Information on Scrip Dividend Scheme

 

TIDMBNC 
 
RNS Number : 0616W 
Banco Santander S.A. 
11 November 2010 
 
 
 
                                  MATERIAL FACT 
 
Banco Santander, S.A. discloses information in connection with the 
free-of-charge capital increase through which the flexible remuneration program 
"Santander Dividendo Elección" (scrip dividend scheme) to be applied to the 
third 2010 interim dividend will be implemented.  An informative document 
regarding the capital increase is enclosed for purposes of articles 26.1.e) and 
41.1.d) of Royal Decree 1310/2005, of 4 November (implementing Directive 
2002/71/EC on the prospectus to be published when securities are offered to the 
public or admitted to trading). 
 
                                  Boadilla del Monte (Madrid), November 11, 2010 
 
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|                            INFORMATIVE DOCUMENT                             | 
|    CAPITAL INCREASE CHARGED TO RESERVES CONSISTING OF RETAINED EARNINGS     | 
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|                            BANCO SANTANDER, S.A.                            | 
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|                              November 11, 2010                              | 
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| THIS DOCUMENT HAS BEEN PREPARED IN ACCORDANCE WITH ARTICLES 26.1.E) AND     | 
| 41.1.D) OF ROYAL DECREE 1310/2005.                                          | 
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1.       OBJECT 
The Ordinary General Shareholders' Meeting of Banco Santander, S.A. ("Banco 
Santander", "Santander" or the "Bank") held on June 11, 2010 resolved, under 
item seven B of its agenda, to increase the share capital of Banco Santander, 
with full charge to reserves consisting of retained earnings, in an amount to be 
determined in accordance with the terms and conditions set out in the resolution 
(the "Increase"), delegating the execution of the Increase to the Board of 
Directors, with authority to delegate in turn to the Executive Committee, 
pursuant to article 153.1.a) of the Spanish Business Corporations Law ("Ley de 
Sociedades Anónimas") (which has been replaced by article 297.1.a) of Royal 
Legislative Decree 1/2010, of 2 July, by means of which the consolidated Spanish 
Capital Corporations Law was passed; "Spanish Capital Corporations Law"). 
In accordance with articles 26.1.e) and 41.1.d) of Royal Decree 1310/2005, of 4 
November (implementing Directive 2002/71/EC on the prospectus to be published 
when securities are offered to the public or admitted to trading), the 
preparation and publication of a prospectus related to the issuance and 
admission to listing of the shares issued as a consequence of the execution of 
the Increase will not be necessary "provided that a document is made available 
containing information on the number and nature of the shares and the reasons 
for and details of the offer". 
This informative document is aimed at providing the part of the above mentioned 
information that is available as of the date hereof.  Once the Increase is 
executed and the pending information is available, it will be publicly disclosed 
through a supplement to this document.  It is envisaged that the public 
announcement of the execution of the Increase and its remaining terms will be 
made on January 13, 2011. 
2.       PURPOSE OF THE INCREASE: "SANTANDER DIVIDENDO ELECCION" PROGRAM 
The Increase serves as an instrument for the shareholder-remuneration program 
named "Santander Dividendo Eleccion" which shall be applied to the third 2010 
interim dividend in January/February 2011. This program was implemented by the 
Bank for the first time in 2009, and again in October/November of this year, in 
both cases with wide acceptance by shareholders.  The program allows 
shareholders to opt between receiving newly issued Santander shares or an amount 
in cash equivalent to the third interim dividend of 2010.  The "Santander 
Dividendo Eleccion" program is similar to other programs implemented in the past 
by other international banks and follows the suggestions made by the 
shareholders of Banco Santander.  With it, Santander's shareholders benefit from 
more flexibility, since they will be able to adapt their remuneration to their 
preferences and personal situation, also benefiting from a more favourable tax 
treatment in case they opt to receive new shares. 
"Santander Dividendo Eleccion" program works as follows.  Each shareholder will 
receive a free allotment right for every Santander share held.  These rights 
will be listed in and may be traded in the Spanish Stock Exchanges during a 15 
calendar day period. Following the end of this period, the rights will be 
automatically converted into new Santander shares.  Each shareholder may opt for 
one of the following alternatives: 
(i)      Receive new Santander shares.  In this case, the shareholder will 
receive free of charge the number of shares corresponding to the number of 
