CALCULATION OF REGISTRATION FEE

Transcription

1 CALCULATION OF REGISTRATION FEE Maimum Aggregate Amount of Registration Title of Each Class of Securities Offered Offering Price Fee (1) 5.179% Fied Rate Subordinated Debt Securities due 2025 $1,500,000,000 $151,050 Guarantee of 5.179% Fied Rate Subordinated Debt Securities due 2025 (2) Total $1,500,000,000 $151,050 (1) Calculated in accordance with Rule 457(r) (2) Pursuant to Rule 475(n), no separate fee is payable with respect to the guarantee Filed pursuant to Rule 424(b)(5) Registration Nos PROSPECTUS SUPPLEMENT (to prospectus dated October 13, 2015) $1,500,000,000 Santander Issuances, S.A. Unipersonal fully and unconditionally guaranteed by Banco Santander, S.A. Series 26 Subordinated Debt Securities Santander Issuances, S.A. Unipersonal due November 2025 The 5.179% Fied Rate Subordinated Debt Securities due 2025 (the Subordinated Notes ) will bear interest at a rate of 5.179% per year. From and including the date of issuance, interest will be payable semi-annually in arrears on the Subordinated Notes on May 19 and November 19 of each year, beginning on May 19, The Subordinated Notes will be due on November 19, The Subordinated Notes will be issued in minimum denominations of $200,000 and integral multiples thereof. The Subordinated Notes will constitute direct, unconditional, subordinated and unsecured obligations of Santander Issuances, S.A. Unipersonal ( Santander Issuances ). Banco Santander, S.A. ( Banco Santander ), as guarantor, fully, unconditionally and irrevocably guarantees on a subordinated basis the due and punctual payment in full to the holders of the Subordinated Notes of all amounts due and owing under the Subordinated Debt Securities Indenture (as defined below) and Banco Santander s guarantee of the Subordinated Notes will constitute a direct, unconditional, subordinated and unsecured obligation of Banco Santander. By its acquisition of the Subordinated Notes, each holder (which, for the purposes of this clause, includes each holder of a beneficial interest in the Subordinated Notes) acknowledges, accepts, consents to and agrees to be bound by the terms of the Subordinated Notes related to the eercise of the Spanish Bail-in Power (as defined herein) set forth under Description of the Subordinated Notes and the Guarantee Agreement and Acknowledgement with Respect to the Eercise of the Spanish Bail-in Power in the accompanying prospectus. See Notice to Investors on the inside cover page of this prospectus supplement for further information. The Subordinated Notes are not deposits or savings accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency of the Kingdom of Spain, the United States or any other jurisdiction. We may redeem the Subordinated Notes, in whole but not in part, at any time at 100% of their principal amount plus accrued and unpaid interest (if any) (i) upon the occurrence of certain ta events; or (ii) upon occurrence of certain regulatory events. We intend to apply to list the Subordinated Notes on the New York Stock Echange in accordance with its rules. Investing in the Subordinated Notes involves risks. See Risk Factors beginning on page 3 of the accompanying prospectus, in our annual report on Form 20-F for the fiscal year ended December 31, 2014 and as incorporated by reference herein. Neither the Securities and Echange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense. Underwriting Discounts and Proceeds to us Price to Public Commissions (before epenses) Per Subordinated Note % 0.500% % Total $ 1,500,000,000 $ 7,500,000 $ 1,492,500,000 The initial public offering price set forth above does not include accrued interest, if any. Interest on the Subordinated Notes will accrue from the epected date of issuance, which is November 19, See Underwriting (Conflicts of Interest).

2 We may use this prospectus supplement and the accompanying prospectus in the initial sale of the Subordinated Notes. We epect that the Subordinated Notes will be ready for delivery through the book-entry facilities of The Depository Trust Company ( DTC ) and its direct and indirect participants including Clearstream Banking, société anonyme ( Clearstream Luembourg ) and Euroclear Bank S.A./N.V. ( Euroclear ) on or about November 19, 2015, which will be the fifth New York business day following the pricing of the Subordinated Notes (such settlement period being referred to as T+5 ). Beneficial interests in the Subordinated Notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. Joint Bookrunners BofA Merrill Lynch Credit Agricole CIB Morgan Stanley Santander Prospectus Supplement dated November 12, 2015

