reached the bronze category, and the FTSE4Good, that analyse and assess the corporate social responsibility activities of companies. DJSI World is a selective index that incorporates 10% of the 2,500 companies in the Dow Jones World Index those with the best performance in the economic, environmental and social dimensions. The DJSI Stoxx consists of 20% of the leading sustainability companies of the European index (Dow Jones Stoxx Index). The performance is assessed on the basis of an annual questionnaire which includes all the aspects of sustainability classified in three dimensions: economic, environmental and social. The rating agency Sustainability Asset Management (SAM) then makes an analysis for a rating. Santander is part of this index and, after the results of the annual review of the index in 2009, Santander maintained its presence in it. As shown in the charts below, the Bank s scores are well above the average of the financial sector in all the assessed dimensions and it is close to the leader. The Bank is also included in other responsible investment indices such as the ASPI Eurozone, Ethibel Excellence Europe and Ethibel Excellence Global Index. The Santander share in the DJSI World % Santander Financial sector average Best company in the financial sector Total score Economic dimension Environmental dimension Social dimension

28 26 Customers Santander continues to strengthen its relation with its customers Commitment To achieve the highest level of customer satisfaction, creating lasting relations and offering the products that best adapt to their needs and risk profile and provide maximum quality service. Main activities in 2009 Consolidation of the Corporate Model for Customers and Quality (META 100) and its expansion to the UK, Portugal, Chile and Argentina. Definition of the corporate model of quality in Internet. Improved ratios of quality in the global businesses of insurance and means of payment. Installation of the corporate model of incidents in the Santander Spain branch network. Contact centre: due to the technological and operational transformation projects to attain optimum customer attention, the satisfaction ratios have improved substantially except in Portugal and the UK, where an improvement is expected in The periods for meeting the 2009 objectives regarding multi channel accessibility were reconsidered. The portfolio of socially responsible products was maintained in Customers profile Customers are the focal point of Banco Santander s activity in all the markets where it operates. Santander had more than 90 million customersin 2009, 41% of them in Latin America, 28% in the UK, 18% in Spain and Portugal, 10% in the rest of Europe and 3% in the US. Most (99.7%) are retail banking and consumer credit customers, reflecting the focus on the retail segment, something that sets Santander apart from the other Top 10 global banks. Customers by countries Spain 15.92% Brazil 24.37% Mexico 9.49% Germany 6.50% Argentina 2.23% Chile 3.51% Portugal 2.40% US 2.79% UK 28.20% Other countries 4.59% Objectives in 2010 Distribution of customers by geographical and business areas Continue to expand the corporate model of customers and quality to other Group banks. Install the corporate model of quality of the Internet channel in Spain and the UK. Retail banking UK 27.8% Continue to improve the ratios of quality in global businesses. Expand the corporate model of incidents to the Group s other banks. Launch the Retail Banking School corporate project. Retail banking Latin America 40,8% Retail banking US 1.9% Santander Consumer Finance 14.3% Private banking, global wholesale banking and others 0.3% Retail banking Continental Europe 14.9%

29 27 META 100 indicator of c u s t o m e r orientation Banco Santander provides each of its customers with products and services tailored to suit their individual profile and their capacity to assume risks. All the products including those specifically linked to society s most vulnerable sectors and to sustainable development meet the best commercial practices and are characterised by their innovation and technical rigour. Total Group customers Thousands Santander Branch Network 8,876 Banesto 2,527 Santander Totta 1,859 Openbank 411 Total Continental Europe 13,674 United Kingdom 25,577 Argentina 2,048 Brazil 22,412 Colombia 402 Chile 3,231 Mexico 8,724 Puerto Rico 412 Uruguay 258 Total Latin America 37,487 United States 1,723 Total retail banking 78,460 Total private banking 240 Total global wholesale banking 28 Germany 5,978 The Americas 962 Spain 2,823 Italy 988 Nordic countries 1,149 Poland 161 Portugal 345 United Kingdom 354 Others 462 Total Consumer Banking 13,222 Total Group customers 91,950 Closer to customers In a difficult environment, like that in 2009, Santander showed more than ever that it knows how to respond to the needs of its customers. Santander s 13,660 branches, the largest network of any international bank, enable it to develop all the potential of its retail banking business. In addition, the Bank provides service through other channels, available around-the-clock, such as online banking and telephone banking. Of note in 2009 was the opening of a new Call Centre in Querétaro (Mexico) which, with vanguard technology, will provide service not only to Mexico but also to other Latin American countries was the year when the We want to be your Bank plan was expanded and announcing the launch of the Santander Zero Current Account, which attained wide renown and acceptance in the market. Both plans eliminate commissions for millions of customers. This strategy to eliminate commissions for linked customers is an example of the good practices that the Bank is exporting to other countries where the Group operates. In Spain, Santander was the clear leader in 2009 in the market for channelling the loans of the Official Credit Institute (ICO).

30 28 Customers Seeking quality of service The corporate model of customers and quality (META 100) was created in 2006 and has been evolving over the last three years, Its objectives are to reflect and contribute the customer s voice to businesses and other forums of the Bank; establish a culture of quality (i.e. an organisation closer to and focused on the customer) and generate dynamics of continuous improvement, centred on customer satisfaction. The corporate unit of customers and quality is responsible for monitoring the application and results of the model throughout the Group, as well as adapting or developing it according to market conditions. In an environment of a sharp downturn in confidence in the financial sector, the satisfaction and fidelity ratios of Santander, thanks to its policy of proximity, transparency and excellency in management, increased in Incidents and complaints Banco Santander made a big effort in 2009 to systemise and homogenise treatment of complaints and incidents, through implementing the corporate model to manage incidents, consultations and complaints. In Spain, the corporate model of incidents has already been fully installed in the Santander Branch Network, while Portugal and the UK have made significant progress in this direction. It should be pointed out that the increase in the number of complaints in the United Kingdom is mainly due to the change of perimeter and the incorporation of Bradford & Bingley and Alliance & Leicester. Satisfaction Despite the year s difficult circumstances, the satisfaction indices remained very high in all markets. Complaints % of customers Continental Europe 0.20% 0.16% 0.19% United Kingdom 0.29% 0.19% 0.25% Latin America 0.31% 0.50% 0.52% Total 0.29% 0.37% 0.36% Customer satisfaction % of satisfied active individual customers Bank Spain, Santander 85.8% 88.7% 87.5% Spain, Banesto 89.9% 89.1% 84.2% Portugal 91.4% 90.9% 89.9% United Kingdom (1) 84.8% 84.0% 86.7% Chile 86.4% 88.1% 87.6% Mexico 94.0% 92.5% 93.9% Brazil (2) 85.7% 81.9% 74.5% Argentina 94.4% 95.1% 94.6% Puerto Rico 95.4% 95.4% 97.0% Total 86.9% 86.2% 83.8% (1) 2009: Abbey and A&L; 2008; just Abbey (2) Brazil: methodology homogenised with the Group Complaints by countries Bank Spain, Santander 5,541 6,743 8,589 Spain, Banesto 4,452 2,808 2,968 Portugal 6,123 5,227 4,309 United Kingdom (1) 53,002 21,407 26,576 Colombia 2,443 2,212 1,008 Chile 5,787 4,481 4,773 Mexico 6,157 6,960 8,303 Brazil 64,962 64,807 16,112 Argentina 1,448 1,262 1,166 Puerto Rico Total 150, ,229 74,239 (1) 2007/2008 only Abbey Abbey, Badford & Bingley and Alliance & Leicester stage 2 complaints

31 29 Supporting our customers The network of managers of Banco Santander receive ample training that enables them to transparently and rigorously inform and advise customers. In this way Santander helps to foment security and responsibility in the development of customer relations. Santander also makes available to customers some specific tools, such as, in Spain, Formapyme, which facilitates the management and organisation of SMEs; the internationalisation programme for companies in order to support and advise them on going abroad and Santander Broker to help customers understand and analyse stock market information. Meanwhile, in the UK, the Bank cooperates in publications which aim to improve the financial education of its subscribers and which cover everything from basic concepts such as the difference between a loan and a credit to the procedures needed to contract financial products Multichannel accessibility The level of accessibility of customers is a key component in Santander s value proposal. The Bank strives to provide the maximum level of accessibility for all users, both physically and virtually. Santander strives to guarantee accessibility to its branches and buildings of central services by eliminating barriers so that everyone, regardless of their physical, psychological or sight limitations, can access financial services. Both Santander s extensive network of branches as well as the rest of channels enable customer s needs to be quickly and efficiently met. In order to facilitate the access by the disabled to corporate buildings and branches, Banco Santander applies a series of measures for this purpose set out in the corporate office manual. The design of the corporate website is also in the process of being adapted to the standards defined by the Web Accessibility Initiative (WAI) of the World Wide Web Consortium (W3C). Retail Banking School The Retail Banking School will be launched in Its main objective, while maintaining the focus on the customer, will be to gather and structure retail banking knowledge, support teams in the various business areas who apply this knowledge, improve commercial practices and support the process of adapting and integrating the Group s new acquisitions. The school is structured into 31 retail banking knowledge areas around which networks of experts will be created and training contents developed for their dissemination.

