AGM additional document

RNS Number : 0825S

Banco Santander S.A.

12 May 2009

 



ANNUAL REPORT REQUIRED BY ARTICLE 116 BIS OF THE SPANISH SECURITIES MARKET LAW

CORPORATE GOVERNANCE PROPOSED DISTRIBUTION OF PROFIT

A total gross dividend of EUR 0.65078 per share to be paid out of 2008 profit will be proposed for approval by the shareholders at the annual general meeting, the detail being as follows: two interim dividends of EUR 0.1352 per share, one of EUR 0.1229 per share and a final dividend of EUR 0.2574 per share. The first three were distributed in August and November 2008 and February 2009, and the fourth will be paid in May 2009. With this fourth dividend, which, if the proposed distribution of profit to be submitted to the shareholders at the annual general meeting is approved, will be the final dividend paid out of 2008 profit, the total dividend per share will be the same as that paid out of 2007 profit. The total dividend, which will amount to EUR 4,812 million, in cash, represents an 18% increase with respect to that for 2007 as a result of the three capital increases carried out since October 2008.

On 1 August and 1 November 2008, dividends amounting to EUR 846 million and EUR 865 million, respectively, were distributed. The third interim dividend out of 2008 profit, amounting to EUR 1,003 million, was paid on 1 February 2009. On the date on which this report is authorised for issue, 23 March 2009, EUR 2,099 million had not yet been distributed, but will be paid on or after 1 May 2009.

SHARE CAPITAL AND TREASURY SHARES

Structure of the share capital and agreements in force relating to the possible issuance of new shares or of debentures convertible into shares

At 31 December 2008 the share capital of Banco Santander, S.A. amounted to EUR 3,997.0 million, represented by 7,994,059,403 fully subscribed and paid shares of EUR 0.50 par value each, all of the same class and of a single series. 

Subsequently, pursuant to the resolution adopted by the shareholders at the extraordinary general meeting held on 26 January 2009, 161,546,320 new shares were issued to enable the implementation of the agreements with Sovereign Bancorp Inc. for Banco Santander to acquire the percentage of the share capital that it did not already own. Subsequent to this transaction, and on the date on which this report is authorised for issue, the share capital of the Bank amounts to EUR 4,077,802,861.50, represented by 8,155,605,723 fully subscribed and paid shares of EUR 0.50 par value each, all of the same class and of a single series.

All the shares carry the same voting and dividend rights and are in the form of book entries.

Also, securities issued in 2007 with a total nominal value of EUR 7,000 million, mandatorily convertible into newly-issued ordinary shares of the Bank, were outstanding at 31 December 2008. These securities can be voluntarily exchanged for shares of the Bank on 4 October 2009, 2010 and 2011, and must be mandatorily exchanged on 4 October 2012. 

The reference price of the shares of the Bank and the exchange ratio were initially set at EUR 16.04 per share and 311.76 shares for each debenture, respectively. Subsequently, as a result of the capital increase performed by the Bank on 3 December 2008, the reference price of the shares of the Bank and the exchange ratio were set at EUR 14.63 per share and 341.76 shares for each debenture, respectively.

As approved by the shareholders at the extraordinary general meeting held on 27 July 2007, the authorised additional share capital amounts to EUR 1,563,574,144.5. The Bank's directors have until 27 July 2010 to carry out capital increases under this authorisation and up to such limit. This resolution empowers the board to fully or partially disapply the pre-emption right in accordance with the terms of Article 159.2 of the Spanish Companies Law.

At 2008 year-end, the limit available for capital increases under the aforementioned authorisation amounted to EUR 623,718,766.50, since a total of EUR 939,855,378 had been used, of which EUR 799,405,940 were used in the capital increase of 3 December 2008 and EUR 140,449,438 were used under a resolution of the board to increase capital to partially cater for the exchange of Santander Securities, at the appropriate time. 

In addition, under item eight of the agenda of the Bank's annual general meeting of 21 June 2008, the shareholders resolved to increase the capital of the Bank by EUR 375 million and granted the board the broadest powers to set the date and establish the terms and conditions of this capital increase within one year from the date of the aforementioned annual general meeting. If the board does not exercise the powers delegated to it within the aforementioned period, these powers will be rendered null and void.