3 TABLE OF CONTENTS Prospectus Supplement Page Notice to Investors S-i About this Prospectus Supplement S-iii Incorporation of Information by Reference S-iv Forward-Looking Statements S-iv Summary S-1 Use of Proceeds S-10 Capitalization of the Group S-11 Ratio of Earnings to Fied Charges S-13 Description of the Subordinated Notes and the Guarantee S-14 Underwriting (Conflicts of Interest) S-17 Legal Opinions S-23 Eperts S-23 Prospectus About this Prospectus 1 Use of Proceeds 2 Banco Santander, S.A. 2 Santander US Debt, S.A. Unipersonal 2 Santander Issuances, S.A. Unipersonal 2 Risk Factors 3 Description of Debt Securities and Guarantees 34 Description of Contingent Convertible Capital Securities 56 Description of Certain Provisions Relating to Debt Securities and Contingent Convertible Capital Securities 99 Description of Ordinary Shares 105 Description of American Depositary Shares 105 Taation 105 Benefit Plan Investor Considerations 129 Plan of Distribution (Conflicts of Interest) 130 Legal Opinions 131 Eperts 131 Enforcement of Civil Liabilities 131 Where You Can Find More Information 132 Incorporation of Documents by Reference 132 Cautionary Statement on Forward-Looking Statements 133 NOTICE TO INVESTORS Agreements and Acknowledgments of Investors, Including Holders and Beneficial Owners Notwithstanding any other term of the Subordinated Notes or any other agreements, arrangements, or understandings between Santander Issuances and any holder of the Subordinated Notes, by its acquisition of the Subordinated Notes, each holder (which, for the purposes of this clause, includes each holder of a beneficial interest in the Subordinated Notes) acknowledges, accepts, consents to and agrees to be bound by: (a) the effect of the eercise of the Spanish Bail-in Power by the relevant resolution authority, which eercise may include and result in any of the following, or some combination thereof: (i) the reduction of all, or a portion, of the Amounts Due on the Subordinated Notes; S-i

4 (ii) the conversion of all, or a portion, of the Amounts Due on the Subordinated Notes into ordinary shares, other securities or other obligations of Santander Issuances, Banco Santander or another person (and the issue to or conferral on the holder of the Subordinated Notes of such shares, securities or obligations), including by means of an amendment, modification or variation of the terms of the Subordinated Notes; (iii) the cancellation of the Subordinated Notes; (iv) the amendment or alteration of the maturity of the Subordinated Notes or amendment of the amount of interest payable on the Subordinated Notes, or the date on which the interest becomes payable, including by suspending payment for a temporary period; and (b) the variation of the terms of the Subordinated Notes, if necessary, to give effect to the eercise of the Spanish Bail-in Power by the relevant resolution authority. For these purposes, the Amounts Due are the principal amount of, premium, if any, together with any accrued but unpaid interest, and Additional Amounts, if any, due on the Subordinated Notes. References to such amounts will include amounts that have become due and payable, but which have not been paid, prior to the eercise of the Spanish Bail-in Power by the relevant resolution authority. For these purposes, the Spanish Bail-in Power is any write-down, conversion, transfer, modification, or suspension power eisting from time to time under, and eercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, as amended or superseded from time to time, ( BRRD ), including but not limited to Law 11/2015, of June 18, for the recovery and resolution of credit entities and investment firms, as amended from time to time ( Law 11/2015 ), and up to 31 December 2015 (inclusive), Law 9/2012, of 14 November, on restructuring and resolution of credit institutions, (ii) the Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from time to time (the SRM Regulation ) and (iii) the instruments, rules and standards created thereunder, pursuant to which any obligation of a regulated entity (as defined below) (or other affiliate of such regulated entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other obligations of such regulated entity or any other person (or suspended for a temporary period). A reference to a regulated entity is to any entity to which Law 11/2015 applies as provided under article 1.2 of Law 11/2015, as amended from time to time, which includes, certain credit institutions, investment firms, and certain of their parent or holding companies. A reference to the relevant resolution authority is to the Spanish Fund for the Orderly Restructuring of Banks (the FROB ), the European Single Resolution Mechanism, as the case may be, according to Law 11/2015, and any other entity with the authority to eercise the Spanish Bail-in Power from time to time. By its acquisition of the Subordinated Notes, each holder of the Subordinated Notes, (which, for the purposes of this clause, includes each holder of a beneficial interest in the Subordinated Notes), to the etent permitted by the Trust Indenture Act of 1939 ( Trust Indenture Act ), will waive any and all claims, in law and/or in equity, against the Trustee for, agree not to initiate a suit against the Trustee in respect of, and agree that the Trustee will not be liable for, any action that the Trustee takes, or abstains from taking, in either case in accordance with the eercise of the Spanish Bail-in Power by the relevant resolution authority with respect to the Subordinated Notes. By purchasing the Subordinated Notes, each holder (including each beneficial owner) of the Subordinated Notes shall be deemed to have authorized, directed and requested The Depository Trust Company ( DTC ) and any direct participant in DTC or other intermediary through which it holds the Subordinated Notes to take any and all necessary action, if required, to implement the eercise of the Spanish S-ii