32 30 Customers Sustainability in products and services Specifically noteworthy in the CSR sphere are those products and services dedicated, on the one hand, to encouraging financial inclusion in developing countries and, on the other, tending to the new needs of the elderly population in developed countries. The Bank also offers socially responsible investment products and those to protect the environment. The products and services specifically linked to the Bank s commitment to the most vulnerable collectives or to sustainable development are structured into four groups: Micro credits: financial product that allows the financial inclusion of the least favoured and most vulnerable collectives in order to improve not only their level of life but also their local environment. An example of this are the Bank s branches in Brazil and Chile with agents specially trained in these matters. Products designed for students: the Bank develops financial products and services with preferential conditions so that students can carry out their university studies. Of note are financing of training programmes and international travel, as well as university costs for books, transport and accommodation. Santander is also increasingly implementing in university campuses the Intelligent University Card (IUC), which accredits and enables students to access installations and conduct online procedures and borrow books. The card also acts as a public transport ticket and can be optionally linked to banking services, including ATM operations or with a debit card. Cooperation with NGOs: Santander provides products and services in cooperation with NGOs such as, among others, management of donations by Internet which allows customers to contribute to non-profit making organisations quickly, comfortably and safely, while the NGO has all the information on line of the operations conducted in this way. Products for immigrants: the Bank, via its branch network, offers special products and services for immigrants. Some examples are Santander envios (remittance service to more than 29 countries) and Banesto s Welcome programme which helps to integrate immigrants into the Spanish banking system. This information is available at in the section on sustainability. Socially Responsible Investment Banco Santander is committed to developing socially responsible investment (SRI) products. It has various products with different profiles adjusted to customers investment demands. These products not only meet financial return criteria but also social and environmental ones and recommended practices of corporate governance and transparency. The products are rigorously analysed on the basis of these parameters, guaranteeing investors that their funds are assigned to companies committed to sustainable return. Banco Santander s activity in the SRI sphere began in 1995 with the creation of the first fund in Spain to incorporate SRI criteria. Since then, the Bank has striven to develop products of this type and actively participates in fostering SRI. Santander Asset Management is one of the founding partners of Spainsif, an organisation comprising all agents involved in responsible investment (researchers, companies of indices, managers and third sector) in order to foment and galvanise SRI development in Spain. Furthermore, Banco Santander has a portfolio management service which provides a personalised service for clients to administer their portfolios with SRI criteria. This service groups 17 portfolios, and the total volume managed in 2009 was EUR 39 million.

33 31 The Bank has developed various SRI funds, including: Inveractivo confianza FC (launched in 1995) and Santander responsabilidad conservador FI (launched in 2003): Ethical funds which invest on the basis of the values of the Catholic Church. Santander dividendo solidario FI (launched in 1999): A fund which focuses on investments in companies committed to human, labour and social rights and respect for the environment. It assigns 21% of its management fee to the NGO chosen by the investor from among the 21 NGOs that make up the fund. Fundo infra-brasil: A fund for investors who want to help develop infrastructure in Brazil by investing in transport projects, telecommunications, distribution and transport of gas, cleaning-up and energy. Fundo floresta Real: A fund that offers the investor the right to receive a monetary value corresponding to the carbon credits generated by the Floresta Real Programme (reforestation project for deteriorated areas in the Vale do Ribeira in the state of São Paulo). Brazil ethical fund Banco Santander Brazil developed in 2009 a new ethical fund. This innovative and pioneering fund in the Brazilian market invests in companies committed to environmental, social responsibility and corporate governance policies. This fund has been available since December 2009 to all customers of Grupo Santander Brazil. The total volume managed in 2009 was EUR 170 million. The fund is advised by organisations of recognised prestige, such as the Ethos Institute, Amigos de la Tierra (Friends of the Earth) and the Brazilian Institute of Corporate Governance. By investing in the ethical fund, the customer helps to strengthen the value of Brazilian companies and stimulate them to implement policies that respect the environment, the community and also their professionals, consumers and shareholders. IT security In cards and means of payment, the Bank continued to develop a series of measures to prevent fraud including anti-skimming devices, magnetic strip marker to avoid cloning of credit cards and the sending of alerts by SMS text messages when there are suspicious movements, among others. As a result of the proliferation of techniques to commit fraud via Internet such as phishing, the Bank has a solid system of security to protect its customers which includes the following measures: geolocalisation technologies, confirmation of transfers by SMS and the blocking of fraudulent pages, etc.

34 32 Employees Santander strives for knowledge, talent, diversity and the life balance of its 170,000 professionals Commitment To support business growth with innovative policies that enable us to attract and develop the best talent at the international level. Main activities in 2009 Implement the internal model for selecting executives. New edition of the general code of conduct of employees. Design the corporate policy of international mobility and gender equality. Coordinated corporate response against influenza A, following the corporate model for the health of professionals. Commitment of professionals to corporate values, whose best expression has been the holding of the First Santander is You Race and the Santander is You Week. New corporate segmentation of Group executives, with the creation of the Top RED and Dir RED collectives. 167,849 participants in training programmes. Drive in the executive development centre via new initiatives. Specific plans were developed for new employees in Brazil, the US, the UK and Germany within the corporate integration programme. Objectives in 2010 Profile of Santander s professionals Banco Santander s 169,460 professionals are the key element of its growth and leadership. Employees are diverse and incorporate the talent of the different countries in which they work. This diversity underlines the integration and non-discrimination. Santander is a reference employer which attracts and achieves the loyalty of the best talent at the international level, and supports the development of their potential. Moreover, in this difficult economic context, Banco Santander has stood out in a singular manner, maintaining the number of employees and contributing to job stability. Santander supports the development of all employees regardless of sex, capacity, age, nationality, origin and beliefs can attain their potential and help achieve the Bank s objectives. Ethical principles are one of the pillars supporting the Bank s activity. The Board of Directors approved in 2009 a new edition of the general code of conduct, which is to be applied by all employees. In accordance with this, their activities must be guided by principles such as equality of opportunity, nondiscrimination, life balance, prevention of risks at work and protection of the environment. There is also a confidential communication channel for employees to make known to the Bank possible questionable practices in accounting and auditing matters, and any employee can denounce non-compliance with the general code of conduct they know. Foster the development of future leadership. Guarantee the sharing and transmission of strategic knowledge. Promote gender diversity in all the organisation. Consolidate Santander is You as the channel for knowing the Bank s value offer and living the corporate culture. 220 executives will form part of/formed part of the network of experts of the Retail Banking Corporate School.

35 33 "Santander is you" programme Managing people Santander is an organisation focused on people and manages human capital on the basis of three strategic references: the talent of professionals, the creation of knowledge shared in the organisation and the corporate culture, which acts as a link binding all teams. In order to manage all employees, Santander has defined a corporate strategy in human resources which has four main aims: Generate and develop executives prepared to face the challenges of the future from a corporate standpoint. Consolidate Santander as the reference employer in order to attract and retain talent at the international level. Sustain the corporate culture and transmit the strategic knowledge characteristic of Santander throughout the organisation. Have ordered processes that facilitate management of talent. This strategy is shaped in corporate policies that tend to the talent throughout the cycle. Employees By institution Employees M(%) W(%) Graduates(%) Santander, Spain 19, Banesto, Spain 8, Santander Totta, Portugal 5, Abbey, UK 15, Alliance & Leicester, UK 4, Sovereign Bank Corp. US 8, SCF Germany 2, SCF Italy SCF United States 1, Grupo Santander Brazil 47, Santander, Mexico 11, Santander, Chile 9, Santander Río, Argentina 5, Santander, Puerto Rico 1, Santander, Colombia 1, Others 23, Total 169, Types of employment By geographic areas Full time Part time Total Continental Europe 47, ,162 UK 20,298 4,487 24,785 Latin America and rest 94,461 2,052 96,513 Total Group 162,327 7, ,460 Types of contract By geographic areas Fixed Temporary Total Continental Europe 47,136 1,026 48,162 UK 24, ,785 Latin America and rest 96, ,513 Total Group 167,883 1, ,460 Average age of employees Years Average length of time with Santander Years Women Total Men Women Total Men