Treasury shares, policy and transactions involving treasury shares

The annual general meeting held on 21 June 2008 expressly authorised the Bank and the Group subsidiaries to acquire shares representing the Bank's capital for any consideration permitted by law, observing the legally-stipulated limits and requirements, until they reach a maximum -including the shares already held by them- of 312,714,828 shares or, as the case may be, a number of shares equivalent to 5 per cent of the existing share capital at any given time, fully paid, at a minimum price per share of the par value and a maximum price of up to 3% higher than the latest quoted price at which the Bank does not trade on its own account on the Continuous Market of the Spanish stock exchanges (including the block market) at the acquisition date in question. This authorisation, which can only be exercised within 18 months from the date of the annual general meeting, includes the acquisition of the shares, if any, that must be delivered to Company employees and directors either directly or as a result of the exercise of options held by them.

At its meeting on 21 June 2008, the board of directors adopted the current resolution on treasury share policy (which can be consulted on the Group's website: www.santander.com). This resolution regulates the main aspects of treasury share transactions, such as their purpose, the persons authorised to conduct them, general guidelines, prices, time limits and reporting obligations. In any event, this policy prohibits the use of treasury stock transactions as a defensive mechanism.

The Bank shares owned by the consolidated companies accounted for 0.81% of the Bank's capital at 31 December 2008. At 31 December 2007 this percentage was less than 0.01% and at 31 December 2006 it represented 0.12% (0.15% including derivatives on own equity instruments) of the Bank's capital.

The transactions with treasury shares performed in the Group's interest by the consolidated companies in 2008 can be summarised as the acquisition of 758,516,801 shares, equivalent to a par value of EUR 379.3 million (cash amount of EUR 7,799.2 million) and the sale of 694,239,750 shares, with a par value of EUR 347.1 million (cash amount of EUR 7,384.1 million). 

The average purchase price of the Bank shares in 2008 was EUR 10.28 per share and the average selling price was EUR 10.64 per share. The net gain in 2008, net of tax, on transactions involving shares issued by the Bank, amounting to EUR 12 million, was recognised in the Group's equity under 'Shareholders' Equity - Reserves'.

Restrictions on the free transferability of the shares

There are no legal or bylaw-stipulated restrictions on the transfer of shares other than those set forth below.

As is the case with all other Spanish credit institutions, there are legal restrictions on the transfer of shares, since Articles 57 and 58 of Law 26/1988, of 29 July, on Discipline and Intervention of Credit Institutions apply to the Bank. These articles provide that any acquisition of a significant ownership interest in a credit institution must previously be notified to the Bank of Spain, which in certain circumstances has a right to object to the acquisition. 

Notwithstanding the foregoing, a description is provided below of a shareholder agreement notified to the Bank which affects the free transfer of certain shares of the Bank.

Restrictions on voting rights

There are no legal or bylaw-stipulated restrictions on voting rights.

In this respect, first paragraph of Article 26.1 of the Bylaws stipulates that 'the holders of any number of shares registered in their name in the corresponding accounting record five days prior to the date on which the general meeting is to be held and who are current in their capital payments shall be entitled to attend the General Meeting'.

Shareholder agreements

In February 2006 three directors, together with other shareholders of the Bank, entered into a shareholder agreement that was notified to the Bank and to the Spanish National Securities Market Commission ('CNMV'), and the document witnessing the aforementioned agreement was filed at both the CNMV Registry and the Cantabria Mercantile Registry.

The agreement, which was signed by Mr. Emilio Botín-Sanz de Sautuola y García de los Ríos, Ms. Ana Patricia Botín-Sanz de Sautuola y O'Shea, Mr. Emilio Botín-Sanz de Sautuola y O'Shea, Mr. Francisco Javier Botín-Sanz de Sautuola y O'Shea, Simancas, S.A., Puente San Miguel, S.A., Puentepumar, S.L., Latimer Inversiones, S.L. and Cronje, S.L. (Sole-Shareholder Company), provides for the syndication of the Bank shares held by the signatories to the agreement or whose voting rights have been granted to them.

The aim pursued by virtue of the syndication agreement, the restrictions established on the free transferability of the shares and the regulated exercise of the voting rights inherent thereto is to ensure, at all times, the concerted representation and actions of the syndicate members as shareholders of the Bank, for the purpose of developing a lasting, stable common policy and an effective, unitary presence and representation in the Bank's corporate bodies.

