SOURCE: Banco Santander

September 24, 2009 07:53 ET

Santander Announces Results of Exchange Offer for Certain of the Group's Outstanding US$ Tier 1 Hybrid Securities

MADRID, SPAIN--(Marketwire - September 24, 2009) - Banco Santander, S.A. (NYSE: STD)

THIS PRESS RELEASE IS NOT TO BE DISTRIBUTED TO ANY PERSON LOCATED OR RESIDENT IN THE REPUBLIC OF ITALY.

THE EXCHANGE OFFER IS NOT BEING MADE, AND NEITHER THIS PRESS RELEASE NOR ANY OFFERING MATERIAL RELATING TO THE EXCHANGE OFFER IS TO BE DISTRIBUTED, TO ANY PERSON RESIDENT IN OR LOCATED INSIDE THE EUROPEAN ECONOMIC AREA, OTHER THAN TO "QUALIFIED INVESTORS" (AS DEFINED IN THE PROSPECTUS DIRECTIVE).

On 25 August 2009, Banco Santander, S.A. ("Santander" and together with its subsidiaries the "Group") announced that Santander and its subsidiary, Santander Financial Exchanges Limited (the "Offerors"), commenced an offer (the "Exchange Offer") of up to 51,448,000 10.5% Non-Cumulative Guaranteed Series 10 Preferred Securities, par value $25 per security, of Santander Finance Preferred, S.A. Unipersonal (the "Fixed Exchange Preferred Securities") and up to 800,000 10.5% Fixed-to-Floating Non-Cumulative Guaranteed Series 11 Preferred Securities, par value $1,000 per security, of Santander Finance Preferred, S.A. Unipersonal (the "Fixed-to-Floating Exchange Preferred Securities" and together with the Fixed Exchange Preferred Securities, the "New Securities") in exchange for the Existing Securities described below.

The expiration time and date for the Exchange Offer in respect of the Existing Securities was 5:00 p.m., New York time, 23 September 2009.

Santander has accepted all Existing Securities validly tendered for exchange.

As at the expiration date, the aggregate participation rate for the Exchange Offer was 48% of the Existing Securities described below. The participation rates for each issue of Existing Securities are described below. The aggregate principal amounts of the New Securities to be issued are $825,109,575 par value of Fixed Exchange Preferred Securities and $161,587,000 par value of Fixed-to-Floating Exchange Preferred Securities.

Settlement of the exchange of New Securities for the Existing Securities described below is expected to take place on 29 September 2009.

                                       Amount
                                    Accepted for
Existing Securities   CUSIP and ISIN  Exchange         New Security
---------------------  ------------- ---------- --------------------------
7,600,000 outstanding  80281R300;    4,028,302  Fixed Exchange Preferred
6.410% non-cumulative  US80281R3003  securities Securites:
existing Series 1                               Santander Finance
preferred securities,                           Preferred, S.A. Unipersonal
par value $25, fully                            10.5%  Non-Cumulative
and unconditionally                             Guaranteed  Series 10
guaranteed by Banco                             Preferred Securities, par
Santander S.A.                                  value $ 25 per security
                       ------------- ---------- CUSIP No. E8683R144
20,000,000 outstanding 80281R706;    13,529,373
6.800% non-cumulative  US80281R7061  securities
existing Series 4
preferred securities,
par value $25, fully
and unconditionally
guaranteed by Banco
Santander S.A.
                       ------------- ----------
24,000,000             80281R805;    19,621,398 ISIN USE8683R1448
outstanding 6.500%     US80281R8051  securities
non-cumulative
existing Series 5
preferred securities,
par value $25, fully
and unconditionally
guaranteed by Banco
Santander S.A.                                  Fixed Exchange Preferred
                       ------------- ---------- Securites:
14,000,000 outstanding 80281R888;    5,583,978  Santander Finance
Floating Rate          US80281R8887  securities Preferred, S.A.
(Three-Month U.S.                               Unipersonal 10.5%
dollar LIBOR plus                               Non-Cumulative Guaranteed
0.52%) non-cumulative                           Series 10 Preferred
existing Series 6                               Securities, par value $ 25
preferred securities,                           per security
par value $25, fully                            CUSIP No. E8683R144
and unconditionally                             ISIN USE8683R1448
guaranteed by Banco
Santander S.A.
                        ------------- ----------
8,000,000 outstanding   845905405;    3,443,334
7.300% existing         US8459054057  securities
Sovereign depositary
shares (each Representing
a 1/1,000th interest in
a Share of Series C Non-
Cumulative Perpetual
Preferred Stock),
liquidation
preference $25.
                        ------------- ---------- --------------------------
1,000,000               002927AA9;    202,012    Fixed-to-Floating Exchange
outstanding             US002927AA95 securities  Preferred Securites:
8.963% non-                                      Santander Finance
cumulative                                       Preferred, S.A.
existing Abbey                                   Unipersonal 10.5%
National trust                                   Fixed-to-Floating
preferred securities,                            (3m $ Libor + 7.673%)
liquidation preference                           Non-Cumulative Guaranteed
$1,000, fully and                                Series 11 Preferred
unconditionally                                  Securities, par value
guaranteed by Abbey                              $ 1,000 per security
National plc.                                    CUSIP No. 80281RAC6
                                                 ISIN US80281RAC60

Morgan Stanley & Co. Incorporated is acting as dealer manager for the Exchange Offer. You may request a copy of the prospectus included in the registration statement by contacting the Tax Certification and Exchange Agent for the Exchange Offer, Acupay System LLC, which can be reached at +1-212-422-1222, toll-free at 1-888-385-BOND (2663), or at Info@Acupay.com.