36 34 Employees 1 Attract/Identify 2 Support the talent cycle Segmentation policy Human resources marketing policy Human resources technology support Remunerate 4 Talent cycle Assess Evaluar 3 3 Development Corporate policies of human resources The strategy is materialised in corporate policies that tend to the talent throughout its cycle. 1 2 Attract/Identify: Have talent in optimum quality and quantity in order to respond to business challenges, giving preference in opportunities to internal talent. External and internal selection policy Develop: Enrich the professional skills of employees through the leadership of their executives, taking advantage of the diverse experience, sharing knowledge and strengthening a common culture. Development policy Training and knowledge policy Internal selection of executives policy International mobility policy Equality of gender policy 3 Assess: Know each person s skills and their contribution to the success of their team and of the organisation. Assessment policy 4 Remunerate: Recognise each person on the basis of their contribution to the Group s success. Remuneration policy

37 35 Training figures Total training hours (million) Number of participants in training programmes 167, ,875 Total investment in training (million euros) Investment per employee (euros) Hours of training per employee Excluding Banesto and Isban. Identify and develop talent Santander views talent as the combination of capacity, the aspiration to go further and commitment to the Bank. Santander is constantly working to know the talent of its professionals, through initiatives such as identifying emerging and female talent, internal selection of executives and personalised analysis of the leadership profile of the Group s executives in the development and mobility committees. Armed with this information, Santander then designs the most appropriate development routes to foment each employee s talent. In this way it foments the variety of experiences as a fundamental element for enriching the professional trajectory of its professionals. Internal talent is complemented, according to business needs, by the incorporation of external talent, mainly through interlocution programmes with the best universities and business schools. Sharing and transmitting knowledge Santander drew up in 2009 its own training and knowledge model which seeks excellence in learning in order to consolidate itself as an international reference in this sphere via innovation, continuous improvement and a deep understanding of the business needs. The model ensures the Bank s values and strategic knowledge are transmitted throughout the professional trajectory of its employees. Moreover, it fosters the creation of communities and cooperation networks between professionals. Following this model, Santander puts at the disposal of its professionals a training offer designed both to support employees current performance and their future development, as well as their integration in the Bank and exchange with other professionals. The offer includes: curricular training offer, curricular plan of executives, training to integrate new professionals and knowledge networks (Santander Learning). El Solaruco, the corporate centre for training and development, located at the Group s headquarters in Boadilla del Monte, plays a key role in corporate training. Its installations received 57,910 professionals in Executives training programmes Centre of Executive development Collective Participants Leading the Group s growth Top RED 174 High return leadership Top RED 46 Dealing with strategic leadership challenges Top RED 21 Corporate programme of strategic support Dir RED 328 Role of leader Dir RED 51 Corporate leadership programme Dir RED 25 Leadership in management and development of talent Dir RED 48 Communication Dir RED 67 Strategic Finance in Banking Dir RED 20 Strategic Risk Management Dir RED 23 Corporate development programme (CDP) Senior executives 24 Santander Executive Training Programme (STEP) Young high potential 74 Social responsibility programme for a global Group Senior executives 26 Corporate Managerial Curriculum (CMC) Executives and future executives 811 Female executives challenge Female executives 326 Workshop for graduates Notables in future executives programme 17 Cycle of conferences Ideas for Leading Executives and future executives 1,292 Programme for futures executives in the Americas Young high potential 53 Apolo programme Retail banking (Spain, Banco Santander) 23 Higher programme of executive development Senior executives Spain 36 Human Resources curriculum plan Executives and future executives 128 Excluding Banesto and Isban.

38 36 Employees Santander s professionals are committed to and live the corporate values Living the corporate values As part of the corporate model of Human Resources, Santander transmits to all employees its corporate culture in such a way that it acts as a link of union between all teams. Particularly important in this process is the transmission of the Group s values: strength, leadership, dynamism, business orientation, innovation, professional ethics and commitment to sustainability. An essential element is the Santander is You project, started in 2007, which transmits Santander s commitment to people and the pride in belonging to the Bank. In 2009, Santander continued to integrate all employees of the Group, particularly those from the new companies in the US, Brazil and Germany. One of the best reflections of employees participation and commitment to the corporate values is the Santander is You week which, in 2009, for the second year running, was held in all countries at the same time. Informative, solidarity, health promotion and sporting activities were held for participation in teams or in family. Initiatives such as these underscore the identification of professionals with the Group s corporate values and with solidarity. First Santander is You Race The values that move us was the slogan of the First Santander is You Race, an initiative that wants to reflect the corporate values that every day drive the Group s almost 170,000 professionals. Between October 1 and 3, 2009, 56 professionals from various countries and the Bank s divisions ran, in relay, the 500 km. between the Madrid corporate centre and the city of Santander in Cantabria. Aside from the sporting challenge of the runners, all professionals were able to participate actively in this initiative via the blog created as a communication vehicle between employees, a solidarity project in favour of the NGO Save the Children and very particularly, the experience of the corporate values. Occupational health and safety Santander, as part of its responsibility for maintaining a healthy working environment based on the prevention of risks at work and promotion of good health, has a corporate model for occupational health and safety. A plan to prevent and act in the face of the influenza pandemic was launched in Based on the recommendations of the World Health Organisation (WHO) and of local health authorities, the plan was gradually implemented in countries according to the degree of intensity of the virus. At the same time, various programmes developed the corporate aspects for promoting good health, training and health culture and prevention of cardiovascular, diet and exercise risk factors. Santander and human rights Within the usual communication channels which the Bank maintains, no relevant incident regarding failure to comply with human rights was reported in 2009, nor were any activities detected which implied that the right of freedom of association and to adhere to collective agreements were at risk. Also, no incidents involving child exploitation or episodes of forced labour or without consent were identified. The Bank, moreover, provides employees with courses in corporate social responsibility including, among other things, specific training in human rights. Continuous dialogue Active, continuous and two-way communication with professionals is essential in Santander. The main corporate channel is Santander Today in Intranet, which every working day gives information on the Bank s strategy, businesses, activities and achievements in four languages. There are other more specific corporate channels, such as the Directivos (executives) portal which during 2009 continued to increase its base of users, and the first corporate blog made available to all of the Group s employees for the First Santander is You Race. Santander also has systems to receive suggestions from employees and conducts various surveys in order to know their views on the working environment.

39 37 Santander is you programme Diversity and life balance Santander fosters the life balance of its professionals. In 2009, the various local programmes already underway continued to be consolidated and pioneering initiatives were adopted with a substantial impact on the life balance of professionals. Santander became the first Spanish bank to decide to close its branches on Saturdays, to the benefit of the life balance of its employees. Distribution of employees By sex and geographic area Men Women Total Executives Continental Europe 2, ,310 United Kingdom Latin America and rest 1, ,593 Total Group 4,954 1,426 6,380 Technicians Continental Europe 18,413 13,735 32,148 United Kingdom 4,058 4,234 8,292 Latin America and rest 16,343 13,329 29,672 Total Group 38,814 31,298 70,112 Clerical Continental Europe 6,920 5,784 12,704 United Kingdom 4,881 11,135 16,016 Latin America and rest 24,180 40,068 64,248 Total Group 35,981 56,987 92,968 Committed to the diversity and wellbeing of its employees The 1st Santander Women and Business Meeting was held in 2009, a forum of debate on gender diversity held at the Bank s headquarters in Boadilla del Monte. In this framework the corporate policy on gender equality was announced, which sets out common guidelines for promoting female talent throughout the Group. There are also specific programmes to foment the professional development of women. Santander was one of the first institutions to adhere to the Charter of Diversity, a platform promoted by the European Union to foster social and cultural diversity in the workplace. The Bank signed a joint declaration with the European Companies Committee in favour of social and labour rights in the European sphere. It sets out social principles and rights based on the universal declaration of human rights and on the agreements of the International Labour Organisation (ILO) on issues such as equal opportunities, no discrimination, protection of health and wellbeing at work, etc. The Santander Prize for equal opportunities through education and learning was created under the framework of the United Kingdom s prestigious Opportunity Now 2009 prizes. Total Group employees 169,460 Continental Europe 48,162 United Kingdom 24,785 Latin America and rest 96,513

