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Banco Santander SAAnnouncement

14/07/2017 07:05

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RNS Number : 0533L
Banco Santander S.A.
13 July 2017 
 
The material fact dated July 13th (register number 0485L) is submitted again
in order to correct a typographical error identified in the table located on
the second page of the abovementioned material fact. 
 
MATERIAL FACT 
 
Banco Santander, S.A. ("Banco Santander") and Banco Popular Español, S.A.
("Banco Popular") inform that they have decided to launch a commercial action
aimed at building loyalty among their networks' retail clients (Banco
Santander, Banco Popular, Banco Pastor or Popular Banca Privada) affected by
Banco Popular's resolution (the "Fidelity Action"). 
 
By virtue of the Fidelity Action, those clients of Banco Santander and Banco
Popular that meet certain conditions and that have been affected by the
resolution of Banco Popular will be able to receive, without any payment on
their part, tradable securities issued by Banco Santander for a nominal value
equivalent to the investment in shares or certain subordinated bonds of Banco
Popular (with certain limits) that they held as of the date of the resolution
of Banco Popular. 
 
The Fidelity Action will be carried out under the terms and conditions set
forth below and that will be further detailed in the prospectus that is
expected to be registered with the Comisión Nacional del Mercado de Valores
("CNMV"). 
 
1.    Recipients: the Fidelity Action is addressed to retail clients that meet
the following requirements: 
 
(i)      To have acquired: 
 
(a)     Shares of Banco Popular in the period between 26 May 2016 and 21 June
2016 (the "Relevant Period") or 
 
(b)     Subordinated bonds qualifying as tier 2 of the issuances with ISIN
codes ES0213790019 or ES0213790027 of Banco Popular (the "Subordinated Bonds")
in their respective subscription periods; 
 
(ii)      To have maintained deposited in Banco Santander, Banco Popular,
Banco Pastor or Popular Banca Privada the mentioned shares or Subordinated
Bonds at the time of the resolution of Banco Popular; and 
 
(iii)     To have maintained, at the date of delivery of the Fidelity Bonds,
an equivalent commercial relationship with Banco Santander, Banco Popular,
Banco Pastor or Popular Banca Privada to the one they had at the time of the
acquisition of the shares or the Subordinated Bonds. 
 
The following persons will not be beneficiaries of the Fidelity Action: (i)
the persons that have been part of the Board of Directors of Banco Popular at
any time before its resolution; (ii) related parties of those persons; and
(iii) the shareholders that individually or acting in concert have had a
significant participation in Banco Popular declared to the CNMV, all of the
above in the terms that will be set forth in the framework of the Fidelity
Action. 
 
2.    Amount to be compensated: 
 
(i)      In the case of shares: the amount effectively invested by each client
in the acquisition of Banco Popular shares during the Relevant Period that
they maintained deposited in Banco Santander, Banco Popular, Banco Pastor or
Popular Banca Privada at the time of the resolution of Banco Popular. 
 
(ii)      In the case of the Subordinated Bonds: The gross amount resulting
from subtracting (a) to the amount effectively invested by each client in the
acquisition in the respective subscription periods of the Subordinated Bonds
maintained in Banco Santander, Banco Popular, Banco Pastor or Popular Banca
Privada at the time of the resolution of Banco Popular, (b) the interest
received by the client for these Subordinated Bonds from its issuance until
the time of the resolution of Banco Popular. 
 
(iii)     Both in the case of the shares and of the Subordinated Bonds, the
maximum amount to compensate per retail client will be the amount resulting
from the table below: 
 
 Between 100 and 100,000 euros        100%  
 Between 100,001 and 500,000 euros    75%   
 Between 500,001 and 1,000,000 euros  50%   
 More than 1,000,000 euros            0%    
 
 
More than 1,000,000 euros 
 
0% 
 
*Each tranche will be applied for the established range. Thus, for instance,
for an amount of 250,000 euros, 100% will be applied to the first 100,000 and
75% to the remaining 150,000 (total compensated amount: 212,500). 
 
The amount to be compensated thus calculated will be referred to as "Amount To
Be Compensated". 
 
3.    Securities to be delivered under the Fidelity Action: 
 
(i)      Securities to be delivered: the Fidelity Action will be done through
the delivery to the client, without any payment on its part, of tradable
securities, in particular, contingent redeemable perpetual bonds (the
"Fidelity Bonds") of Banco Santander, S.A. of 100 euros of nominal value. The
number of Fidelity Bonds to be delivered to each client will result from
dividing the Amount to Be Compensated by the nominal value of the Fidelity
Bond (100 euros), rounded down. It is estimated that the maximum principal
amount of the Fidelity Bonds will be approximately Euro 980 million. 
 
While the nominal value of each Fidelity Bond will be, as it has been
indicated, of 100 euros, it is expected that its fair value at the time of the
delivery will be lower. 
 
(ii)      Coupon: the Fidelity Bond will accrue a discretional, non-cumulative
cash coupon, payable quarterly in arrears, calculated on the basis of an
annual nominal interest rate: 
 
a.   Until the seventh anniversary of the issue, the interest rate will be 1%
over the outstanding nominal value in each remuneration period (quarterly);
and 
 
b.   Since the seventh anniversary onwards, for each five-year term, the rate
resulting from adding to the spread to be determined at the time of the issue,
the 5-year mid-swap rate over the outstanding nominal value in each
remuneration period (quarterly), calculated according to the usual terms in
this type of issuances as to be described in the prospectus1. 
 
The payment of the coupon will be cancelled in the usual cases for this type
of securities. 
 