rights held.  The delivery of shares will not be subject to Spanish withholding 
tax. 
(ii)      Receive a cash payment equivalent to the traditional interim dividend. 
 To this end, Banco Santander will assume an irrevocable undertaking to acquire 
the free allotment rights for a fixed price.  This option will be subject to the 
same tax treatment as a dividend distribution and, therefore, the amount to be 
paid to the shareholders will be subject to a 19% Spanish withholding tax 
deduction. 
(iii)     Receive a cash payment through selling rights on market.  Given that 
the rights will be listed, the shareholders may sell them on market at any time 
during the trading period described in section 3.2 below at the prevailing 
market price rather than at the guaranteed price offered by Banco Santander. 
The proceeds for the on market sale will not be subject to Spanish withholding 
tax. 
Additionally, shareholders will be able to combine the above mentioned 
alternatives in view of their specific needs. 
Shareholders who do not make an election will receive new shares unless they 
have previously given (either in this program or in previous programs) the 
permanent instructions described in section 3.2 below. 
As stated above, shareholders will receive a free allotment right for each 
Santander share held.  The number of rights needed to receive a new share and 
the guaranteed price at which Santander undertakes to acquire the rights to 
those shareholders opting to receive cash will depend on the market price of 
Santander in the days prior to the execution of the Increase and on the number 
of shares outstanding at that moment1.  It is envisaged that such number of 
rights and definitive price will be publicly announced on January 13, 2011 by 
means of a supplement to this document, which figures will be calculated with 
the formulae agreed in the capital increase resolution passed by the 
Shareholders' Meeting (available at www.cnmv.es and www.gruposantander.com, and 
set out below). 
In any event, the capital increase resolution envisages that the number of 
shares to be issued will be that which results in an overall market value for 
those shares of 1,000 million Euro2, calculated at the market price of Santander 
in the days prior to the execution of the Increase.  Thus, the approximate value 
of each right is 0.120 Euro. This is also the approximate price at which 
Santander will acquire the rights of the shareholders that request so. 
Specifically, the number of rights needed to receive one new share and the 
guaranteed price at which Santander undertakes to acquire the rights will be 
calculated as follows: 
Num. rights = NTAcc / (1,000,000,000 / PreCot), rounded up to the nearest whole 
number, 
where 
"Num. rights" will be the number of rights needed to receive a share. 
"NTAcc" will be the number of outstanding shares on the date of execution of the 
Increase (as of today, 8,329,122,098 shares); and 
"PreCot" will be the average of the weighted average price of the Santander 
share on the Spanish Stock Exchanges in the 5 business days prior to the 
resolution to execute the Increase, rounded up or down to the nearest Euro 
thousandth and, in case of a half Euro thousandth, rounded up to the nearest 
Euro thousandth. 
If necessary, Santander or an entity from its group will waive the number of 
free allotment rights needed to ensure that the number of shares to be issued in 
the Increase and the number of rights needed to receive a share are a whole 
number and not a fraction. 
Fixed price of the undertaking to acquire the free allotment rights = PreCot / 
(Num. of rights + 1), rounded up or down to the nearest Euro thousandth and, in 
case of a half Euro thousandth, rounded up to the nearest Euro thousandth. 
where "PreCot" and "Num. of rights" have the meaning indicated above. 
3.       DETAILS OF THE OFFER 
3.1.    Calendar 
The envisaged calendar for the execution of the Increase is the following: 
(i)      January 13, 2011. Resolution of the Executive Committee executing the 
Increase. Hence, the weighted average prices to be used in the calculation of 
"PreCot" for purposes of applying the formulas set out above shall be those of 
January 6, 7, 10, 11 and 123. Publication of the number of rights needed to 
receive one share and the final price for the rights-purchase undertaking. 
(ii)      January 14, 2011. Publication of the announcement of the Increase in 
the Official Bulletin of the Commercial Registry ("BORME"). Record date for the 
allotment of rights (23:59 h. CET). 
(iii)     January 17, 2011. Beginning of the trading period of the rights. 
Santander share quotes "ex-coupon". 
(iv)     January 28, 2011. Last date to request remuneration in cash (sale of 
rights to Banco Santander). 
(v)     January 31, 2011. End of the trading period of the rights. Acquisition 
of free allotment rights by Banco Santander from those shareholders who have 
requested cash equivalent to the traditional interim dividend. 
(vi)     February 1, 2011. Banco Santander waives the rights so acquired. 
Closing of the Increase. 