5 Bail-in Power with respect to the Subordinated Notes as it may be imposed, without any further action or direction on the part of such holder. You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus (including any free writing prospectus issued or authorized by us). Neither we nor Banco Santander nor the underwriters have authorized anyone to provide you with different information. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the Subordinated Notes in some jurisdictions may be restricted by law. If you possess this prospectus supplement and the accompanying prospectus, you should find out about and observe these restrictions. This prospectus supplement and the accompanying prospectus are not an offer to sell the Subordinated Notes and neither we nor Banco Santander nor the underwriters are soliciting an offer to buy the Subordinated Notes in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or from any person to whom it is not permitted to make such offer or sale. We refer you to the information under Underwriting (Conflicts of Interest) in this prospectus supplement. You should assume that the information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates. In this prospectus supplement, we use the following terms: ABOUT THIS PROSPECTUS SUPPLEMENT we, our and us or Santander Issuances means Santander Issuances, S.A. Unipersonal; Banco Santander means Banco Santander, S.A. and the term Group means Banco Santander, S.A. and its consolidated subsidiaries; dollars and $ refer to the currency of the United States; euro and refer to the currency of the member states of the European Union ( EU ) that have adopted the single currency in accordance with the treaty establishing the European Community, as amended; and SEC refers to the Securities and Echange Commission. This document is not a prospectus for the purposes of the European Union s Directive 2003/71/EC (as amended, including by Directive 2010/73/EU) as implemented in member states of the European Economic Area (the Prospectus Directive ). This document has been prepared on the basis that all offers of the Subordinated Notes offered hereby made to persons in the European Economic Area will be made pursuant to an eemption under the Prospectus Directive from the requirement to produce a prospectus in connection with offers of such Subordinated Notes. The communication of this document and any other document or materials relating to the issue of the Subordinated Notes offered hereby is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the United Kingdom s Financial Services and Markets Act 2000, as amended ( FSMA ). Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Financial Promotion Order )), or within Article 49(2)(a) to (d) of the Financial Promotion Order, or to any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order (all such persons together being referred to as relevant persons ). In the United Kingdom, the Subordinated Notes offered hereby are only available to, and any investment or investment activity to S-iii

6 which this document relates will be engaged in only with, relevant persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents. INCORPORATION OF INFORMATION BY REFERENCE This prospectus supplement is part of a registration statement on Form F-3 (File No ) we have filed with the SEC under the Securities Act. This prospectus supplement omits some information contained in the registration statement in accordance with SEC rules and regulations. You should review the information in and ehibits to the registration statement for further information on us and the securities we are offering. Statements in this prospectus supplement concerning any document we filed or will file as an ehibit to the registration statement or that we otherwise filed with the SEC are not intended to be comprehensive and are qualified in their entirety by reference to these filings. You should review the complete document to evaluate these statements. The SEC allows us to incorporate by reference the information that we file with the SEC. This permits us to disclose important information to you by referring to these filed documents. Any information referred to in this way is considered part of this prospectus supplement and accompanying prospectus, and any information that we file with the SEC after the date of this prospectus supplement will automatically be deemed to update and supersede this information. We incorporate by reference the Group s 2014 Annual Report on Form 20-F for the year ended December 31, 2014 filed with the SEC on April 29, 2015; the Group s Report on Form 6-K including the Group s results for the interim period ended June 30, 2015 filed with the SEC on September 30, 2015; the Group s Reports on Form 6-K relating to recast segment information for the year ended December 31, 2014 and the interim period ended June 30, 2015 filed with the SEC on November 5, 2015; the Group s Report on Form 6-K including the Group s interim condensed consolidated financial statements for the interim period ended September 30, 2015 filed with the SEC on November 5, 2015; and the Group s Report on Form 6-K including the Group s results for the interim period ended September 30, 2015 filed with the SEC on November 12, We also incorporate by reference all subsequent annual reports of the Group filed on Form 20-F and any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Echange Act of 1934, as amended, and certain reports on Form 6-K, if they state that they are incorporated by reference into the registration statement of which this prospectus supplement forms a part, that we furnish to the SEC after the date of this prospectus supplement and until we or any underwriters sell all of the securities. Upon written or oral request, we will provide free of charge a copy of any or all of the documents that we incorporate by reference into this prospectus supplement, other than ehibits which are not specifically incorporated by reference into this prospectus supplement. To obtain copies you should contact us at Investor Relations, Ciudad Grupo Santander, Avenida de Cantabria s/n, Boadilla del Monte, Madrid, Spain (telephone: (011) ). FORWARD-LOOKING STATEMENTS From time to time, we may make statements, both written and oral, regarding assumptions, projections, epectations, intentions or beliefs about future events. These statements constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of We caution that these statements may and often do vary materially from actual results. Accordingly, we cannot assure you that actual results will not differ materially from those epressed or implied by the forward-looking statements. You should read the sections entitled Risk Factors in the accompanying prospectus and Forward-Looking Statements in our Annual Report on Form 20-F for the year ended December 31, 2014, which is incorporated by reference herein. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, forward-looking events discussed in this prospectus supplement or any information incorporated by reference, might not occur. S-iv

