Event Brief of Santander Central Hispano: Acquisition by Abbey of the Distribution Channels and Retail Deposits of Bradford & Bingley - Final.(Broadcast transcript)

PARTICIPANTS

. Arturo Santo Domingo, Banco Santander, IR . Jose Antonio Alvarez, Banco Santander, CFO . Antonio Horta-Osorio, Abbey UK Santander, CEO . Carlos Berastain, Deutsche Bank, Analyst . Santiago Lopez, Credit Suisse, Analyst . Giovanni Carriere, Execution Limited, Analyst . Jagoba Garcia, Fox-Pitt, Kelton, Analyst . Antonio Ramirez, Keefe, Bruyette & Woods, Analyst . Robin Down, HSBC, Analyst . Javier Bernat, Cajon Madrid Bolsa, Analyst . Carlos Paciotos, Deutsche Bank, Analyst . John Raymond, CreditSights, Analyst

OVERVIEW

STD reported that it is basically buying transaction from the Treasury, the retail deposit base of Bradford & Bingley at GBP20b with 2.7m customers.

FINANCIAL DATA

A. Key Data From Call 1. STD reported that it is basically buying transaction from the Treasury, the retail deposit base of Bradford & Bingley at GBP20b with 2.7m customers.

PRESENTATION SUMMARY

S1. Transaction Details (J.A.) 1. Terms: 1. Co. is basically buying transaction from the Treasury, the retail deposit base of Bradford & Bingley (B&B) at GBP20b with 2.7m customers. 1. Buys 197 branches and 141 agencies along with telephone distribution, Internet and all the employees purely related with branch network. 2. Co. got, along with these deposits, GBP200m of capital from Isle of Man operations. 2. There is no credit risk transfer. 1. There is no securities transfer. 2. Pure deposits (indiscernible). 2. Key Points: 1. Key points were to get critical mass in UK. 1. Market sharing deposits in PFS deposits now is going to be at 10%, including A&L, the former Abbey deposits, along with one that Co. just bought from B&B. 2. Got almost 200 branches with significant complementary fit with the ones Co. already owns in UK. 2. There is room for efficiency improvement. 1. Cross-selling improvement, because at the end Co. is going to have 2.7m customers with only deposits. 2. There is room to improve in revenue side and cost side with integration of all the back office functions and once Co. has Partenon in place. 3. At the lower end there is no raise, there is no capital involved. 1. Of total consideration of GBP600m: 1. GBP400m is Co. paid. 2. GBP200m as capital (indiscernible) in Isle of Man. 4. Extends Co.'s balance sheet significantly in UK. 1. Has got GBP20b of customer deposits. 2. Deposit rate is fairly stable. 1. Majority of customers have been for long time working with B&B. 2. It is not hot money, it is kind of traditional deposits. 3. Avg. ticket per customer is bigger. 3. Critical Mass in UK: 1. Branch network Co. is going to have in UK with recurring synergies (indiscernible) since STD bought Abbey back in 2004 coming from 70% gross income to 46.7% and now below than sector. 1. Significant scope for revenue synergies. 1. Fee income per branch vs. one of Abbey is basically approx. 20% of the ones Co. gets in Abbey. 2. Rates of combined entity (Abbey plus A&L plus B&B) is very low. 1. Secured portfolio is small. 2. Mortgage book is prime quality. 3. Having customer deposits vs. loans highest in the sector in UK, probably in 75-80% deposits-to-loan ratio. 3. After transaction, combined deposit rates in UK is [roughly] 10% of market, [GBP116b]. 1. Co. is, along with RBS and Nationwide in the same range of deposits. 4. Financial Impact: 1. Investing GBP400m. 1. Paid GBP200m one-for-one for capital. 2. Expects to get profits after taxes of: 1. GBP40m in 2009. 2. GBP80m in 2011. 3. ROI is around 20% in the third year starting from 10%. 5. Summary: 1. Invested GBP400m for 2% of the total UK retail deposit market. 2. Paid GBP200m for capital (indiscernible) in Isle of Man. 3. Year Three Expectations: 1. Profit, GBP80m. 2. …