40 38 Suppliers Santander fosters among its suppliers commitment to society and the environment Commitment To optimise the relation between the cost and quality of goods and services and maintain stable and transparent relations with the strategic suppliers. Main activities in 2009 Progress was made in implementing the corporate model in Santander UK, Sovereign, Santander Global Facilities, Altamira and Isban. Aquanima was consolidated as the Bank s company for negotiating with suppliers. Global spending strategies put into effect. The use of electronic tools in the main processes was consolidated. Development of the application to consult bills in the supplier portal. The perimeter of Gesban was maintained as the organisation responsible for invoicing and paying suppliers. New measures to facilitate fluid dialogue with suppliers. Profile of Santander s suppliers Santander maintains stable relations with its suppliers based on ethics, transparency and mutual respect, thereby ensuring the quality and availability of the products and services needed for the organisation s functioning. Suppliers, in turn, are committed to respecting and meeting the 10 principles of the United Nations Global Compact, which the Bank adheres to, regarding human rights, work regulations, protection of the environment and the fight against corruption. All the Bank s contracts signed in the last few years include a document in which they assume this commitment. Banco Santander has commercial relations with 3,992 accredited suppliers billing more than EUR 50,000 a year. Most of the suppliers (95%) are local (those with operations in the same geographic area where the purchase and invoice are made). The Group s paid suppliers in 2009 around EUR 8,300 million, of which about EUR 1,000 million was managed via the online platform (70% more than in 2008). Santander also positively assesses the offers of suppliers who provide their services via special employment centres, and supports their contracting. Objectives in 2010 Continue to install Aquanima as the purchasing company in the rest of the Group s banks and companies and implement the homologation process in them. Enhance the communication channels with suppliers in order to make the relation more efficient. Align processes and solutions, taking advantage of best practices in various countries. Optimise the pool of potential suppliers, respecting homologation criteria. Increase the percentage of online negotiations. Volume managed by category of spending 100% = EUR 3,542 million Institutional spending 0.2% Human resources 4.7% Costs managed on a decentralised basis 13.4% Technology 31.5% Properties 19.8% Publicity and marketing 9.0% Operations 21.4%

41 39 Logistics center at Grupo Santander city, Boadilla del Monte, Madrid Management of suppliers Aquanima is Banco Santander s purchasing unit. Its purpose is to negotiate with suppliers and incorporate all countries to the negotiating perimeter and to the accreditation processes established. As regards contracting suppliers, the corporate purchasing model developed permits equality of opportunity, objectivity and transparency in awarding contracts, thanks to the use of an electronic platform. Aquanima implemented during 2009 the management model for suppliers in two such important countries as the United Kingdom and the United States, as well as in other areas of the Bank in Communication channels Year after year, the Bank strives to improve the communication channels with its suppliers and seek new formulas of interaction. Of note among the new initiatives adopted in 2009 were: Launch of a centralised suggestions box for all regions, so that all countries can take advantage of the improvement initiatives and proposals of all suppliers. Implementation of initiatives to promote suppliers knowledge, both new and existing ones, through attendance at fairs and events related to business and in situ visits. Continuous improvement in the supplier portal and launch of a new function through which suppliers can consult the state of their invoices. A specialised team was created in 2009 to unify suppliers accreditation criteria and modify the control mechanisms and optimise the accreditation plan in all regions where Santander operates. Main suppliers by amount Spain Portugal UK Brazil Mexico Chile Rest Total > 50,000 < 300, > 300,000 < 1,000, > 1,000, Total Purchases Million euros Management according to the Global Model 3,542 3,384 Volume of e-purchases managed 1,

42 40 Relations with the environment One thousand year old olive trees at Grupo Santander City, Boadilla del Monte, Madrid Mapa de sostenibilidad

43 41 Santander Universities Higher education as the engine of economic and social progress. Society Fostering development with local programmes of social and cultural actions. The environment Active policy to protect and preserve the environment and spirit of commitment.

44 42 Santander Universities EUR 88 million invested in 2009 in cooperation projects with 833 universities Commitment Universities play a key role in social and economic progress. One of the Bank s hallmarks is its commitment to higher education. Main activities in new cooperation projects in Russia, China, the United States and the United Kingdom. 16,981 scholarships, work experience and grants, 8,971 of them for international travel. Consolidation of the prizes for innovation and entrepreneurial culture in Brazil, Colombia, Argentina, Mexico and Chile. More than 4,000 projects were presented by 350 universities. Universia was extended to new countries, covering all of Latin America. 176,985 university students and graduates obtained their first job via Universia and the Universia-Trabajando.com alliance was implemented in Brazil, Mexico, Peru and Colombia, which helps students gain access to their first job via the personalised portals of each university. The Miguel de Cervantes Virtual Library celebrated its 10 th anniversary. Exchange programmes for students and teachers were developed with universities in the Americas, Europe and Asia. Launch of the programmes to learn Spanish in Brazil, the United States, China and Russia. A unique programme in the world Banco Santander assigned EUR 88 million to cooperation projects with universities in 2009, through agreements with 833 universities in Spain, Portugal, the United Kingdom, Brazil, Mexico, Chile, Argentina, Colombia, Peru, Puerto Rico, Uruguay, the United States, China and Russia. For the past 13 years, the Group has been developing this cooperation programme with universities, which distinguish it from the rest of the world s banks and financial institutions. Santander Universities constitutes a unique long-term strategic alliance with universities in the world. This cooperation is based on the conviction that the best way to contribute to economic growth and social progress is to support higher education and research. The Santander Universities Global Division, with 1,961 professionals in 14 countries, coordinates and manages Banco Santander s commitment to higher education. This alliance with universities enables Santander to cooperate with them in the launch of projects to improve education, internationalisation, innovation and the transfer of knowledge to society. Objectives in 2010 Hold the II Meeting of Rectors of Universia in Guadalajara, Mexico, with the participation of more than 1,000 Latin American universities. Increase the number of university students and graduated who gain access to their first job via Universia. Maintain and expand the aid to university projects in countries where the Bank operates. Improve the attention to and quality of service to university students. Launch new scholarship programmes.

45 43 Santander Universities in figures 833 cooperation agreements with universities in 14 countries in 4 continents 3,340 joint projects with universities in ,959,000 intelligent university cards in 201 universities 16,981 scholarships and grants for study given in 2009 EUR 20 million assigned in 2009 to innovation projects and to foment an entrepreneurial culture Lines of action Banco Santander s cooperation with universities revolves around four lines of action: Integral agreements, which led in 2009 to the launch of 3,340 academic, financial and technology cooperation projects with universities. Support for international cooperation programmes, such as the national and international travel programmes for students and teachers, which promote the Latin American space of knowledge, strengthen the relation between students and teachers in Asia, Europe and the Americas and permit the exchange of experiences between university students and researchers throughout the world. Foster and cooperate with international academic networks, such as the Latin American university network for the incubation of companies (Emprendia Network). Support global projects, such as Universia, the largest university cooperation network in the Spanish and Portuguesespeaking world, and the Miguel de Cervantes Virtual Library, the largest digital library of books on Spanish and Latin American culture. Growth in cooperation projects 3,340 2,820 2, Cooperation programmes between universities Plans to support higher education Universia Emprendia Network Transversal programmes

46 44 Santander Universities Santander student aid In 2009, the scholarships, work experience and study grants benefited 16,981 students and graduates from 389 universities. Of the 13,578 study scholarships granted, 8,971 were for international travel and, of them, 5,479 were for travel between Latin American countries. Moreover, Santander is promoting 1,379 scholarships for domestic travel in Mexico and Colombia. These initiatives have made Santander one of the pioneering institutions in fomenting the creation of a Latin American knowledge space via the mobility of students, teachers and researchers. Main scholarship programmes Marco Polo scholarships: travel for Asia-Europe-the Americas. Pushkin programme: mobility with Russia. Cooperation in the internationalisation of universities In 2009, Santander helped universities to internationalise by developing high value added programmes such as Top China, which enabled 41 students and 10 teachers from 10 Brazilian universities to cooperate with Chinese universities in projects to perserve the environment and combat climate change. This type of programme allows students to enjoy a unique academic and personal experience. By signing these cooperation agreements between universities in different countries, Santander, thanks to its international dimension, launches transversal projects which facilitate this international connection. Another focal point has been greater proximity between English language and Latin American universities. Examples of this are cooperation programmes between UK and Brazilian universities, fomenting exchanges of students and teachers between US and Latin American universities and launching joint research projects between universities in the UK, the US and Latin America. US mobility programme. Santander UK scholarships. ECOES-Mexico scholarships. Portugal-Brazil scholarship programme. CRUE scholarships: Latin American mobility. Grupo Montevideo scholarships. Top China: mobility China-Brazil. International travel programme scholarships Scholarships in 2009 (including work experience) 16,981* Scholarships and study grants 13,578 Universities with scholarship programmes 389 International travel scholarships 8,971 Latin American space of knowledge 6,858 (*) This figure is different from that in the annual report, due to the including of the professional practices in Brazil