At the date of execution of the agreement, the syndicate comprised a total of 44,396,513 shares of the Bank (0.555% of its capital at 2008 year-end). In addition, as established in clause one of the agreement, the syndication will be extended, solely with respect to the exercise of the voting rights, to other Bank shares held either directly or indirectly by the signatories, or whose voting rights are assigned to them, in the future. Accordingly, at 31 December 2008, a further 32,352,043 shares (0.405% of the Bank's share capital) were included in the syndicate.

At any given time, the chairman of the syndicate is the person then presiding over the Marcelino Botín Foundation, currently Mr. Emilio Botín Sanz de Sautuola y García de los Ríos. 

The members of the syndicate undertake to syndicate and pool the voting and other political rights inherent to the syndicated shares, so that these rights may be exercised and, in general, the syndicate members heading the Bank may act in a concerted manner, in accordance with the instructions and indications and with the voting criteria and orientation, necessarily unitary, issued by the syndicate, and, for this purpose, the representation of these shares is attributed to the chairman of the syndicate as the common representative of its members.

Except for transfers made in favour of other members of the syndicate or the Marcelino Botín Foundation, prior authorisation must be obtained from the syndicate assembly, which may freely approve or refuse permission for the planned transfer.

Significant direct and indirect ownership interests

At 31 December 2008, the share capital of the Bank was distributed among 3,034,816 shareholders.

The Bank's Shareholder Register showed the following shareholders with an ownership interest of more than 3% in the share capital at 31 December 2008: Chase Nominees Limited (10.73%), EC Nominees Ltd (8.61%), State Street Bank & Trust (7.56%) and Société Générale (3.08%). The Bank understands that the aforementioned entities hold these interests in their capacity as international custodian/depository banks acting for the account of third parties, and has no record of any individual holding of more than 3% in the Bank's share capital or voting rights.

(*) Threshold stipulated, for the purposes of the Annual Corporate Governance Report, in Royal Decree 1362/2007, of 19 October.

The table below includes the direct and indirect holdings of the members of the Bank's board of directors and the ownership interests represented by them at 31 December 2008, per the Bank's Official Shareholder Register. The ownership interests are expressed as a percentage of the Bank's share capital at 31 December 2008:

	Number of Shares				Total as %
Directors	Held Directly	Held Indirectly	Represented	Total  Shares	of Share Capital
Mr. Emilio Botín-Sanz de Sautuola y García de los Ríos (1)	7,991,418	40,936,473	125,330,554	174,258,445	2.420
Mr. Fernando de Asúa Álvarez	34,332	55,625	---	89,957	0.001
Mr. Alfredo Sáenz Abad	658,110	1,243,532	---	1,901,642	0.024
Mr. Matías Rodríguez Inciarte (3)	804,640	81,625	76,806	963,071	0.012
Mr. Manuel Soto Serrano	56,686	338,340	---	395,026	0.005
Assicurazioni Generali S.p.A	12,243,277	78,534,810	---	90,778,087	1.136
Mr. Antonio Basagoiti García-Tuñón	700,000	---	---	700,000	0.009
Ms. Ana Patricia Botín-Sanz de Sautuola y O'Shea (1)	4,994,461	4,024,136	---	9,018,597	0.000
Mr. Javier Botín-Sanz de Sautuola y O'Shea (1) (2)	4,793,481	5,350,000	---	10,143,481	0.000
Lord Burns (Terence)	100	27,001	---	27,101	0.000
Mr. Guillermo de la Dehesa Romero	100	---	---	100	0.000
Mr. Rodrigo Echenique Gordillo	651,598	9,180	---	660,778	0.008
Mr. Antonio Escámez Torres	749,359	---	---	749,359	0.009
Mr. Francisco Luzón López	1,167,071	48,000	---	1,215,071	0.015
Mr. Abel Matutes Juan	122,048	2,588,937	---	2,710,985	0.034
Mr. Juan Rodríguez Inciarte	1,264,197	---	---	1,264,197	0.016
Mr. Luis Ángel Rojo Duque	1	---	---	1	0.000
Mr. Luis Alberto Salazar-Simpson Bos	183,750	5,580	---	189,330	0.002
Ms. Isabel Tocino Biscarolasaga	15,140	---	---	15,140	0.000
	36,429,769	133,243,239	125,407,360	295,080,368	3.691