7 SUMMARY The following is a summary of this prospectus supplement and should be read as an introduction to, and in conjunction with, the remainder of this prospectus supplement, the accompanying prospectus and any documents incorporated by reference therein. You should base your investment decision on a consideration of this prospectus supplement, the accompanying prospectus and any documents incorporated by reference therein, as a whole. Words and epressions used in this summary and not defined herein shall have the meanings ascribed to them in Description of the Subordinated Notes and the Guarantee in this prospectus supplement and in Description of Debt Securities and Guarantees in the accompanying prospectus. The Issuer Santander Issuances, a wholly-owned subsidiary of Banco Santander, was incorporated by a public deed eecuted on February 27, 2004, and registered in the Mercantile Registry of Madrid on March 2, 2004 as a company with unlimited duration and with limited liability under the laws of Spain (sociedad anónima). Santander Issuances is a financing vehicle for the Group and has no subsidiary companies. Other than the proceeds of any issuance, which will be deposited with Banco Santander, Santander Issuances has no material assets. With the eception of Spanish reserve requirements which must be met prior to the payment of dividends and provided that dividends may only be distributed out of income for the previous year or out of unrestricted reserves and provided further that the net worth of Santander Issuances must not, as a result of the distribution, fall below its paid-in share capital (capital social), there are no restrictions on Banco Santander s ability to obtain funds from the issuer through dividends, loans or otherwise. Spanish Law 10/2014 requires that the net proceeds of the offering of the debt securities of any series, including the Subordinated Notes, be invested with Banco Santander. The principal office of Santander Issuances is located in Banco Santander s principal eecutive offices at Ciudad Grupo Santander, Avenida de Cantabria s/n, Boadilla del Monte, Madrid, Spain, and its telephone number is (011) The Guarantor Banco Santander, S.A. is the parent bank of the Group. The Group operates principally in Spain, the United Kingdom, other European countries, Brazil and other Latin American countries and the United States, offering a wide range of financial products. In Latin America, the Group has majority shareholdings in banks in Argentina, Brazil, Chile, Meico, Peru and Uruguay. Banco Santander, S.A. was established on March 21, 1857 and incorporated in its present form by a public deed eecuted in Santander, Spain, on January 14, Banco Santander, S.A. is incorporated under, and governed by, the laws of the Kingdom of Spain as a company with unlimited duration and with limited liability (sociedad anónima). Banco Santander, S.A. conducts business under the commercial name Santander. The Group s principal corporate offices are located in Ciudad Grupo Santander, Avenida de Cantabria s/n, Boadilla del Monte, Madrid, Spain, and its telephone number is (011) The Offering Issuer Guarantor Santander Issuances Banco Santander S-1

8 Series 26 Subordinated Debt Securities Santander Issuances, S.A. Unipersonal due November 2025 $1,500,000,000 aggregate principal amount of 5.179% Fied Rate Subordinated Debt Securities due Issue Date November 19, 2015 Maturity Date Interest Rate Interest Payment Dates Regular Record Dates Business Day Convention We will pay the Subordinated Notes at 100% of their principal amount plus accrued interest on November 19, The Subordinated Notes will bear interest at a rate of 5.179% per annum. Each May 19 and November 19, commencing on May 19, 2016, up to and including the Maturity Date or any date of earlier redemption. Interest will be paid to holders of record of the Subordinated Notes in respect of the principal amount thereof outstanding 15 calendar days preceding the relevant Interest Payment Date, whether or not a Business Day (as defined herein). Following, unadjusted Day Count Basis 30/360 Ranking The Subordinated Notes will constitute direct, unconditional, subordinated and unsecured obligations of Santander Issuances and, upon the insolvency of Santander Issuances (and unless they qualify as more subordinated claims pursuant to the Spanish Insolvency Law or equivalent legal provisions which replace it in the future, and subject to any applicable legal and statutory eceptions) rank, under Article 92.2 of the Spanish Insolvency Law (or equivalent legal provisions which replace, substitute or amend it in the future) pari passu without preference or priority among themselves and: (i) senior to (1) those contractually subordinated obligations of principal related to instruments qualifying as Tier 1 Capital of Banco Santander, (2) those subordinated obligations which qualify as more subordinated claims pursuant to Articles 92.3 to 92.7 of the Spanish Insolvency Law or equivalent legal provisions which replace them in the future, and (3) any other subordinated obligations which by law or their terms, and to the etent permitted by Spanish law, rank junior to the Subordinated Notes; (ii) pari passu with all of Santander Issuances other contractually subordinated obligations of principal related to instruments qualifying as Tier 2 Capital of Banco Santander; and (iii) junior to any non-subordinated obligations of Santander Issuances, any Senior Subordinated Obligations and any claim on Santander Issuances that becomes subordinated as a consequence of article 92.1º of the Spanish Insolvency Law. Senior Subordinated Obligations means any subordinated obligations of Santander Issuances which by law and/or their terms, and to the etent permitted by Spanish law (including contractually subordinated obligations of principal related to instruments not qualifying as Tier 2 Capital or Tier 1 S-2