47 45 Innovation and transfer of knowledge In the last few years, universities have put particular emphasis on promoting research centred on the real economy, creating companies of university origin and developing an entrepreneurial culture. In this direction, and giving continuity to the commitment begun in 2008, Santander made a significant effort to support initiatives related to innovation and fostering the entrepreneurial spirit, particularly those activities related to training teachers in undertaking and recognising entrepreneurial activity in university students. Santander cooperated in 40 university company incubation projects in 2009, resulting in the launch of 320 new university companies. The Santander prizes for Innovation and Fomenting Entrepreneurial Culture in Argentina, Brazil, Mexico, Chile, Uruguay and Colombia have been consolidated as an international reference. More than 4,000 university projects were convened in The development of the Emprendia Network with the incorporation of new universities in Brazil, Spain and Mexico also facilitated the launch of new projects to strengthen knowledge transfer and best practices in fomenting the entrepreneurial culture between Latin American universities. Santander Chairs at universities Grupo Santander has been promoting the creation of specialised Chairs in research and teaching, in many cases formed by or comprising multidisciplinary teams from various universities. The number of Chairs reached 122 in The work of these groups mainly focuses on social responsibility, family-run companies, innovation and entrepreneurial culture. The following universities have sustainability Chairs: University of Alcalá de Henares. Chair of Corporate Social Responsibility. Antonio de Nebrija University. Chair for the study of Human Rights. Analysis of the social responsibility of companies-santander. University of Cádiz. UNESCO Chair. Sustainable coastline development. University of Camilo José Cela. Chair to Promote a democratic education of citizens, compliance with human rights and the training of critical thought. University of Cantabria. EuroAmericas Chair for the legal protection of consumers. CEU San Pablo University Foundation. Chair of sustainable development. Chair of solidarity economy (Abat Oliba CEU-Barcelona)). University of Extremadura. Chair of Human Rights, Manuel de Lardizabal. Francisco de Vitoria University. Chair of corporate social responsibility. University of Salamanca. Chair of corporate social responsibility.

48 46 Santander Universities A life-changing experience Ousmane Amadou is a Mauritanian student who studied in Spain for 10 months with a Santander travel scholarship. These scholarships give university students and graduates in developing countries the possibility of studying in Spain on condition of returning to their country afterwards. Ousmane s commitment to his country and his desire to return after completing his postgraduate studies made him a perfect candidate to receive a scholarship from the Pontificia de Comillas University, paid for by Banco Santander via its Santander Universities Global Division, to take a Master s in International Development Cooperation. This Master s degree aims to respond to the demand for a greater professionalisation in developing countries, while also promoting a deep ethical and social commitment to combating inequalities. After his Master s, Osumane is working in Mauritania, in the Judicial Institute of the Rey Juan Carlos University, on an immigration project. Universia Universia has met its objective of reaching all of Latin America and, in 2008 and 2009, it signed 80 agreements with universities in countries where it was not present. In this way, it will extend to the Latin American university community the products and services it has been promoting in the 11 countries in which they were initially present. Universia continued to focus on the four lines set out in its strategic plan: Training: A total of 24,859 courses (62% more than in 2008) and 13,556 announcements for study grants (+79%) were published. Employment (1) : 176,985 jobs managed for graduates in 2009; 5,207,386 candidates for 442,462 vacancies and 1,185,273 CVs in the data base. Observatory: The II International Meeting of Rectors of Universia, which will be held in May 2010 in Guadalajara, Mexico, was prepared in 2009 and will be attended by 1,000 universities. Social networks: the new tools (RSS, Participa) facilitate the participation of users and transparent contents. For the second year running, the Universia Scholarships - Fernando Alonso programme was presented for international travel, postgraduate studies and professional practices. All the information of Universia is available in its Annual Report and at Jobs 1 Thousand (1) Metrics: Data estimated on 40% of the published vacancies. Source: Universia / Trabajando.com

49 47 Universia in figures 1,169 partner universities 23 countries in Latin America 12.5 million students 1 million teachers 176,985 university students and graduates obtained their first job 8.7 million navigators (monthly average) Partner universities of Universia ,100 1,169 1,056 Universia Foundation This foundation aims to place disabled university students and graduates in jobs by fostering superior training and equality of opportunity. A total of 268 disabled students benefited directly from projects managed by the foundation (61 cooperation agreements with universities and administration of 607 job offers) Of note among its main actions in 2009 were: 69 Capacitas scholarships were granted. They promote access to higher education and facilitate international travel. The bank of products that support these students. Their purpose is to facilitate the autonomy of the disabled in the sphere of training and employment through free and temporary lending of IT equipment. 13 people in 2009 benefited from the Incluye programme, which encourages work experience for students with disabilities. Pilot experience for job incorporation and quality of working life for disabled women through the use of information and communication technologies (ICTs) and telework. More information can be found at Miguel de Cervantes Virtual Library Created 10 years ago by Banco Santander, the University of Alicante and the Marcelino Botín Foundation, this digital library has more than 125,000 books and documents freely available on Internet in order to disseminate and promote Hispanic culture in the world. In 2009, almost 13 million people used the library (17.5 million visits). More information can be found at

50 48 Society The Bank s social commitment is shown in its daily activity in all the regions where it operates Commitment To contribute to bankarisation and to the cultural, social and educational development of the communities where the Bank operates, through projects in which customers and employees are directly involved. Main activities in 2009 The Santander is You week was consolidated as the link of corporate identification and meeting point for employees and customers in matters of social actions. Use of new technologies to foment volunteering among the Group s professionals. More cooperation with the third sector via solidarity offices in various countries. Greater awareness and internal participation in social action initiatives. The solidarity portal was launched in Spain, enabling employees to conduct micro volunteer tasks and participate in the initiatives of the Solidarity Corner from their workplace. Objectives in 2010 Increased stable relations with the third sector. Creation of new ways of development cooperation. Development of a tool with unified criteria to measure the investment of actions in society at Group level. Define initiatives and corporate projects of social actions and volunteering. Promote new iniciatives which foment financial education among the least favoured collectives. Profile of social actions For many years Banco Santander has assumed the commitment to contribute to the cultural, social and educational development of the communities in which it operates. The Bank, in each of the countries where it does business, carries out social projects in close cooperation with the third sector (NGOs and other non-profit making institutions). These are local projects adapted to each country s social and economic circumstances and which aim to cover the basic requirements of the most needy collectives and those with the least purchasing power, such as children, immigrants or the disabled. Santander is particularly interested in projects to develop education for low income students and people who are at risk of social and economic exclusion. In 2009, against a backdrop of global crisis, Santander continued to cooperate with society and actively involved employees and customers. Detailed information on the projects can be seen at Solidarity professionals Santander enhanced in 2009 the participation of its professionals in various social action initiatives, aware that this is not only the best way to encourage solidarity among the Group s professionals, but it also spurs motivation, team spirit and pride in belonging. During the year, the Group s employees participated in various solidarity initiatives, both at the corporate level, as well as, in the case of Santander is You, at the local level. A good example of this type of initiative is the Solidarity portal in Spain, which is a virtual platform through which employees have the possibility of conducting their micro volunteering tasks from their own workplace. Other particularly noteworthy local initiatives are the Escola do Brasil project and the Community Days programme in the UK. This type of initiative has the support that the human resources division has made available to employees in countries a certain number of hours a month for volunteering activities during the working day. In Spain, employees have two hours a month, 3 hours in the UK and 4 hours in Brazil.

51 49 We dialoge with stakeholders CSR: regular publications Frequent meetings with NGOs Awareness seminars Mail box for proporsal "Santander is you" week, solidarity market. Stable relations with the third sector Banco Santander maintains a fluid and constant dialogue with many NGOs, through meetings, interviews and participation in forums in order to know the work they are doing and identify possible ways to cooperate. Santander also makes available to employees various communication channels with the third sector (NGOs and nonprofit making institutions). In Spain, at the Bank s headquarters, the Solidarity Corner is a meeting point between employees and non-profit making institutions. The Solidarity Corner in Argentina is a similar initiative. And in the UK, the Community Partnership Groups analyse and assess the projects presented every year by NGOs. This type of initiative helps to forge closer relations between the Bank and the third sector and respond in a more agile way to the real needs of local communities. The Group s internal communication channels and Intranet are also used to make employees aware and provide information in this sphere. Transparent information The Bank also cooperates with various institutions to promote transparent information in the third sector by fostering actions to analyse the performance of NGOs. In Spain, the Bank cooperates with the Lealtad Foundation and forms part of the group of Institutions Promoting the Transparency of NGOs. Sustainable products and services As set out in the corresponding section on products and services in this report, Santander develops products and services which aim to facilitate access to the financial market by certain groups, contributing to the bankarisation of the countries in which it operates. Micro credits Micro credits have become in the last few years a potent tool for the financial inclusion of the poorest and most vulnerable groups to improve not only their quality of life but also that of their local environment. Santander, via its micro credit programmes, particularly in Brazil and Chile, helps low income families to develop profitable economic activities which can generate benefits for the whole community. Loans are granted to micro companies (dressmakers, sellers of cosmetics, electricians, etc). In Brazil, the integration of Banco Santander and Banco Real enabled us to expand the micro credit sector and made possible growth of 28% more than in Financial education Santander, through financial education, promotes social inclusion and the bankarisation of the most needy groups. The objective is to foment financial knowledge, generate greater confidence in financial services and institutions and show people how to use banking services effectively. Basic concepts are taught such as the importance of savings and access to loans. The Bank conducts various programmes, such as the education web channel Quanto Vale in Brazil, which teaches and resolves freely and on line doubts on household economic matters, or draws up publications such as the pamphlet, My money, my rights in the UK, which promotes financial education among the youngest. Development cooperation Santander, working with public and private institutions and entities of recognised prestige, carries out development cooperation projects in order to contribute to the progress of the least favoured countries. The Bank cooperates and participates in initiatives that develop in Africa, Asia and Latin America, among others, projects for the construction and maintenance of infrastructure, literacy projects and projects to combat child malnutrition. Moreover, with all these initiatives, Santander has contributed to two of the Millennium Development goals promoted by the United Nations to eradicate extreme poverty in the world and achieve universal primary education.