(1)    Mr. Emilio Botín-Sanz de Sautuola y García de los Ríos has been attributed the voting rights of 108,191,035 shares owned by the Marcelino Botín Foundation (1.35% of the share capital), 8,096,742 shares held by Mr. Jaime Botín-Sanz de Sautuola y García de los Ríos, 9,042,777 shares held by Mr. Emilio Botín-Sanz de Sautuola y O'Shea, 9,018,597 shares held by Ms. Ana Patricia Botín-Sanz de Sautuola y O'Shea and 10,143,481 shares held by Mr. Javier Botín-Sanz de Sautuola y O'Shea. Therefore, although the table above shows the direct and indirect ownership interests of each of the two last-mentioned directors of the Entity, these holdings, in the column relating to the total percentage of share capital held, are included together with those belonging to or also represented by Mr. Emilio Botín-Sanz de Sautuola y García de los Ríos.

(2)    Mr. Javier Botín-Sanz de Sautuola y O'Shea has the status of a proprietary director, since he represents on the board the 2.420% of the share capital relating to the holdings of the Marcelino Botín Foundation, Mr. Emilio Botín-Sanz de Sautuola y García de los Ríos, Ms. Ana Patricia Botín-Sanz de Sautuola y O'Shea, Mr. Emilio Botín-Sanz de Sautuola y O'Shea, Mr. Jaime Botín-Sanz de Sautuola y García de los Ríos, Ms. Paloma O'Shea Artiñano and his own holding.

(3)    Mr. Matías Rodríguez Inciarte has been attributed the voting rights of 76,806 shares owned by his two children.

BOARD OF DIRECTORS

Rules governing the appointment and replacement of members of the board of directors and the amendment of the Bylaws

The most significant regulations governing the procedures, criteria and competent bodies for the nomination, re-election and renewal of directors are contained in various provisions of the Spanish Companies Law, the Regulations of the Mercantile Registry, the Bank's Bylaws (Articles 20.2.i, 41, 42, 55 and 56) and the Rules and Regulations of the Board of Directors (Articles 6, 7, 17 and 21 to 25). The legislation governing the creation of credit institutions is also applicable. 

1 At its meeting on 23 March 2009, the board of directors resolved to approve new Rules and Regulations of the Board in order to adapt certain aspects of its internal rules to the Bylaws approved by the shareholders at the annual general meeting held on 21 June 2008. Any reference in this report to the Rules and Regulations of the Board will relate to the new wording. The New Rules and Regulations of the Board are available on the Group's website: www.santander.com. 

Following is a description of the most relevant features of the framework resulting from all the aforementioned provisions:

- Number of directors and term of office:

The Bylaws (Article 41.1) provide for a maximum of 22 directors and a minimum of 14 directors. The Bank's board is currently composed of 19 directors. 

The term of office of a director is five years, although directors can be re-elected. Directors designated by coߛoptation and ratified at the earliest subsequent general meeting shall cease to hold office on the same date as that on which his/her predecessor would have done so.

- Competence and procedure for appointment:

Responsibility for the nomination and re-election of directors lies with the general meeting. Nevertheless, in the event that directors vacate their office during the term for which they were appointed, the board of directors may provisionally designate another director until the shareholders, at the earliest subsequent general meeting, either confirm or revoke this appointment.

Proposals for the nomination, re-election and ratification of directors submitted by the board of directors to the general meeting and decisions adopted by the board itself by virtue of its co-optation powers must be preceded by the related nomination from the appointments and remuneration committee. If the board objects to the committee's nomination, it must give the reasons for its decision and place these reasons on record.

The directors whose appointment, re-election, ratification or removal has been proposed shall refrain from participating in the deliberations and ballots of the board and of the committee.

The rules applicable for the amendment of the Bylaws do not establish more exacting conditions than those stipulated by law and, accordingly, the requisites established in the Spanish Companies Law shall apply.

- Appointment requisites and restrictions:

It is not necessary to be a shareholder in order to be appointed a director, except when this is legally required in the case of provisional appointment by the board (co-optation), as mentioned above. The following persons may not hold the office of director: undischarged bankrupt traders and non-traders, minors and the incapacitated, persons sentenced to penalties disqualifying them from holding public office, those sentenced for gross breach of the law or of social provisions, persons barred from trading and government employees who discharge functions related to the Bank's specific activities. Directors must be persons of renowned commercial and professional integrity, competence and solvency. There is no age limit for directors.