9 Agreement and Acknowledgement with Respect to the Eercise of Spanish Bail-in Power Capital of Banco Santander), rank senior to the Subordinated Notes. Notwithstanding any other term of the Subordinated Notes or any other agreements, arrangements, or understandings between Santander Issuances and any holder of the Subordinated Notes, by its acquisition of the Subordinated Notes, each holder (which, for the purposes of this clause, includes each holder of a beneficial interest in the Subordinated Notes) acknowledges, accepts, consents to and agrees to be bound by: (a) the effect of the eercise of the Spanish Bail-in Power by the relevant resolution authority, which eercise may include and result in any of the following, or some combination thereof: (i) the reduction of all, or a portion, of the Amounts Due on the Subordinated Notes; (ii) the conversion of all, or a portion, of the Amounts Due on the Subordinated Notes into ordinary shares, other securities or other obligations of Santander Issuances, Banco Santander or another person (and the issue to or conferral on the holder of the Subordinated Notes of such shares, securities or obligations), including by means of an amendment, modification or variation of the terms of the Subordinated Notes; (iii) the cancellation of the Subordinated Notes; (iv) the amendment or alteration of the maturity of the Subordinated Notes or amendment of the amount of interest payable on the Subordinated Notes, or the date on which the interest becomes payable, including by suspending payment for a temporary period; and (b) the variation of the terms of the Subordinated Notes, if necessary, to give effect to the eercise of the Spanish Bail-in Power by the relevant resolution authority. For these purposes, the Amounts Due are the principal amount of, premium, if any, together with any accrued but unpaid interest, and Additional Amounts, if any, due on the Subordinated Notes. References to such amounts will include amounts that have become due and payable, but which have not been paid, prior to the eercise of the Spanish Bail-in Power by the relevant resolution authority. For these purposes, the Spanish Bail-in Power is any write-down, conversion, transfer, modification, or suspension power eisting from time to time under, and eercised in compliance with, any laws, regulations, rules or requirements in effect in the Kingdom of Spain, relating to (i) the transposition of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, as amended or superseded from time to time, ( BRRD ), including but not limited to Law 11/2015, of June 18, for the recovery and resolution of credit entities and investment firms, as amended from time to time ( Law 11/2015 ), and up to 31 December 2015 (inclusive), Law 9/2012, of 14 S-3

10 November, on restructuring and resolution of credit institutions, (ii) the Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014, establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of the Single Resolution Mechanism and the Single Resolution Fund and amending Regulation (EU) No. 1093/2010, as amended or superseded from time to time (the SRM Regulation ) and (iii) the instruments, rules and standards created thereunder, pursuant to which any obligation of a regulated entity (as defined below) (or other affiliate of such regulated entity) can be reduced, cancelled, modified, or converted into shares, other securities, or other obligations of such regulated entity or any other person (or suspended for a temporary period). See Description of Debt Securities and Guarantees Agreement and Acknowledgement with Respect to the Eercise of the Spanish Bail-in Power in the accompanying prospectus. Repayment of Principal and Payment of No repayment or payment of Amounts Due on the Subordinated Notes will be or become due and Interest After Eercise of Spanish Bail-in payable or be paid after the eercise of any Spanish Bail-in Power by the relevant resolution authority Power if and to the etent such amounts have been reduced, converted, cancelled, amended or altered as a result of such eercise. Subordinated Guarantee Additional Issuances Banco Santander, as guarantor, will fully, unconditionally and irrevocably guarantee on a subordinated basis the due and punctual payment in full to the holders of the Subordinated Notes all amounts due and owing under the Subordinated Debt Securities Indenture, including as may be modified pursuant to the eercise of the Spanish Bail-in Power under the Subordinated Debt Securities Indenture, and payment in full of such amounts to the Trustee. The subordinated guarantee is set forth in, and forms part of, the Subordinated Debt Securities Indenture under which the Subordinated Notes will be issued by Santander Issuances and will be affied to the Subordinated Notes. Banco Santander s guarantee of the Subordinated Notes will constitute a direct, unconditional, subordinated and unsecured obligation of Banco Santander. See Description of Debt Securities and Guarantees Guarantee for Debt Securities Issued by Santander US Debt and Santander Issuances Subordinated Debt Securities in the accompanying prospectus. Santander Issuances may, without the consent of the holders of the Subordinated Notes, issue additional subordinated notes of the same series having the same ranking and same interest rate, maturity date, redemption terms and other terms as the Subordinated Notes described in this prospectus supplement ecept for the price to the public, original interest accrual date, issue date and first interest payment date, provided however that such additional subordinated notes will not have the same CUSIP, ISIN or other identifying number as the outstanding Subordinated Notes unless the additional subordinated notes are fungible with the outstanding Subordinated Notes for U.S. federal income ta purposes. Any such additional subordinated notes, together with the Subordinated Notes offered by this prospectus supplement, will constitute a single series of securities under the Subordinated Debt Securities Indenture. There is no limitation on S-4