52 50 Society The bank supports and carries out corporate and local projects adapted to the social and economic circumstances of each country Santander is You week One of the best reflections of the social commitment of the Group's employees was the holding, for the second year running and in all countries at the same time, of the Santander is you week. The Group s professionals showed their commitment to the environment by participating actively in various initiatives, ranging from the cleaning of rivers and forests and the construction of homes for the homeless to fomenting and developing projects with children, the elderly and the disabled. Solidarity was the axis of the Santander spirit. Community Days In the UK, Santander offers employees via the Community Days programme, the possibility of participating and working as a volunteer in local charity organisations. More than 750 employees in 2009 took part in Community Days. The activities range from teaching financial skills in schools to accompanying the very elderly and supporting projects to preserve the environment. A total of 64 social projects were able to be developed, thanks to almost 5,500 hours of volunteering by employees in the UK More than 200 solidarity initiatives, 50 of them corporate volunteering, were carried out during this week.

53 51 Distribution of social initiatives by sphere % Education and youth 37 % Labour inclusion 13% Environment 6% Development cooperation 6% Social welfare 38% Escola Brazil The goal of the programme is to help improve state schools, bringing them closer to the communities where they are located. Santander Brazil s programme of corporate volunteering involves more than 2,000 employees who participate in the activities that the schools carry out with students (sports, leisure, culture and the environment). A total of 170 state schools and 703 teachers participate in the programme. The number of students that benefit from the programme has reached 142,000. Micro credits in Chile Santander Banefe contributed 15 million pesos in its micro credit programme via the Un techo para Chile Foundation. The aim of this programme is to strengthen the entrepreneurial skills of families in the shanty areas of marginalised populations in Chile, erradicate precarious housing, build better homes and provide the necessary tools so that people can resolve their own problems themselves. In 2009, 37% of those benefiting from this programme were micro entrepreneurs living in the area of Santiago de Chile and 63% went to families in other parts of the country.

54 52 Society The Banco Santander Foundation has a firm cultural, humanistic and scientific vocation and sponsors cultural events Banco Santander Foundation The Banco Santander foundation dedicates its activities mainly to art, music, the humanities, science and sustainability. In art, it manages the Santander Collection, organises art exhibitions and conducts courses or programmes on artistic subjects. The foundation continued in 2009 to restore, loan and exhibit the works of its collection.. Particularly noteworthy was the exhibition in the auditorium of the University of Zaragoza of the Santander Collection entitled Selecta: Del Greco a Picasso. Guided visits to the permanent exhibition of the Collection continued to take place at the gallery at Grupo Santander City, as well as other exhibitions such as those dedicated to Daumier or to the Headquarters Project. In 2009, the Foundation also sponsored significant exhibitions including the Settecento veneciano in the Real Academia de Bellas Artes de San Fernando in Madrid and the Museo de Bellas Artes in Seville, the retrospective exhibition on Juan Muñoz in the Museo Nacional Centro de Arte Reina Sofía in Madrid, the one dedicated to Dibujos de arquitectura y ornamentación del siglo XVIII in the National Library of Spain and the exhibition of the Spanish royal collections of small bronze statues entitled Brillos en bronce. Colecciones de reyes, in the Royal Palace in Madrid. In music, of particular note in 2009 was the support provided by the Foundation to young artists, through, among others, the Cátedra de piano Fundación Banco Santander, the Conciertos para escolares, the Encuentro de Música y Academia de Santander and the Paloma O Shea International Piano Competition. In humanities and social sciences, the Foundation continued its cycle of conferences on Biografías e Historia, Ciencia y Sociedad and El mundo que viene, as well as the Simposio de Moneda y Crédito, dedicated on 2009 to the economic crisis. Three new volumes of the prestigious Colección Obra Fundamental were also published on literature, dedicated to Juan Larrea, Corpus Barga and Alfonso Reyes, respectively. In scientific research, a new project was begun in 2009 on genetic epidemiology of bladder cancer with the National Centre for Oncology Research, which is added to the programme started two years ago on colon cancer in the Puerta de Hierro Hospital. The activities on sustainability and conservation of the Foundation s natural patrimony are set out later in the section of this Report on the environment. More information is available at Art gallery at Grupo Santander city, Boadilla del monte, Madrid

55 53 Banesto Cultural Foundation The Banesto Cultural Foundation encourages the creation and development of companies both in Spain (Banespyme) and in developing countries, where it is supporting vital sectors. The idea that a country's prosperity is very much connected to enterprising abilities of its inhabitants has inspired Banesto to strongly support small and medium sized companies through financing, training and awareness-raising activities. The Foundation also carries out other initiatives to promote enterprising activities of third parties or done through Banesto's business areas. One example of this is Sustainable and Supportive Tourism, a social and economic development project for African women. Created with an end-to-end philosophy, this project allows knowledge transfer from Spain to Africa, as well as African women's access to education, advice and financing. Moreover, it also facilitates the use and learning of new technologies. The information can be consulted at Turismo solidario y sostenible Created under the framework of the First Spain-Africa Meeting of Women for a Better World, held in Maputo, Mozambique in March 2006, Turismo Solidario y Sostenible is an initiative promoted by the Banesto Foundation to contribute to the economic and social development of Africa by supporting female entrepreneurs and their local environment in the tourism sector. The aim is to galvanise, develop and foster a network of solidarity and sustainable tourism in Africa. The project provides training and technical assistance for female entrepreneurs, supports the promotion and marketing of new tourism locations, gradually introduces technologies and finances viable projects that can contribute to the creation of sustainable jobs in the region. Banesto employees participate in the programme as volunteers. The network of Turismo Solidario y Sostenible has more than 300 lodgings and 20 tourism routes in 12 African countries: Cape Verde, Cameroon, Ethiopia, Gambia, Guinea-Bissau, Equatorial Guinea, Mali, Morocco, Mozambique, Namibia, Senegal and Tanzania. In 2009, the project was extended to a small group of countries in Latin America. The information can be consulted at

56 54 The environment Santander helps to preserve and improve the environment by measuring the consumption of resources and emissions, controlling risks and encouraging renewable energy Commitment Develop banking activity preserving the environment and promoting initiatives for its protection, with particular attention paid to the consumption of items and emissions and to the social and environmental risks in financing operations. Main activities in 2009 Updating and implementing the Bank s general social and environmental policy and development of sectoral policies for the financing of operations in sensitive sectors (water, energy, defence and forestry). A systematic process for analysing social and environmental risk in project finance operations was implemented in accordance with the Equator Principles and business and risks teams were trained to identify and analyse the social and environmental risks in these operations. The geographic sphere of financing renewable energy activity was broadened. A tool was developed to calculate the Group s environmental footprint and report the consumption of items and emissions of all the Bank. ISO certification of the two main work centres in Brazil, which completed the certification of the Group s most important locations in the country. The VIDA environmental risk analysis tool used with retail banking customers was updated. Santander and the environmental challenge Santander promotes initiatives that are committed to protecting, conserving and recovering the environment. Over and above legal obligations or international conventions, the Bank sees in issues of an environmental nature social and economic problems to be combated or reduced, while also providing opportunities of socioeconomic as well as personal development for customers and employees. The corporate social responsibility area is responsible for coordinating the Bank s environmental management at the global level. The Sustainability Committee, chaired by the CEO, fosters the Bank s strategy and policies in this sphere, which the Board approves. Santander s social and environmental policy, revised in April 2009, establishes two general principles that govern administration of the Bank s corporate responsibility, particularly regarding the financing of projects. The Bank s activities in the sphere of environmental protection revolve around three large lines of work: Reducing the impact of the items consumed and the emissions from the Bank s installations. Social and environmental risk analysis in credit operations. Developing financial solutions committed to protecting the environment, such as renewable energy. These lines of work are now explained in greater detail. Objectives in 2010 Systemise the social and environmental risk analysis process in project finance operations which is incorporated in IT tools (NILO/AQUA platforms). Develop a management plan to cut consumption and emissions in all the Group s installations. Develop an energy efficiency plan for the corporate headquarters in Spain.