(vii)    February 1-7, 2011.  Actions for the registration of the Increase and 
admission to listing of the new shares on the Spanish Stock Exchanges. 
(viii)   February 3, 2011. Cash payments to those shareholders who have so 
requested. 
(ix)     February 8, 2011. Beginning of ordinary trading of new shares on the 
Spanish Stock Exchanges4. 
3.2.    Allotment of rights and procedure to opt for cash or new shares 
The free allotment rights will be allotted to the shareholders of Banco 
Santander who appear as such in the book-entry registries of Iberclear at 23:59 
on the day of publication of the announcement of the Increase in the Official 
Bulletin of the Commercial Registry ("Boletín Oficial del Registro Mercantil") 
(envisaged for January 14, 2011).  The trading period of the rights will begin 
on the next business day and will have a term of fifteen calendar days (from 
January 17 to January 31. 2011).  The holders of bonds convertible into shares 
of Santander currently outstanding will not have free allotment rights; however, 
if applicable, they will be entitled to the amendment of the conversion ratio 
proportionally to the amount of the Increase. Specifically, the conversion ratio 
applicable to the "Valores Santander" will be modified, if necessary, according 
to the anti-dilution provision set out in their prospectus. 
During the trading period of the rights, the shareholders may opt for cash or 
new shares as explained above, as well as for acquiring on market free allotment 
rights to subscribe for new shares.  However, those shareholders who wish to 
accept the undertaking to purchase rights offered by Banco Santander and receive 
cash at the guaranteed price shall need to communicate their decision no later 
than January 28, 2011.  To choose among the alternatives offered by the 
"Santander Dividendo Eleccion" program, shareholders will have to contact the 
entities where their Santander shares and corresponding free allotment rights 
are deposited. Specifically: 
(i)      Shareholders whose shares are deposited at Grupo Santander.  These 
shareholders may opt to receive permanently, both in the current and future 
programs, their remuneration in cash at the guaranteed fixed price offered by 
Banco Santander from time to time.  To this end, they will have to contact their 
usual branch. Shareholders who opted to receive cash in the following program at 
the guaranteed fixed price in any previous "Santander Dividendo Elección" 
program will receive their remuneration in cash and no communication shall be 
required.  Shareholders who wish to make an election only for a specific program 
will have to give the relevant order. In the absence of an express 
communication, shareholders who have not opted in previous programs to receive 
cash permanently will receive new shares.  Grupo Santander shall not charge any 
fees or costs to those shareholders who opt to receive cash at the guaranteed 
fixed price or to receive new shares.  In case of sale of the rights on market, 
Grupo Santander shall charge the usual fees or costs pursuant to the applicable 
regulations. 
(ii)      Shareholders whose shares are deposited with other entities.  These 
shareholders will have to contact the entity where their shares are deposited to 
make their decision.  Specifically, if they want to receive cash at the fixed 
purchase price of Banco Santander's undertaking, they shall make their option no 
later than January 28, 2011.  In the absence of an express communication, 
shareholders will receive new Santander shares5.  The depository entities may 
charge to shareholders fees or costs related to the allotment of shares or to 
the sale of rights pursuant to the applicable regulations. 
The capital increase is carried out free of fees and costs for shareholders in 
connection with the allotment of the new shares, with Banco Santander assuming 
the costs for the issue, subscription, placing on market, listing and other 
related costs. 
4.       NUMBER AND NATURE OF THE SHARES TO BE ISSUED 
4.1.    Number of shares to be issued 
The number of shares to be issued as a consequence of the execution of the 
Increase ("NAN") will be calculated pursuant to the formula approved by the 
Ordinary General Shareholder's Meeting of Santander set out below, rounded down 
to the nearest whole number. 
NAN = NTAcc / Num. rights 
where "NTAcc" and "Num. rights" will have the meaning stated above. 
It is envisaged that the number of shares to be issued will be publicly 
announced on January 13, 2011 by means of a supplement to this document. 
Notwithstanding this, the number of shares actually issued will depend on the 
number of shareholders who request to receive their remuneration in cash at the 
fixed price of the undertaking to acquire rights. Banco Santander will waive the 
free allotment rights acquired pursuant to such undertaking. As a result, only 
those shares corresponding to the free allotment rights which have not been 
acquired by Banco Santander pursuant to its undertaking will be issued. 
