Sovereign Second Quarter 2011 Results

Sovereign Second Quarter 2011 Results

Disclaimer 2 Banco Santander, S.A. ("Santander") and Santander Holdings USA, Inc. ( SHUSA ) caution that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates, and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the SEC ), could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. 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Any statements in this Communication to tax matters were not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor.

Agenda 3 Market Environment 2Q11: Strategy and Business 2Q11: Results

Market Environment Despite recent downward projections, trends continue to support a modest recovery. GDP (% Real Annual Growth) Spread between 10-year and 2-year Treasury (bps) 4 2.6 2.5 2.9 230 250 276 264 1.1 165-2.5 2008 2009 2010 2011* 2012* Source: U.S. Department of Commerce 2008 2009 2010 1Q11 2Q11 Source: Federal Reserve Bank Annual CPI Inflation Rate (%, annual average) USD Exchange Rate vs Euro (Average) 3.8 1.47 1.6 2.8 2.9 1.39 1.37 1.4 1.33-0.4 2008 2009 2010 2011* 2012* Source: Bureau of Labor Statistics * Estimates from Servicio de Estudios Santander 2008 2009 2010 1Q11 2Q11 Source: Federal Reserve Bank

Market Environment Job creation continues to be the most significant challenge. Deleveraging from the consumer continues. 5 6.9 Unemployment Rate (%) 9.3 9.7 9.0 8.7 2008 2009 2010 2011* 2012* Source: Bureau of Labor Statistics * Estimates from Servicio de Estudios Santander Consumer Credit (% change, annual rate) 1.6 2.5 Debt Payments as % of Disposable Income USA: Debt payments as % of disposable income (%) 13.7 13.3 12.9 12.5 12.1 11.7 11.3 Mar-08 Mar-09 Mar-10 Mar-11 Source: Federal Reserve Personal Savings as % of Disposable Income Personal saving rate Financial gap -1.1-3.9 2008 2009 2010 2011 YTD Source: Federal Reserve Bank USA: personal saving rate and financial gap 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Mar-08 Mar-09 Mar-10 Mar-11 Source: Bureau of Economic Analysis Prior periods have been restated by the BEA

Market Environment Housing Market 6 Sovereign s footprint remains relatively stable. Elevated supply levels remain a concern relative to home prices. Average Sales Price of Existing Homes Existing Home Sales Volume (seasonally adjusted) Northeast Average: 1.4% May 09 May 11 U.S. National Average: 1.9% May 09 May 11 $277,600 $281,600 4,720,000 4,810,000 $218,100 U.S. National Average: -1.7% May 09 May 11 $214,400 Northeast Average: -3.8% May 09 May 11 800,000 770,000 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Source: National Association of Realtors Northeast includes the states of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.

Banking System: Loan Balances C&I is showing early signs of increased activity. Consumer loan demand is decreasing. 7 US$ in billions %, year-over-year growth rate Total Loans Commercial & Industrial 1,205 7,240 7,144 7,147 7,145 7,031 1,188 1,175 1,175 1,186-4.0% -3.6% -0.7% 1.2% -2.9% -17.2% -13.9% -7.9% -2.9% 1.4% 1Q10 2Q10 3Q10 4Q10 1Q11 Real Estate 1Q10 2Q10 3Q10 4Q10 1Q11 Consumer 4,401 4,337 4,302 4,267 1,381 1,360 32.0% 31.1% 1,329 1,318 27.8% 24.3% 1,275 4,159-6.4% -6.8% -5.0% -4.4% -5.5% -7.7% 1Q10 2Q10 3Q10 4Q10 1Q11 Source: FDIC Statistics on Depository Institutions 1Q10 2Q10 3Q10 4Q10 1Q11 Growth rates for 2010 are inflated due to the consolidation of over $300 billion of securitized credit card loans effective January 1, 2010.