11 the amount of subordinated notes that Santander Issuances may issue under the Subordinated Debt Securities Indenture. Ta Redemption If (i) as a result of any change in the laws or regulations of Spain or of any political subdivision thereof or any authority or agency therein or thereof having power to ta or in the interpretation or administration of any such laws or regulations which becomes effective on or after the date of issue of the Subordinated Notes, Banco Santander or Santander Issuances shall determine that (a) Santander Issuances or Banco Santander, as the case may be, would be required to pay additional amounts as described in Description of Debt Securities and Guarantees Additional Amounts in the accompanying prospectus or (b) Santander Issuances would not be entitled to claim a deduction in computing ta liabilities in Spain in respect of any interest to be paid on the net Interest Payment Date on the Subordinated Notes or the value of such deduction to Santander Issuances would be materially reduced or (c) the applicable ta treatment of the Subordinated Notes changes and (ii) such circumstances are evidenced by the delivery by Santander Issuances or Banco Santander, as the case may be, to the Trustee of a certificate signed by two directors of Santander Issuances or Banco Santander, as the case may be, stating that such circumstances prevail and describing the facts leading thereto, an opinion of independent legal advisers of recognized standing to the effect that such circumstances prevail and a copy of the Regulator s consent to the redemption, Santander Issuances may, at its option and having given no less than 30 nor more than 60 days notice to the holders of the Subordinated Notes in accordance with the terms described under Description of Debt Securities and Guarantees Notices in the accompanying prospectus (which notice shall be irrevocable), redeem in whole, but not in part, the outstanding Subordinated Notes, in accordance with the requirements of Applicable Banking Regulations in force at the relevant time, at their early ta redemption amount, which shall be their principal amount, together with accrued interest (if any) thereon; provided, however, that (i) in the case of (a) above, no such notice of redemption may be given earlier than 90 days prior to the earliest date on which Santander Issuances or Banco Santander, as the case may be, would be obliged to pay such Additional Amounts were a payment in respect of the Subordinated Notes then due and (ii) redemption for taation reasons may only take place in accordance with Applicable Banking Regulations in force at the relevant time and is subject to the prior consent of the Regulator. See Description of Debt Securities and Guarantees Redemption and Repurchase Early Redemption for Taation Reasons in the accompanying prospectus. Regulatory Redemption If (i) there is a change in Spanish law, Applicable Banking Regulations or any change in the application or official interpretation thereof that Banco Santander or Santander Issuances determines results or is likely to result in the entire outstanding aggregate principal amount of the Subordinated Notes ceasing to be included in, or counting towards, Banco Santander s and/or the Group s Tier 2 Capital and (ii) such circumstances are evidenced by the delivery by Santander Issuances or Banco Santander, as the case may be, to the Trustee of a certificate signed by two directors of Banco Santander S-5

12 stating that the said circumstances prevail and describing the facts leading thereto and a copy of the Regulator s consent to the redemption, Santander Issuances may, at its option and having given no less than 30 nor more than 60 days notice to the holders of the Subordinated Notes in accordance with the terms described under Description of Debt Securities and Guarantees Notices in the accompanying prospectus (which notice shall be irrevocable), redeem in whole but not in part the outstanding Subordinated Notes in accordance with the requirements of Applicable Banking Regulations in force at the relevant time) at their early capital disqualification event redemption amount, which shall be their principal amount, together with accrued interest (if any) thereon; provided, however, that the Regulator consents to redemption of the Subordinated Notes. Redemption for regulatory reasons is subject to the prior consent of the Regulator and may only take place in accordance with Applicable Banking Regulations in force at the relevant time. See Description of Debt Securities and Guarantees Redemption and Repurchase Early Redemption of Subordinated Debt Securities for Capital Disqualification Event. Events of Default If any of the following events occurs and is continuing with respect to the Subordinated Notes it shall constitute an event of default: (i) Non-payment: default is made in the payment of any interest or principal due in respect of the Subordinated Notes and such default continues for a period of seven days. (ii) Winding up: any order is made by any competent court or resolution passed for the winding up or dissolution of Santander Issuances or Banco Santander (ecept in any such case for the purpose of reconstruction or a merger or amalgamation which has been previously approved by the holders of at least a majority of the outstanding principal amount of the Subordinated Notes or a merger with another institution in this case even without being approved by holders of the Subordinated Notes, provided that any entity that survives or is created as a result of such merger is given a rating by an internationally recognized rating agency at least equal to the then current rating of Santander Issuances or Banco Santander, as the case may be, at the time of such merger). If an Event of Default occurs as set forth in paragraph (i) above, then the trustee or the holders of at least 25% in outstanding principal amount of the Subordinated Notes may institute proceedings for the winding up or dissolution of Santander Issuances or Banco Santander but may take no further action in respect of such default. If an Event of Default occurs as set forth in paragraph (ii) above, then the trustee or the holders of at least 25% in outstanding principal amount of the Subordinated Notes may declare the Subordinated Notes immediately due and payable whereupon the Subordinated Notes shall, when permitted by applicable Spanish insolvency law, become immediately due and payable at their early termination amount (which shall be the principal amount of the S-6

13 Subordinated Notes), together with all interest (if any) accrued thereon. Without prejudice to paragraphs (i) and (ii) above, the trustee or the holders of at least 25% in outstanding principal amount of the Subordinated Notes may at their discretion and without further notice, institute such proceedings against Santander Issuances or Banco Santander as they may think fit to enforce any obligation, condition or provision binding on Santander Issuances or Banco Santander under the Subordinated Notes, provided that, ecept as provided in (ii) winding up above, neither Santander Issuances nor Banco Santander shall as a consequence of such proceedings be obliged to pay any sum or sums representing or measured by reference to principal or interest in respect of the Subordinated Notes sooner than the same would otherwise have been payable by it or any damages. Under the terms of the Subordinated Debt Securities Indenture, no eercise of a resolution tool by the relevant resolution authority or any action in compliance therewith shall constitute an event of default. See Description of Debt Securities and Guarantees Events of Default and Defaults; Limitation of Remedies Subordinated Debt Securities Event of Default in the accompanying prospectus. Repurchases of the Subordinated Notes Santander Issuances and Banco Santander and any of their respective subsidiaries or any third party designated by any of them, may at any time repurchase the Subordinated Notes in the open market or otherwise and at any price. The repurchase of the Subordinated Notes by Santander Issuances, Banco Santander or any of its subsidiaries shall take place in accordance with Applicable Banking Regulations in force at the relevant time. Under the current Applicable Banking Regulations, an institution requires the prior permission of the Regulator (Article 77(b) of CRR) to effect the repurchase of Tier 2 instruments, and these may not be repurchased before five years after the date of issuance (Article 63(j) of CRR). Book-Entry Issuance, Settlement and Clearance CUSIP We will issue the Subordinated Notes in fully registered form in denominations of $200,000 and integral multiples thereof. All payments on or in respect of the Subordinated Notes will be made in U.S. dollars. The Subordinated Notes will be represented by one or more global securities deposited with a custodian for, and registered in the name of a nominee of, DTC. You will hold beneficial interests in the Subordinated Notes through DTC and its direct and indirect participants, including Euroclear and Clearstream Luembourg, and DTC and its direct and indirect participants will record your beneficial interest on their books. We will not issue definitive notes other than in the limited circumstances described in the accompanying prospectus. Settlement of the Subordinated Notes will occur through DTC in same day funds. For information on DTC s book-entry system, see Description of Certain Provisions Relating to the Debt Securities and Contingent Convertible Capital Securities Form of Securities; Book-Entry System in the accompanying prospectus T AE8 S-7

