Santander launches Santander Advance, a global strategy to become SMEs’ partner for growth

1. SME GLOBAL STRATEGY

2. SMEs are a strategic segment for the Group
• 24 million SMEs in the markets where we operate.
• Contribute between 30% (e.g. USA) and 60% (e.g. MX) of GDP.
• Generate 300 million jobs, 66% of total in Europe and 69% in Latin America.
• Growing presence in international business, up to 40% of exports.
They are the driving force of the economies where we operate:

3. 18%
11%
6%
11%
9%
8%
20%
6.5%
30%
SMEs’ market share by country
• Spain includes micro companies and SMEs,
excludes retailers and the self-employed.
• UK includes retailers and the self-employed.

4. SMEs are a strategic segment for the Group
They are the driving force of the economies where we operate:
Significant contribution to Group’s results:
• 24 million SMEs in the markets where we operate.
• Contribute between 30% (e.g. USA) and 60% (e.g. MX) of GDP.
• Generate 300 million jobs, 66% of total in Europe and 69% in Latin America.
• Growing presence in international business, up to 40% of exports.
• 3.8 million customers
• EUR 6.5 billion gross income, 22% of commercial banking.
• EUR 65 billion in loans.
• EUR 125 billion of business volume.

5. •Education and training for their employees.
•Access to other markets
•Constantly updating its technology
•Means to connect with complementary SMEs
•Guidelines for management and leadership
And they tell us that they need much
more than financing.
We have actively listened to our
CUSTOMERS…
•At our branches
•Through surveys
•Pilot workshops with more than 200
companies
•Market research
•Expert reports
We looked at the Group’s best practices.
SMEs are a strategic segment for the Group
•Santandertrade.com
•Argentina SME training – Universities
•SME Power (Mexico)
•Breakthrough (UK)
•Exporta Plan and SME Internship
Programme (Spain)
•International Desk (Latin America)

6. Our proposal:
Advance
Financing
Financing and linkage
programme for SMEs Advance Fund
Value
proposition
for SMEs,
customers
and non-
customers
Recruitment
and training
International
Advance
Development
Employment Connectivity
SMEs’
partner of
choice for
growth

7. Progressive implementation in the Group’s units
Phase 1:
Spain
Phase 2:
Mexico
Brazil
UK Phase 3:
Other major markets
15%
70%
MAR-14 2015START 2H’14

8. Advance Financing
Linkage and
financing
programme
Dec-13 Dec-14 Santander Market
Spain* 26,200 29,100 11% 0%
Brazil 8,313 9,727 17% +11%-13%
UK 14,029 16,123 15% +2.5%
Mexico 2,255 2,900 29% +26%
Chile 4,300 4,844 13% 12%
Growth in balancesOutstanding balance (in € mn)
* Excluding self-employed and retailers.
• Selected SMEs (operational for at
least three years, growing and
with a specific investment project).
• Minimum investment: € 1mn;
medium / long term financing.
• New or existing customers.
Advance
Fund
• EUR 250 mn for
Spain. Can be
expanded and
replicated in other
markets.
• Subordinated debt
 Capital

9. Advance Development
Advance
Development
• Knowledge Institute
• Development workshops
• Masterclass
80,000
Jobs and
scholarships
• Scholarships
• Jobs platform 80,000
Connectivity • Santanderadvance.com
International
• International Desk
• Santander Trade
• Trade missions
• Santander Passport (June 2014)
30,000

10. Aim of the Advance programme: provide service to 200,000
SMEs in three years
Spain 20,000 42,000 60,000
2014 2014* 2016*
Mexico / Brazil / UK 7,500 45,000 90,000
Rest -- 13,000 50,000
27,500 100,000 200,000
* Cumulative figures

11. Santander, a partner of choice for SMEs
• We have the capital and liquidity to support SMEs’ growth.
• We have the geographic diversification to support their
international expansion.
• We have partnerships to offer (Santander Universities).
• We have the experience of proven strategies in different
countries.
• We have the necessary teams and tools to help.
• We are determined to become their partner of choice.

12. SME GLOBAL STRATEGY
SPAIN

13. We are seeing loan growth and signs of genuine demand
SMEs already show credit growth and a rising demand...
New loans to SMEs have stopped
falling and are growing at 5-10%
year-on-year.
There is demand from SMEs that
only needs a change in the market
New loans to SMEs1 ECB survey of SMEs
-25%
-13%
-20%-19%
-9%
-16%
-12%
-7%-6%
-1%
0%
4.7%
9.6%
5.0%
dic-12
ene-13
feb-13
mar-13
abr-13
may-13
jun-13
jul-13
ago-13
sep-13
oct-13
nov-13
dic-13
ene-14
SMEs that needed loans…
11%
30%
59%
Expected
loan to be
denied
Expected
restrictive
conditions
Did not have
sufficient funds
of their own
Request
ed loans
27%
73%
Did not
seek loans
1 New loans to companies of less than €1 million. (Source: Bank of Spain)