Banking System: Deposit Balances 8 Deposits are growing, continuing shift from Time to Core Deposits. US$ in billions %, year-over-year growth rate Total Deposits 1 Core Deposits 2 Time Deposits Demand Deposits: 17.4% Money Market: 7.8% Savings: 17.8% 7,692 7,668 7,738 7,873 7,991 6,066 5,895 2,249 2,165 2,092 1,978 1,925 5,646 3.9% 5,443 5,503 2.0% 1.5% 2.5% 2.3% 13.7% 12.0% 11.9% 10.6% 11.5% -18.3% -18.1% -16.5% -16.4% -14.4% 1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 Source: FDIC Statistics on Depository Institutions 1 Held in domestic offices 2 Demand, NOW, money market and savings accounts

Market Environment Summary 9 Consumers and financial institutions remain cautious as weak housing markets, high unemployment, and budget and debt ceiling debates remain a concern. A moderate recovery is expected to continue despite downward revisions to growth accompanied by recent unfavorable job creation and housing performance. The Fed recently completed its second round of quantitative easing efforts and is ready to take additional stimulus actions if needed. Deposits in large and sound financial institutions are stable as corporations and individuals increase levels of cash. Regulatory uncertainty is beginning to lift but the impact of reform is expected to negatively affect the banking industry in the U.S.

Agenda 10 Market Environment 2Q11: Strategy and Business 2Q11: Results

Sovereign Bank Overview Sovereign s footprint is located in a very attractive market that is showing good resilience throughout current economic downturn. 11 Deposits 1 : $47,550 Loans 1 : $50,840 Branches: 723 ATMs: 2,285 Employees: 7,855 MSA # of branches Market Share % 2 Market Share Rank 2 New York 203 1.47% 10 Philadelphia 72 1.13% 13 Boston 164 6.24% 4 Providence 55 6.25% 5 Hartford 25 4.02% 8 1 Average period balances, calculated using local US GAAP accounting criteria. 2 FDIC Market Share of deposits; data as of June 2010 (latest date available). The most recent FDIC data reflects Sovereign s strategy to run off higher cost deposits.

Highlights 12 Continued growth in volume in global banking, multi-family and mortgage channels. Continued growth in core deposits and favorable mix and growth of time deposits. Favorable credit trends continue.

Current Initiatives 13 1 Retail Continue to build on steady growth in customer base over this past quarter Improve net growth of Core Deposit accounts Increase solutions sold per retail representative Expansion of Small & Medium Enterprise product offerings and customer base 2 Corporate Expand balance revenue mix Increase presence in large corporations Leverage relationships with existing Santander clients 3 Global banking & markets business Develop relations in US with existing Santander clients abroad Acquire new US clients with presence abroad in Santander s footprint 4 Information Technology Achieve cost synergies by completing full implementation of Santander IT platform

Business Core Deposit Balances 1 Consistent increases in core deposits are the result of continued successful retail bank initiatives. 14 US$ in millions %, year-over-year growth rate $29,828 $29,672 $30,147 $30,786 $32,290 2Q11 2Q10 Var. % Money Market, NOW & Savings $24,670 $22,850 8.0% 8.3% 7.3% 4.4% 4.9% 8.3% Demand Deposits 7,620 6,978 9.2% 2Q10 3Q10 4Q10 1Q11 2Q11 Total Core Deposits $32,290 $29,828 8.3% Retail & Commercial Core Deposits Growth rate 1 Average period balances, calculated using local US GAAP accounting criteria

Business Time and Other Deposit Balances 1 15 High-cost time deposits generally replaced with lower-cost, longer tenor time and other deposits. US$ in millions %, year-over-year growth rate $13,642 0.8% $15,260 28.3% 2Q11 2Q10 Var. % Time Deposits $8,565 $7,098 20.7% $11,894 $11,617 $12,137-25.3% Wholesale Deposits 2,982 935 218.8% -46.5% -41.6% Other 2 3,713 3,861 (3.8)% 2Q10 3Q10 4Q10 1Q11 2Q11 Retail & Commercial Core Deposits Growth rate Time & Other Deposits Total Core Deposits 15,260 32,290 11,894 29,828 28.3% 8.3% Total Deposits $47,550 $41,722 14.0% 1 Average period balances, calculated using local US GAAP accounting criteria 2 Other includes government, customer repo and Eurodollar deposits