(iii)     Possibility of redemption: the Fidelity Bonds are perpetual
securities. However, it will be possible to totally redeem them (and not
partially), by decision of Banco Santander, with the prior authorization of
the European Central Bank, in any of the payment dates of the coupon, after
seven years from their issuance. Additionally, it will be possible to redeem
them in other usual cases for this type of securities. 
 
The redemption of the Fidelity Bonds in these cases will grant the holder
right to receive a redemption price equivalent to the nominal value plus the
accrued coupon pending of payment. 
 
Therefore, in the case that Banco Santander decided to redeem the Fidelity
Bonds in the seventh year, the client that had not sold their Fidelity Bonds
will receive at that time, 100% of the Amount To Be Compensated in cash (in
addition to the coupons received until that time). In the case that Banco
Santander decided not to carry out such redemption in the seventh anniversary,
the holder of the Fidelity Bond will start to receive, as the case may be, a
greater discretional coupon in the terms set forth in paragraph (ii) above. 
 
Lastly, there will be cases of mandatory redemption to absorb loses in the
usual terms for this type of securities (in particular, for the case that the
maximum category of equity of Grupo Santander is reduced below a certain
threshold). In such cases, the holder will not receive the price of
redemption, nor the amount of the cancelled nominal value (and, as the case
may be, cancelled interests). 
 
(iv)     Negotiation: it is expected that the Fidelity Bonds are admitted to
trading in the AIAF Fixed Income Market, SEND platform. It is also foreseen
that Banco Santander will sign a liquidity contract with a third party
regarding the Fidelity Bonds. 
 
(v)     Rank and computability: The rank of the Fidelity Bonds will be lower
than that of the level 2 capital instruments (subordinated debt) and higher
than that of the shares. The Fidelity Bonds will not qualify as regulatory
capital of the credit institutions neither at the time of their issue nor at
the time of the delivery to the recipients of the Fidelity Action. However,
they are expected to be eligible instruments for the fulfillment of the MREL
(minimum requirement for own funds and eligible liabilities) / TLAC (total
loss-absorbing capacity) requirement under the resolution regulations. 
 
4.   Process and other terms: It is expected that the Fidelity Action begins
to be executed from September (once the prospectus is registered) onwards,
moment from which the recipients of the Fidelity Action will be entitled to
request the delivery of the Fidelity Bonds. Prior to such execution, it is
expected that Banco Santander registers with the CNMV a prospectus in which
all of the Fidelity Action terms will be described in detail, as well as the
time-limits and procedure to participate in the Fidelity Action. 
 
Among these terms, it will be included the need for the client that asks for
the Fidelity Action to waive its legal actions against Grupo Santander, its
directors, executives and employees, that derive from or are linked to its
condition as current or former holder of any security that qualifies as credit
institutions' own funds issued by Banco Popular or its subsidiaries prior to
the resolution, all the above in accordance with the terms that will be set
out in the corresponding prospectus. 
 
The tax treatment for the beneficiaries of the Fidelity Action, including, as
the case may be, the payment in advance for final income tax and its
allocation to the beneficiaries, will be also described in the mentioned
prospectus. 
 
The beginning of the Fidelity Action, as well as the integrity of its terms
and conditions, are subject to the actual registration of the corresponding
prospectus with the CNMV and to the terms contained therein. 
 
Additionally, the Fidelity Action is subject, in any case, to the antitrust
authorities' approval of Banco Santander's acquisition of Banco Popular. 
 
Grupo Santander launches this Fidelity Action exclusively on the basis of
commercial considerations, due to the interest that Grupo Santander has on its
business relationship with the clients to which the Fidelity Action is
addressed. 
 
For any doubt concerning the above terms of the Fidelity Action, the
interested clients in Spain can refer to their usual offices of Banco
Santander, Banco Popular, Banco Pastor or Popular Banca Privada. 
 
The maximum cost arising from the Fidelity Action at the time that it is
granted is estimated in approximately 680 million euros and it will not have
an additional impact on the capital of Grupo Santander, insofar as it has been
included in the first consolidation adjustments of Banco Popular, that had
been already taken into consideration in the estimation of the semi-annual
financial information on 30 June 2017, communicated in a Material Fact on 3
July 2017. The Fidelity Action does not have any impact in the profit and loss
account of Grupo Santander and its impact in 2017 in the net worth of Grupo
Santander will not be significant. 
 
Boadilla del Monte (Madrid), 13 July 2017 
 
IMPORTANT INFORMATION 
 
This document is not a prospectus but an advertisement and investors or
clients of Grupo Santander should not request or acquire the Fidelity Bonds
(Bonos de Fidelización) of Banco Santander, S.A. ("Banco Santander" or the
"Bank") or participate in the Fidelity Action referred to in this document,
except on the basis of the information contained in the prospectus of the
Fidelity Bonds to be registered by Banco Santander with the Comisión Nacional
del Mercado de Valores ("CNMV"). Once registered with the CNMV, the prospectus
shall be publicly available at the Bank's registered address and, in
electronic format, in the websites of the Bank (www.santander.com) and the
CNMV (www.cnmv.es). 
 
This announcement does not constitute an offer to sell, or a solicitation of
offers to acquire the Fidelity Bonds or any security in any jurisdiction in
which such offer or solicitation is unlawful or, as the case may be, until the
applicable requirements for those purposes have been met. The distribution of
this announcement and/or the prospectus and/or Fidelity Bonds into
jurisdictions other than Spain may be restricted by law. Persons that access
this announcement comes should inform themselves about and observe any such
restrictions. Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction. 
 
The securities referred to herein have not and will not be registered under
the U.S. Securities Act of 1933 and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements 
 
1 If the issue were to take place today, that spread would be approximately
575 bps. 
 
This information is provided by RNS
The company news service from the London Stock Exchange