14. … and they make an outstanding
contribution to Santander Spain
They are the driving force of
the Spanish economy…
• Spain’s is an economy
based on SMEs
• They are 1,250,000…
• … 90% of corporate Spain
• They represent > 50% of GDP
• They generate > 65% of jobs in
the private sector
• They account for 56% of exports
• 280,000 active customers
including companies, SMEs and
micro companies
• > €26 bn loans
• > €45 bn business volume
SMEs: A strategic segment in Spain and for the bank

15. We want to be the partner of choice in their growth:
Santander Advance
Transformation
of the business
model
Financial offer:
Products and services centred on
the customer.
Specialisation, quality, security and
agility in loans as an integral part of
the business.
The best non-
financial offer
An innovative offer:
Unique value offer to help SMEs grow by providing
complementary services alongside financing
Areas involved:
• Business
• Risks
• HR
• Technology
• Finance

16. The pillars of
Advance
Financing
Financing and linkage
programme for SMEs Advance Fund
Recruitment
and training
International
Advance
Development
Employment Connectivity

17. Advance Financing
Short-term
domestic market
financing
Advance lending
• Interest rate discounts depending on linkage
• Spreads of 3.50%, dependent on linkage and amount
• Other Advance products to assist with billing and payments
Short-term
international
financing
Exporta plan
• International trade finance: export and import
• Specialists in international business and support services
• Discounts for using electronic banking
Long-term
financing
Aim: to be leader in ICO credit lines and EIB funding
Competitive products to meet their needs:
• Mortgage lending
• Equipment leasing / renting
• Launch of Bansacar Advance

18. Advance Financing
Basic principles
• Complements traditional financing
• Independent vehicle, with its own process and risk managements
Characteristics
Stated target:
• SMEs with a record of growth (3 years)
• Job creation
Investment:
• Minimum €1 million
• Medium- and long-term financing
• Flexible repayments and guarantees
Debt structure:
• Mainly subordinated debt
• Eventually, convertible debt or other kind of debt
Advance Fund of €250 million

19. Advance Development
Business
inspiration
• SME days hosted by regional
“flagship companies”.
Development
workshops/ SME
Observatory
• Workshops in Santander branches
with 15-20 SMEs to discuss specific
problems
• Information collected and studied in
SME Observatory
Business
inspiration
• Themed training videos
• Testimonials of SME experiences
Knowledge
Institute
• Training course (Business management
and export training programmes)
• Online training (languages, other skills)
• Everything SME leaders need
RECRUITMENT AND TRAINING

20. Advance Development INTERNATIONAL EXPANSION
Santander Trade
Portal / Club
• International trade portal. Market research
and contact with potential business
partners
• www.santandertrade.com
International
Desk/
Passport
• Network of specialists in different countries
and regions to support customers in their
international growth
International
Connections
• Virtual and physical trade missions. We can
put SMEs in touch with the different markets
where the Santander Group is present.
Local events with
customers
• Breakfast:
promotional meetings with 15-20 SMEs
• Talks on international expansion:
for 50-75 SMEs

21. Advance Development
EMPLOYMENT
Employment
• Platform to help find employees, including
publication of specific vacancies.
• Capacity for 50,000 job offers from 10,000 SMEs.
Santander
Scholarships
• 5,000 scholarships for university students
to do internships in SMEs

22. Advance Development
www.santanderadvance.com

23. What makes Santander Spain’s offer different
Proximity to
SMEs
• Extensive network of universal branches (4,097): Proximity to
SMEs
• Extensive network of corporate branches (224): Largest in Spain
• Plan to increase number of staff specialising in SMEs from 325 to
600 in the corporate branches
• In the universal branches we have more than 3,648 sales staff who
directly handle SME business
Specialisation
• Product specialists to support the SME business (353): International
and Transactional Banking managers
• Risk management teams that specialise in SMEs (400):
• Analysts specialised in managing non-customers
• Sectorial expertise
• Commitment to respond to every request: 3 days
• Risk pre-classification for SMEs to analyse their future needs
International
presence
• Presence in 15 countries: Support for SMEs in their international
expansion

24. Advance Financing goals for 2014
Loans
New loan production
+ 24%  €30.7 billion
Customers
Capture
22%
Linkage
29%

25. Advance Development goals for 2014
•20,000 SMEs will access various training initiatives, internationalization
and employment
•In addition, 6,000 university students will benefit from Santander
scholarships
Training • 8,500 trained SMEs
International • 1,500 pymes with international initiatives
Employment • 10,000 SMEs in job portal/5,000 scholarships
Main goals in 2014
“Partners for growth”
20,000 SMEs will benefit from Advance Development

26. Conclusions
2014 ADVANCE PROGRAMME
• SMEs are a strategic segment for the country and for Santander
Spain
• Banco Santander is launching:
• A unique programme in the market
• With a range of products with very competitive financial
conditions and
• Based on entirely new non-financial solutions to support SMEs
EUR 31 billion available to SMEs
20,000 SMEs in non-financial programme

27. SME GLOBAL STRATEGY