Nominees for the position of director will be selected on the basis of whether they are persons of renowned solvency, competence and experience, and, furthermore, particular importance will be attached, where appropriate, to the size of their shareholdings in the Bank's capital. 

Individuals representing legal-entity directors are subject to the same requirements as individual directors. 

On taking office, the designated directors must formally agree to fulfil all the obligations and perform all the duties inherent to the position. 

- Proportional system:

Shares pooled to form an amount of share capital equal to or greater than that which results from dividing the total share capital by the number of board members will carry entitlement to designate, on the legally-stipulated terms, a proportionate number of directors, disregarding fractions.

- Vacation of office or removal:

Directors shall cease to hold office when the term for which they were appointed elapses, unless they are re-elected, when the general meeting so resolves, or when they resign or place their office at the disposal of the board.

Directors must place their office at the disposal of the board and tender the related notice of resignation if the board, after receiving the report of the appointments and remuneration committee, should deem this appropriate, in those cases in which the directors might have an adverse effect on the functioning of the board or on the Bank's credibility and reputation and, in particular, when they are subject to any incompatibility or prohibition provided for by law that would bar them from holding office.

Furthermore, the directors must, at their earliest convenience, notify the board of any circumstances which might jeopardise the Bank's credibility and reputation and, in particular, of any lawsuits in which they are involved as accused parties.

Lastly, the Rules and Regulations of the Board (Article 23.3) specifically provide that non-executive proprietary directors must tender their resignations, in the appropriate number, when the shareholder they represent disposes of, or significantly reduces, its ownership interest.

Powers of the general meeting and of the board of directors

The powers of the general meeting and of the board of directors of the Bank are governed by current legislation and the Bank's Bylaws, the Rules and Regulations for the General Shareholders' Meeting and those of the Board, which can be consulted on the Group's website at www.santander.com. 

Following is a summary of the most noteworthy features:

- Powers of the general meeting

As provided for in Article 20 of the Bylaws, the general meeting is authorised to decide on any matters attributed to it by law or under the Bylaws. In particular, without limitation, the general meeting has the power:

(i)    To appoint and remove the directors, and to ratify or revoke the provisional appointments of directors made by the board itself, and to scrutinise and approve their performance.

(ii)    To appoint and remove the auditors.

(iii)    To approve, if appropriate, the annual financial statements; to decide on the distribution of profit; and to approve, if appropriate, the annual consolidated financial statements.

(iv)    To resolve to issue debentures or other fixed-income securities, increase or reduce capital, transform, merge, spin off or dissolve the Company and, in general, make any amendment to the Bylaws.

(v)    To authorise the board of directors to increase share capital, as provided for in the Spanish Companies Law and in the Bylaws.

(vi)    To authorise the acquisition of treasury shares

(vii)    To decide on any matters submitted to it by resolution of the board of directors.

(viii)    To decide on the application of share- or share-option based remuneration systems and of any other remuneration scheme linked to the value of the Bank's share, irrespective of the eventual beneficiaries of such remuneration schemes.

(ix)    To resolve to subsidiarise or contribute to subsidiaries the Company's operating assets, thus converting the Company into a mere holding company.

(x)    To approve, as appropriate, the acquisition or disposal of assets when, in view of their quality and volume, they entail an effective change in the company objects; and

(xi)    To resolve to conduct transactions whose effect is equivalent to the liquidation of the Company.

The powers not attributed by law or under the Bylaws to the general meeting correspond to the board of directors.

- Powers of the board of directors

As established in Article 38.1 of the Bylaws, the board of directors has the broadest powers to manage the Bank and, except with respect to matters for which the general meeting has sole responsibility, the board of directors is the Bank's senior decision-making body. The board shall, in all cases, directly assume, on a non-delegation basis, hold those powers directly reserved to it by law, and any other powers required to exercise responsibly the general supervisory function.

Without prejudice to any other general or specific powers of attorney that might be made, the powers to represent the Bank, in or out of court, correspond to the board of directors, which shall act as a collective body. The chairman of the board is also empowered to represent the Bank. The secretary of the board and, if any, the deputy secretary, have the representative powers required to document in public deeds and request the registration of resolutions of the general meeting and the board of directors.

The Rules and Regulations of the Board (Article 3) establish that, except with respect to matters for which the general meeting has sole responsibility, the board of directors is the Bank's senior decision-making body.