57 55 Banco Santander has detailed information on consumption and emissions in 2009 in all its buildings in the world Reducing the impact of consumption and emissions During 2009, Santander calculated the main resources consumed and the emissions in all its buildings throughout the world in order to gauge the Group s environmental footprint. A tool was developed for this which gathers, calculates and consolidates all the data in order to standardise the management and treatment of environmental information so as to have precise, reliable and traceable information. This exercise is the basis for setting common goals for improvement and reduction in the medium and long-term and share best practices among the Group s various countries and dependencies. The Bank contributed specific information on policies and good practices to those employees and new incorporations whose activity has the greatest environmental impact. In 2009, certification of the environmental management system implemented in accordance with the UNE-EN-ISO rule of the two corporate buildings of Grupo Santander in Brazil was obtained, including the new headquarters. As a result, this system has now been implemented in the Group s eight main work centres in this country. Environmental requirements demanded from suppliers whose activities have a significant environmental impact. Grupo Santander s environmental indicators Consumption 2009 Water (cubic metres) 3,699,876 Water (cubic metres)/employee Electricity (million kwh) 1, Electricity (thousand kwh)/employee 7.13 Direct consumption of energy (GJ) 699, Paper (tonnes) 35,313 Paper (tonnes)/employee 0.21 Waste 2009 Paper and cardboard (Kg) 15,030,191 Paper and cardboard (Kg)/employee Containers, plastic and cans (Kg) 6,136,714 Containers, plastic and cans (Kg)/employee Toners (units) 193,468 Toners (units)/employee 1.14 Glass (Kg) 121,701 Glass Kg)/employee 0.72 Electrical and electronic waste (units) 213,480 Emissions of greenhouse gases 2009 Direct and indirect emissions of CO 2 (tonnes) 603,539 Other indirect emissions of CO 2 (tonnes) 22,966 Total emissions of CO 2 gases 626,505 Grupo Santander City, Boadilla del Monte, Madrid

58 56 The environment Social and environmental risk analysis in lending Equator Principles Santander attaches importance to social and environmental aspects in risk analysis and decision-taking processes in its loan operations. The corporate risk units are responsible for assessing the environmental and social risks of the projects presented by the business areas for approval, in accordance with the Group s policies. The objective of adopting the Equator Principles for project finance activities is to identify and avoid the negative social and environmental impacts of the project susceptible to financing and, in the event of being inevitable, reduce, mitigate or offset them adequately. Of particular note in this sphere is the effort made by the Bank in the last few years to implement a systematic global process for analysing social and environmental risks. This process has the following phases: For project finance operations equal to or more than $10 million, an initial questionnaire is filled out, of a generic nature, which is designed to establish the risk of the project in socio-environmental matters (on the basis of categories A, B and C, from greater to lesser risk, respectively) and the degree of the operation s compliance with the Equator Principles. In 2009, 21.5% of the operations financed were located in non-high income OECD countries. For those projects classified within the categories of greatest risk (A and B), a more exhaustive questionnaire is filled out, adapted to each sector of activity. Depending on the category and location of the projects, a social and environmental audit is carried out (by independent external auditors). Specific questionnaires have been developed for those sectors where the Bank is most active, such as energy, infrastructure, water, oil and gas. Moreover, the questionnaires help in monitoring the operation as they stress the key points that must be analysed and controlled. Procedure for analysing social and environmental risk, according to the Equator Principles in Project Finance (More than $10 million) A Any country Non high income OECD countries and Non OECD countries Detailed questionnaire + social and environmental audit Proposals of operations Initial questionnaire B High income OECD Countries Social and environmental audit Resolution C Any country Social and environmental audit

59 57 Grupo Santander rigorously applies the Equator Principles to all project finance loans of more than $10 million All loans and project finance are presented, according to the amount, to the Risk Committee and/or the corresponding committees for their approval. The decision-making process also takes into account social and environmental aspects. The Bank, furthermore, provides training courses for risks teams as well as those in charge of businesses. In 2009, 41 people from corporate teams were trained. A constant dialogue is also maintained with stakeholders, which enables the processes and tools for analysing socioenvironmental risks to be adjusted and updated and so that the questionnaires reflect the most relevant technical aspects. Structure of operations analysed (project finance) by geographic area in 2009 (More than $10 million) Structure of operations analysed (project finance) by sector (More than $10 million) East Europe 1.5% Infrastructure 20.8% Real estate 5.4% Latin America 20.8% Oil and gas 6.9% Retail and industry 1% Public sector 9.2% Europe 66.9% North America 8.5% Oceania 1.5% Middle East 0.8% Renewable energy 39.2% TMT 0.8% Transport 2.3% Water and waste 11.5% Energy 3.1% Structure of operations financed (project finance) in 2009 by geographic area and categorisation of the Equator Principles (More than $10 million) Area N. of operations and category Total Equator Principles A B C Europe North America Latin America Oceania Total number of projects Total value of projects* 0 7,963 1,488 9,451 (*) Million euros

60 58 The environment The Bank is one of the international leaders in financing renewable energy projects Renewable energy Banco Santander contributes to the global goal of combatting climate warming with its financial solutions and from a position of international leadership in renewable energy matters at the international level. Agreements were signed in 2009 to finance wind-power parks, solar photovoltaic energy plants, solar thermal power stations and mini-hydraulic plants in Brazil, Spain, the US, Italy, Mexico and UK. Opportunities are also being analysed to finance other types of renewable energy such as, for example, biocombustible plants. Santander regards its participation in the renewable energy sector as strategic. This participation mainly consists of promoting and financing renewable energy projects through various financial products: Project Finance: Santander finances the construction and operation of renewable energy projects through loans whose repayment depends solely on the production of electricity and the corresponding public incentives. During 2009, the Bank participated via this product in the financing of wind-power parks, solar photovoltaic plants, solar thermal stations, hydraulic and mini-hydraulic plants for a total installed power of 7,846 MW. Seed capital investment and venture capital: The Bank sells its stake once the plant is built. During 2009, Santander invested as a shareholder in projects which when constructed will have a total installed capacity of more than 1,800 MW, mainly in Brazil, Spain and Italy. Solar photovoltaic leasing: The financing is carried out via leasing and the Bank cooperates also in drawing up and executing the project, resolving the administrative procedures and maintaining the installation during the life of the operation. Carbon Fund: Santander participates in the Carbon Fund for Spanish Companies (FC2E). This fund buys carbon credits generated by renewable energy projects and energy efficiency in developing countries, putting them at the disposal of Spanish industry in order to facilitate compliance with their obligations to cut emissions, in accordance with the National Plan of Assignment. Santander, through its activities in the Carbon Fund, contributes to the transfer of technology from developed to emerging countries, financing renewable energy and compliance with reducing the emissions of European industries, in accordance with the National Plan of Assignment of each country. At the end of 2009, the Bank continued to have a portfolio of around 6 million equivalent tonnes of CO2, through Emission Reduction Certificates (ERC) and Units of Emission Reduction (UER). In 2009, the Fund included in its portfolio a new biomass project in China and another for treating the gases of a land fill in Argentina. Monetising carbon credits: One of Santander s activities in the sphere of renewable energy is the monetisation of ERCs. The Bank buys in advance the rights that renewable energy projects will generate, so that the project s promoter receives in advance funds that help to finance the investment, For example, Santander financed the project to burn and capture the methane gas produced by a land fill in Brazil, which will produce 1.5 million carbon credits over seven years. In this line, the Bank approved on June 1, 2009 the SCF50, a EUR 50 million line, to invest in CERs in the primary market of countries such as Brazil, Mexico and Chile. The first project is a sugar company in Brazil, which generates energy from the sugar cane pulp of its two plants.