This press release does not constitute an offer of any securities for sale. Santander has filed a registration statement (including a Prospectus and related exchange offer materials) with the Securities and Exchange Commission (the "SEC") for the Exchange Offer.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Certain Matters Relating to Non-US Jurisdictions

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date"), an offer to the public of any New Securities which are the subject of the Exchange Offer (the "New Securities") may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any New Securities may be made at any time with effect from and including the Relevant Implementation Date under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

--  to legal entities which are authorized or regulated to operate in the
    financial markets or, if not so authorized or regulated, whose corporate
    purpose is solely to invest in securities;
--  to any legal entity which has two or more of (1) an average of at
    least 250 employees during the last financial year; (2) a total balance
    sheet of more than EUR 43,000,000 and (3) an annual net turnover of more
    than EUR 50,000,000, as shown in its last annual or consolidated accounts;
--  to fewer than 100 natural or legal persons (other than qualified
    investors as defined in the Prospectus Directive); or
--  in any other circumstances falling within Article 3(2) of the
    Prospectus Directive, provided that no such offer of New Securities shall
    require the issuer, the guarantor, the Offerors or the dealer manager to
    publish a prospectus pursuant to Article 3 of the Prospectus Directive.
    

For the purposes of this provision, the expression an "offer to the public" in relation to any New Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any New Securities to be offered so as to enable an investor to decide to purchase any New Securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

The communication of this document and any other documents or materials relating to the Exchange Offer is not being made and such documents and/or materials have not been approved by an authorized person for the purpose of section 21 of the Financial Services and Markets Act 2000. 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 persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets 2000 (Financial Promotion) Order 2005 (the "Order") or persons who are within Article 43 of the Order or any other persons to whom it may otherwise lawfully be made under the Order.

France

This announcement and the Exchange Offer, if commenced, is not being made, directly or indirectly, to the public in the Republic of France and only qualified investors (Investisseurs Qualifiés) other than individuals, as defined in and in accordance with Articles L.411-1, L.411-2 and D.411-1 and D.411-3 of the French Code Monétaire et Financier are eligible to participate in the Exchange Offer. This document and any other offering material relating to the Exchange Offer have not been and shall not be distributed to the public in the Republic of France. Neither this document nor any other offering material relating to the Exchange Offer has been submitted to the clearance of the Autorité des Marchés Financiers.

Belgium

The Exchange Offer is not being made, directly or indirectly, to the public in Belgium. Neither the Exchange Offer, any offering material relating to the Exchange Offer, nor has this document been notified to the Belgian Banking, Finance and Insurance Commission (Commission bancaire, financiére et des assurances) pursuant to Article 18 of the Belgian law of 22 April 2003 on the public offering of securities (the "Law on Public Offerings") nor has this document or any other information circular, brochure or similar document relating to the Exchange Offer been, nor will it be, approved by the Belgian Banking, Finance and Insurance Commission pursuant to Article 14 of the Law on Public Offerings. Accordingly, neither this document nor any other offering material relating to the Exchange Offer may be advertised and this document and any other information circular, brochure or similar document relating to the Exchange Offer may not be distributed, directly or indirectly, in Belgium only to qualified investors referred to in Article 6, paragraph 3 of the Law of 1 April 2007 on public acquisitions, acting for their own account.

Italy

The Exchange Offer is not being made in The Republic of Italy. None of the Exchange Offer, this document nor any other offering material relating to the Exchange Offer has been submitted to the clearance procedure of the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian laws and regulations. Accordingly, holders of the Existing Securities are notified that, to the extent such holders are located or resident in The Republic of Italy, neither this document nor any other documents or materials relating to the Exchange Offer, the Existing Securities or the New Securities may be distributed or made available in The Republic of Italy.

General

Neither this document nor any other offering material relating to the Exchange Offer constitutes an offer to sell or buy or a solicitation of an offer to sell or buy the Existing Securities and/or the New Securities, as applicable, in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require the Exchange Offer to be made by a licensed broker or dealer and a dealer manager or any of its affiliates is such a licensed broker or dealer in such jurisdictions, the Exchange Offer shall be deemed to be made by such dealer manager or such affiliate (as the case may be) on our behalf in such jurisdictions.