Business Loan Balances 1 Continued decline of run-off portfolio is mitigated by organic growth in Multifamily, residential and C&I. 16 US$ in millions %, year-over-year growth rate $48,716 $48,959 $48,944-4.7% -2.6% -9.3% $51,009 $50,840 3.3% 4.4% 2Q11 2Q10 Var. % Commercial Real Estate $10,939 $12,039 (9.1)% C&I and other 11,035 10,572 4.4% Multi-family 6,950 5,054 37.5% Total Commercial $28,924 $27,665 4.5% Home Equity & Other Consumer 10,361 10,089 2.7% Residential Mortgage 11,555 10,962 5.4% Total Loans $50,840 $48,716 4.4% 2Q10 3Q10 4Q10 1Q11 2Q11 Total loans Growth rate Loans excluding run-off $47,974 $43,965 9.1% Run-off portfolio 2,866 4,751 (39.7)% Total Loans $50,840 $48,716 4.4% 1 Average period balances, calculated using local US GAAP accounting criteria.

Agenda 17 Market Environment 2Q11: Strategy and Business 2Q11: Results

Results: Net Interest Income Net interest income was flat to prior quarter and improved over prior year as cost of funding continues to improve and is offset by the impact of lower interest rates. 18 $580 US$ in millions 2.0% $581 $591 $591 $565 Loan Spread, % 2.24 2.16 2.04 2.08 1.96 2Q10 3Q10 4Q10 1Q11 2Q11 Deposit Spread, % 0.99 2Q10 3Q10 4Q10 1Q11 2Q11 0.62 0.53 0.78 0.66 Net interest income 2Q10 3Q10 4Q10 1Q11 2Q11

Results: Net Fees 19 Optimization of fee structure has kept fees relatively stable given drop in loan volumes from economic conditions and impact of regulatory environment. US$ in millions $142 $135 $130 $127 $138 1H11 1H10 Var. % Account Fees 167 183 (8.6)% Security fees 4 4 (4.4)% Foreign Exchange 17 20 (14.7)% 2Q10 3Q10 4Q10 1Q11 2Q11 Account fees Security fees Contingent risks Insurance / Commitments Other Insurance / Commitment fees 36 32 9.3% Other 41 35 18.3% Net fees $265 $274 (3.5)%

Results: Gross Income 20 Efforts are resulting in a stable revenue stream in spite of difficult economic and environmental factors. US$ in millions $682 $713 $702 $746 $745 1H11 1H10 Var. % Net interest $1,183 $1,150 2.9% income Net fees 265 274 (3.5)% Subtotal $1,448 $1,424 1.6% 2Q10 3Q10 4Q10 1Q11 2Q11 Financial gains and other 44 (54) NM operating income Gross income $1,492 $1,370 8.9% Net interest income Financial gains Net fees Other operating income/(expense)

Results: Total Expenses 21 Increase in expenses due to investments in personnel and increased depreciation expenses related to IT transformation. US$ in millions $300 $312 $325 $324 $327 1H11 1H10 Var. % Personnel $324 $296 9.6% General 252 237 6.4% G&A expenses $576 $533 8.2% Depreciation 75 70 6.5% Total expenses $651 $603 8.0% 2Q10 3Q10 4Q10 1Q11 2Q11 Personnel General Depreciation

Results: Net Operating Income 22 Stable revenue growth is offsetting the impact of increasing expenses. US$ in millions 1H11 1H10 Var. % Gross Income 1,492 1,370 8.9% $382 $401 $422 $378 $418 Total Expenses (651) (603) 8.0% 2Q10 3Q10 4Q10 1Q11 2Q11 Net operating income $841 $767 9.5%

Results: Provisions and Loan Quality 23 Stable provisions for loan growth and improved coverage ratios. Continuing favorable trends in asset quality. US$ in millions Provision 1 Non-performing Loans & Coverage Ratio 82% 85% $193 $181 $179 $171 $149 67% 5.11% 72% 4.80% 75% 4.61% 4.15% 3.76% 2Q10 3Q10 4Q10 1Q11 2Q11 2Q10 3Q10 4Q10 1Q11 2Q11 Provision for credit losses Allowance for loan losses to non-performing loans Non-performing loans to total loans 1 Provision above includes provisions for loans and other credit exposures.