61 59 Management of social and environmental risk in Brazil, pioneer in the world Santander Brazil began in March 2009 to fine tune its socioenvironmental risk practices, a pioneering scheme in the country s financial market. As a result of the integration of Santander and Real, this practice has evolved toward a wider focus, applying aspects of sustainability to all the Bank s corporate and private banking clients in Brazil. Consideration of the socio-environmental variable for the acceptance of clients is a key element for progressing toward the creation of the Bank s business model in its relations with clients. The Bank analyses the social and environmental aspects of clients with a credit limit equal to or more than BRL 1 million. In 2009, 2,162 companies and project finance operations were analysed. This new scope involves an increase in the volume handled of licences, authorisations, fines, infringements, information on contaminated land, certificates and systems of environmental management. This assessment of the risk in granting loans takes into account 14 sectors of large environmental impact including agriculture and fisheries, mining operations, civil architecture and metallurgy. Furthermore, the objective of this initiative is to also encourage other companies to adopt sustainable attitudes. Training on this practice was given in the fourth quarter of 2009 to 170 employees in the commercial and risks areas and in project finance. Presence in international indices and initiatives Santander forms part of the main sustainable investment indices (DJSI and FTSE4Good) which analyse and assess companies corporate social responsibility actions. In the latest revision of the DJSI, Santander achieved a considerable increase in the environmental dimension which put it well above the financial sector s average. The Bank, moreover, is present in or adheres to international initiatives in the sphere of the environment, such as UNEP FI, the UN environment initiative, and the Carbon Disclosure Project (CDP) to support the fight against climate change. In the UK, the Bank is part of the Forge Group of leading financial institutions which promotes the strategic integration of climate change in its operations. Banco Santander Foundation and the environment The foundation pays particular attention to sustaining and conserving Spain s natural spaces through two specific ways: disseminating ideas on sustainable development and measures to recover outstanding natural spaces. In the first sphere, the foundation organised a forum in 2009 on economy and sustainability which looked at the triple crisis of water, food and energy and financed a report on how the environment is covered in TV news programmes. It also published three new issues of Cuadernos de Sostenibilidad y Patrimonio Natural and two new Manuals of Sustainable Development, A new project was begun under the programme to recover natural spaces: environmental improvement of the surroundings of the Talaván lake. The projects begun several years ago were also continued in this sphere.

62 60 Process of preparing the Report The Sustainability Report strives to faithfully reflect Grupo Santander s business model. Its objective is to set out the Bank s main actvities in the sphere of corporate social responsibility and in relation to each of its stakeholders. It achieves this by using the internationally recognised standards of the Global Reporting Initiative (GRI) and the principles of inclusiveness, relevance and capacity of response proposed by he AA1000 AccountAbility Principles Standard. As regards compliance with the GRI standards, in 2009 we included for the first time the necessary information for responding to the indicators of the Financial Services Sector Supplement and the perimeter of environmental information was significantly increased, thereby responding better to the relevant aspects highlighted by stakeholders. Participation of stakeholders and relevant issues In the section on Dialogue with stakeholders, reference is made to various mechanisms and communication channels which enable the Bank to maintain an active dialogue with its stakeholders. Furthermore, Grupo Santander, in its management of sustainability, has fomented the participation of the Group s different areas such as the corporate unit of customers and quality, the shareholders area, the area of investor relations, human resources, risks, the area of integral management of spending, Santander Universities, Asset & Capital Structuring and the Bank s commercial units in each country. In addition to the usual mechanisms, Santander has conducted the following activities as part of the process of preparing the Report: Consultation process. As in previous years, Santander launched a specific consultation process with representatives of organisations of recognised prestige in the countries where the Bank has a significant presence, in order to identify trends in priority aspects in sustainability in each of these countries. Documentary analysis of the most relevant aspects. Santander conducted a comparative exercise of the issues treated in the corporate responsibility reports of the main financial sector leaders in sustainability. At the same time, with the help of the consultancy KPMG, a search was made of the press to identify what were the most important issues, in particular those that could have caused reputational crises for Santander and the financial sector. Meanwhile, the Bank took into account the issues that socially responsible investors considered to be the most important when assessing the performance of banks in sustainability matters. Lastly, the most relevant issues for the organisations certifying social responsibility activities and noteworthy opinion makers were identified, both in the financial sector as well as in the sphere of society and the environment. The main conclusions, which refer to both the most relevant issues identified in this process as well as the way in which the Bank responded to them, were the following: Context of economic crisis: The crisis context continues to be, for stakeholders, an important determinant which influences all the issues identified in this process. In this context, Santander managed to situate itself as a reference international financial institution in profitability, solvency and efficiency, thanks to a business model based on prudence in risks, a strong balance sheet, geographic diversification and Corporate Governance focused on the creation of sustainable value. Ethics and integrity: It is particularly important in a crisis environment to recover the confidence of customers and of society in the financial sector. Ethics and sustainability are corporate values of Banco Santander, which, moreover, has various policies and internal rules including the general code of conduct, which was strengthened during Furthermore, within the corporate framework of the compliance function, a project was launched to strengthen the policies for marketing products and services and monitoring of them. Transparency of information: Stakeholders believe it is important for the Bank to continue developing and demonstrating that its corporate responsibility model is an integral part of the company s strategy. Transparent information in the Report is a key factor for generating and maintaining stakeholders confidence. The Report s credibility depends on it being perceived as an objective and balanced exercise of rendering accounts in the sphere of sustainability, reporting both the positive and negative aspects of Santander s performance in social, environmental, economic and ethical matters. Santander wanted to progress in this matter by conducting a self-assessment of its performance in corporate social responsibility matters, complementing the 2009 balance of meeting the objectives set in the previous year. Social performance: The most significant issues were labour practices, fomenting and improving the dialogue with stakeholders, the commitment of the institution at the level of local communities, education and financial inclusion. Labour practices: gender equality and diversity were identified as aspects to be treated with special interest. In relation to this, Santander is developing strategies and

63 61 programmes to foster the access of women to all levels of the organisation and diversity is perceived by employees as a corporate value. The need to report on the number of permanent contracts, as well as the number of people adhered to a collective bargaining agreement, are also notable issues. The section on Employees fulfils the information on these features. Dialogue with stakeholders: This assumes particular importance in developing countries and must be shaped in the organisation s activities and operations. Santander has understood it as so and consequently, as set out in this Report and in local website pages, maintains a close and continuous dialogue with its stakeholders in all of the countries where it is present. Commitment to local communities: For a global institution such as Santander, it is vital to maintain proximity to customers at the local level, fundamentally in countries or zones where there have been new acquisitions. Santander is an international bank with 13,660 branches, enabling it to be very close to its 92 million customers and to the local community, as detailed in the sections of the Report on these stakeholders. Education and financial inclusion: During the consultations, stakeholders stated that banks must foment, in developing countries, the access of the majority of the population to financial services, promoting products and services designed for the least favoured collectives of society. It is also important to clearly and transparently inform about products to avoid them being contracted unknowingly. These stakeholders believe an effort must be made to ensure users know their rights and the product they are going to acquire. It is thus important that employees are adequately trained. Santander, realising the importance of these issues, has strengthened the training of its network of managers in order to foster the provision of adequate information for customers. Meanwhile, in this same sphere, local initiatives were developed which are described in the section on Society in this Report. Human rights: the material issues identified made reference to management of the supply chain and project finance. Management of the supply chain. Protection of human rights is, without a doubt, one of the most relevant issues in management of the supply chain. Stakeholders recommend that banks require their suppliers to commit themselves to adhere to universal guidelines in human rights matters and their actions be monitored. A noteworthy aspect is the outsourcing of services in developing countries, where there is a greater risk that suppliers or contractors work in conditions that violate human rights. Santander began several years ago to introduce into its contracts respect for the 10 principles of the UN Global Compact. Conscious that this commitment is not enough to achieve a responsible supply chain, the Group is developing many tools that take advantage of the best practices of the various countries, as described in the section on Suppliers. Project finance: The most relevant aspect is control in investments in countries or regions sensitive in matters of human rights. Santander made notable progress in 2009 in adopting the Equator Principles, implementing the necessary processes for analysing projects of more than $10 million and including in the approval process assessment of the social and environmental risks of the operations. Climate change: Lastly, in the environmental sphere, the issues related to climate change are those that have the greatest relevance. For the sector s companies the most relevant issue in the fight against climate change is the establishment of objectives that help to achieve a sustainable business model. Santander is contributing to the global objective of the fight against climate change through specific financial solutions, noteworthy among which is the financing of renewable energy projects. Internally, in 2009 a global tool was implemented to gauge the Group s environmental footprint and be able to establish objectives to improve environmental management and reduction of the impacts derived from consumption of resources. Significant changes in the Group s perimeter The main changes in the Group s perimeter in 2009 were the divestment of the business in Venezuela and the acquisition of various companies as described in Note 3 of the Consolidated Annual Financial Statements, among which was Sovereign Bancorp. These changes should be taken into account when comparing the information of different periods. In those cases where the comparative information of previous years has been changed, and this change is significant, this is made clear in the Report.

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