14 ISIN US80281TAE82 Common Code Listing Trustee and Principal Paying Agent Delivery and Settlement Use of Proceeds Conflict of Interest Governing Law Risk Factors We intend to apply to list the Subordinated Notes on the New York Stock Echange in accordance with its rules. The Bank of New York Mellon acting through its London Branch, a banking corporation duly organized and eisting under the laws of the State of New York, as Trustee, having its Corporate Trust Office at One Canada Square, London E14 5AL, United Kingdom, will act as the Trustee and principal paying agent for the Subordinated Notes. We currently epect to deliver the Subordinated Notes to purchasers through DTC for credit to accounts of direct and indirect participants of DTC, including Clearstream Luembourg and Euroclear, on or about November 19, 2015, which will be the fifth Business Day following the pricing of the Subordinated Notes (such settlement cycle being referred to as T+5 ). We intend to use the net proceeds of the offering for general corporate purposes. See Use of Proceeds. Santander Investment Securities Inc., an affiliate of the Issuer and a subsidiary of the Guarantor, will conduct this offering in compliance with the requirements of FINRA Rule 5121 of the Financial Industry Regulatory Authority, Inc., which is commonly referred to as FINRA, regarding a FINRA member firm s distribution of the securities of an affiliate and related conflicts of interest. Neither Santander Investment Securities Inc. nor any of our other affiliates may make sales in this offering to any discretionary account without the specific written approval of the accountholder. For further information, see Underwriting (Conflicts of Interest). The Subordinated Debt Securities Indenture (as defined below), the First Supplemental Indenture (as defined below), the Subordinated Notes and the subordinated guarantee will be governed by and construed in accordance with the laws of the State of New York, ecept that the authorization and eecution by Banco Santander and Santander Issuances of the indentures and the Subordinated Notes and the subordinated guarantee, and certain provisions of the Subordinated Notes and the Subordinated Debt Securities Indenture related to the subordination of the Subordinated Notes and the subordinated guarantee shall be governed by and construed in accordance with Spanish law. You should carefully consider all of the information in this prospectus supplement and the accompanying prospectus, which includes information incorporated by reference. In particular, you should evaluate the specific factors under Risk Factors beginning on page 3 of the accompanying prospectus, as well as those discussed under the heading Risk Factors in the Group s Annual Report on Form 20-F for the year ended December 31, 2014 which is incorporated by reference in this prospectus supplement, for risks involved with an investment in the Subordinated Notes. S-8

15 Recent Developments With respect to the risk factor Withholding under the EU Savings Directive on page 7 of the accompanying prospectus, the proposal to repeal the Directive 2003/48/EC was approved by the Council of the European Union on 10 November The repeal was enacted by a directive adopted by the Council, which also provides for transitional measures. S-9

16 USE OF PROCEEDS The net proceeds from the sale of the Subordinated Notes, less the underwriting discount stated on the cover of this prospectus supplement and epenses payable by us (estimated to be $660,000) are estimated to be $1,492 million. These proceeds will be used for general corporate purposes. S-10