Results: Net Income 24 Earnings trend is driven by improved margins from lowering deposit and funding costs and deploying our excess liquidity, tight expense management. US$ in millions Pretax income/ (loss) Net income/ (loss) 220 189 199 157 132 252 269 178 176 183 1H11 1H10 Var. % Income/(Loss) Before Taxes $521 $332 57.0% Income Tax (Expense)/Benefit (162) (105) 54.8% Net Income/(Loss) $359 $227 57.9% 2Q10 3Q10 4Q10 1Q11 2Q11

Results: Ratios 25 Improvements in expense management continue to help defend ratios in a lower revenue environment. Cost to Income, % Fees / Costs, % 51.5% 46.0% 44.0% 43.6% 2Q10 2Q11 2Q10 2Q11 ROE % 12.67% 13.14% 2Q10 2Q11

26 Appendix Trended Results Balance Sheet

Income Statement Spanish Criteria 27 US$ million Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Net interest income 570 580 581 565 591 591 Net fees 132 142 135 130 127 138 Gains/(losses) on financial transactions 8 (17) 18 29 50 39 Other operating income * (22) (22) (21) (22) (22) (23) Gross income 688 682 713 702 746 745 Operating expenses (303) (300) (312) (325) (324) (327) General administrative expenses (266) (266) (279) (289) (291) (285) Personnel (148) (147) (162) (161) (161) (163) Other general and administrative expenses (118) (119) (117) (128) (130) (123) Depreciation and amortization (37) (33) (33) (36) (33) (42) Net operating income 385 382 401 378 422 418 Net loan loss provisions (230) (175) (189) (81) (134) (117) Other income (12) (18) 7 (99) (36) (32) Profit before taxes 143 189 220 199 252 269 Tax on profit (48) (57) (64) (21) (76) (86) Profit from continuing operations 95 132 157 178 176 183 New profit on discontinued operations Consolidated profit 95 132 157 178 176 183 Minority interests Attributable profit to the Group 95 132 157 178 176 183 * Including dividends, income from equity-accounted method and other operating income/expenses

Income Statement Spanish Criteria 28 US$ million Variation H1 11 H1 10 Amount % Net interest income 1,183 1,150 33 2.9 Net fees 265 274 (9) (3.5) Gains (losses) on financial transactions 89 (9) 98 Other operating income* (45) (45) (0) 0.1 Gross income 1,492 1,370 121 8.9 Operating expenses (651) (603) (48) 8.0 General administrative expenses (576) (533) (44) 8.2 Personnel (324) (296) (28) 9.6 Other general administrative expenses (252) (237) (15) 6.4 Depreciation and amortisation (75) (70) (5) 6.5 Net operating income 841 767 73 9.5 Net loan-loss provisions (251) (406) 154 (38.0) Other income (68) (30) (38) 128.7 Profit before taxes 521 332 189 57.0 Tax on profit (162) (105) (57) 54.8 Profit from continuing operations 359 227 132 57.9 Net profit from discontinued operations Consolidated profit 359 227 132 57.9 Minority interests Attributable profit to the Group 359 227 132 57.9

Balance Sheet Spanish Criteria 29 US$ million Variation 30.06.11 30.06.10 Amount % Loans and credits* 51,174 48,898 2,275 4.7 Trading portfolio (w/o loans) 283 306 (23) (7.7) Available-for-sale financial assets 13,578 14,218 (640) (4.5) Due from credit institutions* 985 881 104 11.8 Intangible assets and property and equipment 729 590 139 23.5 Other assets 6,443 4,644 1,799 38.7 Total assets/liabilities & shareholders' equity 73,192 69,539 3,653 5.3 Customer deposits* 47,371 41,522 5,849 14.1 Marketable debt securities* 2,531 17,012 (14,482) (85.1) Subordinated debt 3,096 3,575 (479) (13.4) Insurance liabilities Due to credit institutions* 11,471 63 11,408 Other liabilities 2,903 3,348 (445) (13.3) Shareholders' equity** 5,821 4,018 1,803 44.9 Off-balance-sheet funds 20 112 (92) (82.2) Mutual funds Pension funds Managed portfolios 20 112 (92) (82.2) Savings-insurance policies Customer funds under management 53,017 62,221 (9,205) (14.8) * Includes all stock of concept classified in the balance sheet ** Not including profit of the year