4.2.    Face value, issue price and representation of shares 
The new shares to be issued in the Increase will be ordinary shares with a face 
value of fifty Euro cents (0.5) each, of the same class and series as those 
currently outstanding.  The new shares will be issued at an issue price of fifty 
Euro cents (0.5), that is, without issuance premium, and will be represented in 
book-entry form, the records of which will be kept by Sociedad de Gestión de los 
Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U. (Iberclear) 
and its participant entities. 
4.3.    Reserves to which the shares will be charged and balance sheet used for 
the Increase 
The Increase is free of charge and, therefore, does not require any payment from 
the shareholders. The Increase will be charged entirely to the freely 
distributable reserve named voluntary reserves, consisting of retained earnings, 
which amounts to 2,311 million Euros as of December 31, 2009. 
The balance sheet used for purposes of the Increase is that corresponding to 
December 31, 2009, duly audited by Deloitte, S.L. on March 22, 2010 and approved 
by the Ordinary General Shareholders' Meeting on June 11, 2010 under the first 
item of its agenda. 
4.4.    Shares in deposit 
Following the end of the trading period of the free allotment rights, the new 
shares that have not been capable of being allotted due to causes not 
attributable to Banco Santander will be kept in deposit and available to whom 
evidences lawful ownership of the relevant free allotment rights.  Three years 
after the end of the free allotment rights trading period, the shares still 
pending to be allotted may be sold at the risk and expense of the interested 
parties in accordance with article 117 of the Spanish Capital Corporations Law. 
The net proceeds of the sale will be deposited in the Bank of Spain or in the 
General Deposit Bank (Caja General de Depósitos) at the disposal of the 
interested parties. 
4.5.    Rights of the new shares 
The new shares will confer the same voting and economic rights upon their 
holders as the currently outstanding ordinary shares of Banco Santander from the 
date on which the capital increase is declared to be subscribed and paid up, 
which is envisaged to happen on February 1, 2011. 
4.6.    Admission to listing 
The Bank will apply for the listing of the new shares on the Madrid, Barcelona, 
Bilbao and Valencia Stock Exchanges through the Spanish Automated Quotation 
System (Mercado Continuo), and shall take the steps and actions that may be 
necessary with the competent bodies of the foreign Stock Exchanges on which 
Banco Santander shares are traded (currently Lisbon, London, Milan, Buenos 
Aires, Mexico and, through ADSs (American Depositary Shares), the New York Stock 
Exchange) in order for the new shares issued under the Increase to be admitted 
to trading. Subject to the granting of the relevant authorizations, it is 
expected that the ordinary trading of the new shares in the Spanish Stock 
Exchanges will begin on February 8, 2011. 
5.       FOREIGN JURISDICTIONS WHERE BANCO SANTANDER IS LISTED 
The options, terms and procedures indicated in this informative document may not 
be the same as those applicable to the shareholders owning Santander shares on 
the different foreign stock exchanges where the Bank is listed.  These 
shareholders are urged to consult the public announcements made and other 
documents published in their jurisdictions. 
6.       SUPPLEMENT TO THIS INFORMATIVE DOCUMENT AND INFORMATION AVAILABLE TO 
THE PUBLIC 
As indicated in the previous paragraphs of this report, certain information 
relating to the Increase is not available on the date hereof.  Specifically, the 
number of shares to be issued, the number of rights needed to receive a share 
and the definitive price of the undertaking to purchase rights are envisaged to 
be published on January 13, 2011 by means of a supplement to this informative 
document.  This document and the supplement thereto to be published on January 
13, 2011 will be available at the Bank's website (www.santander.com) and at the 
Securities and Exchange Commission's (CNMV) website (www.cnmv.es) from the day 
of their publication. 
                            *          *          * 
Banco Santander, S.A. 
 
 
 _______________________________ 
 Ignacio 
Benjumea Cabeza de Vaca 
Secretary General 
 
 
1 The number of shares currently outstanding is 8,329,122,098. 
2 This amount may be slightly reduced as a consequence of the roundings 
envisaged in the capital increase resolution. 
3 Were January 6 not a trading day, the inmediately preceding day shall be 
considered. 
4 Subject to the granting of the relevant authorizations. The admission to 
trading of the new shares on the foreign Stock Exchanges on which the shares of 
the Bank are traded shall also be requested. 
5 Special arrangements are in place for those shareholders who hold their shares 
through the UK nominees and in the form of ADRs - please note section 5. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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