17 CAPITALIZATION OF THE GROUP The following table sets forth the Group s indebtedness and capitalization on an unaudited consolidated basis in accordance with EU-IFRS and in compliance with IFRS-IASB as at September 30, 2015 and as adjusted to reflect the issuance of the Subordinated Notes and the use of net proceeds therefrom (converting the aggregate principal amount of Subordinated Notes and net proceeds into euros at the European Central Bank buying rate for euro at November 12, 2015 of $ per 1.00). This table should be read in conjunction with the Group s audited and unaudited consolidated financial statements, the notes related thereto and the financial and operating data incorporated by reference into this prospectus supplement and the accompanying prospectus. As of September 30, 2015 Actual As Adjusted(1) (Unaudited) (in millions of euros) Outstanding indebtedness Short-term indebtedness 21,116 21,116 Long-term indebtedness Total indebtedness(2) 195, , , ,261 Stockholders equity Shares, stated value 0.50 each 7,158 7,158 Shares held by consolidated companies (245) (245) Reserves 91,169 91,169 Dividends (716) (716) Valuation adjustments (14,988) (14,988) Net income attributed to the Group 5,941 5,941 Total stockholders equity 88,319 88,319 Minority interests 10,368 10,368 Total capitalization and indebtedness 315, ,948 (1) As adjusted to reflect this offering. (2) At September 30, 2015, the Group had outstanding 197 billion of senior debt and 19.6 billion of subordinated debt. Since September 30, 2015, the Group has issued 3.8 billion of indebtedness and 3.4 billion of its indebtedness has been amortized. Certain capital requirements As a Spanish financial institution, Banco Santander is subject to Capital Requirements Directive IV ( CRD IV ), through which the European Union began implementing the Basel III capital reforms from January 1, 2014, with certain requirements in the process of being phased in until January 1, Credit institutions, such as Banco Santander, are required, on a standalone and consolidated basis, to hold a minimum amount of regulatory capital of 8% of risk weighted assets (of which at least 4.5% must be Common Equity Tier 1 ( CET1 ) capital and at least 6% must be Tier 1 capital). In addition to the minimum own funds regulatory capital requirements, CRD IV also introduces capital buffer requirements that must be met with CET1 capital. CRD IV introduces five new capital buffers: (1) the capital conservation buffer for unepected losses, comprising of CET1 equivalent to 2.5% of the total amount of risk eposure; (2) the institution-specific counter-cyclical capital buffer, requiring CET1 of up to 2.5% of total weighted eposures; (3) the global systemically important institutions buffer of between 1% and 3.5% of total risk eposure; (4) the other systemically important institutions buffer, which may be as much as 2% of total risk eposure; and (5) the Common Equity Tier 1 systemic risk buffer. Beginning in 2016, and subject to the applicable phase-in period, entities will be required to comply with the combined buffer requirement (broadly, the combination of the capital conservation buffer, the institution-specific counter-cyclical buffer and the higher of (depending on the institution) S-11

18 the systemic risk buffer, the global systemically important institutions buffer and the other systemically important financial institutions buffer, in each case as applicable to the institution). Banco Santander will be required to maintain a conservation buffer of 2.5% and a global systemically important institutions buffer of 1%, in each case considered on a fully loaded basis. However, as of the date of this prospectus supplement, due to the application of the phase-in period, Banco Santander is required to maintain a conservation buffer of 0% and a global systemically important institutions buffer of 0%. See page 111 in Item 4. Information on the Company B. Business Overview in our 2014 Form 20-F for more information with respect to the five required types of capital buffers. In addition, CRD IV confers specific tasks on the European Central Bank (the ECB ) concerning policies relating to the prudential supervision of credit institutions and also contemplates that in addition to the minimum Pillar 1 capital requirements, supervisory authorities may impose further Pillar 2 capital requirements to cover other risks, including those not considered to be fully captured by the minimum own funds requirements under CRD IV or to address macro-prudential considerations. Certain banking institutions in Spain, including Banco Santander, are currently subject to additional own funds requirements pursuant to this Pillar 2 framework. On November 10, 2014 the Financial Stability Board (the FSB ) published a consultative document containing certain policy proposals to enhance the loss absorbing capacity of global systemically important banks ( G-SIBs ), such as Banco Santander. The policy proposals included in the consultative document consist of an elaboration of the principles on loss absorbing and recapitalization capacity of G-SIBs in resolution and a term sheet setting out a proposal for the implementation of these proposals in the form of an internationally agreed standard on total loss absorbing capacity ( TLAC ) for G-SIBs. The consultation period ended on February 2, On November 9, 2015, the FSB published its final proposal to the G-20. The final TLAC principles and term sheet reflect changes made following the public consultation and the comprehensive impact assessment studies. Once approved, these proposals will form a new minimum TLAC standard for G-SIBs. If implemented as contemplated, the TLAC requirement is epected to create material additional minimum capital requirements for Banco Santander and its bank subsidiaries and is epected to require Banco Santander to maintain an additional minimum TLAC ratio of (i) Banco Santander s regulatory capital plus certain types of debt capital instruments and other eligible liabilities that can be written down or converted into equity during resolution to (ii) Banco Santander s risk-weighted assets. The FSB has proposed a single specific minimum Pillar 1 TLAC requirement of 16% of the resolution s group risk weighted assets as from January 1, 2019 and 18% as from January 1, Minimum TLAC must be also at least 6% of the Basel III leverage ratio denominator as from January 1, 2019, and at least 6.75% as from January 1, Assuming TLAC requirements at 18%, a Basel III conservation buffer of 2.5% and systemic buffer of 1.0%, we estimate the shortfall between Banco Santander s current capital levels and the requirements epected to be in force by 2019 to be approimately 8 billion, such that, given historical annual debt issuance volumes by the Group, we believe the Group has fleibility to comply with epected TLAC requirements through recurring issuances of qualifying debt. In addition, beginning January 1, 2022, regulatory capital instruments issued by Banco Santander financing vehicle subsidiaries will not count towards Banco Santander s TLAC. The amount of such instruments at September 30, 2015 was 3,102 million. See Item 3. Key Information D. Risk Factors We are subject to substantial regulation which could adversely affect our business and operations in Banco Santander s 2014 Form 20-F. S-12