Without prejudice to the foregoing, the board's policy is to delegate the conduct of the Bank's ordinary operations to the executive bodies (mainly the executive committee) and to the management team, and to focus on the general supervisory function, directly assuming and exercising, on a non-delegation basis, the responsibilities that this function entails, including in particular the following:

a)    Approval of the Bank's general policies and strategies, in particular:

(i)    Strategic plans, management targets and annual budget;

(ii)    Dividend and treasury share policy;

(iii)    General risk policy;

(iv)    Corporate governance policy;

(v)    Corporate social responsibility policy;

b)    Approval of shareholder, market and public reporting and communication policies. The board is responsible for furnishing the markets with swift, accurate and reliable information, specifically that relating to the shareholder structure, to substantial changes in governance rules, to particularly significant related party transactions or to treasury shares.

c)    Approval of the financial information that the Bank must periodically disclose.

d)    Approval of transactions involving the acquisition and disposal of substantial Bank assets and major corporate transactions, unless such approval is to be given by the general meeting, in conformity with Article 20 of the Bylaws.

e)    Approval, within the framework of Article 58 of the Bank's Bylaws, of the remuneration for each director.

f)    Approval of the agreements regulating the performance by the directors of duties other than those of a director and the remuneration corresponding to them for discharging functions, as executive directors or otherwise, other than the collective supervision and decision-making duties performed in their capacity as mere board members.

g)    Appointment, remuneration and, where appropriate, removal of the other senior executives and definition of the basic terms and conditions of their contracts.

h)    Control of management activity and evaluation of executives.

i)    Authorisation to create or acquire holdings in special purpose vehicles or entities domiciled in countries or territories deemed to be tax havens.

j)    The responsibilities specifically provided for in the Rules and Regulations of the Board.

The powers detailed in sections (c), (d), (e), (f), (g), and (i) may be exercised, when advisable for reasons of urgency, by the executive committee, provided the board is subsequently informed at the earliest meeting held.

- Committees of the board of directors

The board has set up, as decision-making committees, an executive committee, to which general decision-making powers have been delegated, and a risk committee, to which specific risk-related powers have been delegated. 

Also, the board has a series of other committees with supervisory, reporting, advisory and proposal powers, namely the audit and compliance committee, the appointments and remuneration committee, the international and technology committee and the productivity and quality committee.

Following is a summary of the rules governing the organisation and operation of the executive committee and the risk committee.

Executive committee

The Executive Committee, regulated in Article 51 of the Bylaws and Article 14 of the Rules and Regulations of the Board, has been delegated all the powers of the board of directors, except for those not delegable by law and those listed below.

a)    Approval of the Bank's general policies and strategies, in particular:

(i)    Strategic plans, management targets and annual budget;

(ii)    Dividend and treasury share policy;

(iii)    General risk policy;

(iv)    Corporate governance policy;

(v)    Corporate social responsibility policy.

b)    Approval of shareholder, market and public reporting and communication policies. The board is responsible for furnishing the markets with swift, accurate and reliable information, specifically that relating to the shareholder structure, to substantial changes in governance rules, to particularly significant related party transactions or to treasury shares.

c)    Control of management activity and evaluation of executives.

d)    The powers pertaining to the board in relation to its composition and operation, the remuneration and duties of directors, the hiring of technical assistance for directors, and the board's relations with shareholders, the markets and the auditors.

As indicated in the 'Powers of the board of directors' section, when reasons of urgency so advise, certain of these powers may be exercised by the executive committee, provided the board is subsequently informed at the earliest meeting held.

The executive committee shall comprise a maximum of twelve directors. The chairman of the board of directors will at all times be one of the members of the executive committee, which he will preside. This committee proposes to the board the decisions for which it has sole responsibility. The executive committee is accountable to the board for the issues addressed and the resolutions adopted at its meetings and makes copies of the minutes available to the members of the board.

Risk committee

The risk committee is regulated in Article 52 of the Bylaws and Article 15 of the Rules and Regulations of the Board. It shall comprise a minimum of four and a maximum of six directors and shall be presided over by a deputy chairman with executive functions. 

This committee has been permanently delegated the following powers of the board of directors:

a)    To decide on the granting of loans, the opening of credit accounts and risk transactions in general, as well as on their modification, assignment and cancellation, and on global risk management -country risk, interest rate risk, credit risk, market risk, operational risk, treasury risk, derivatives risk-, and to determine and approve the general and specific conditions of discounting facilities, loans, deposits, guarantees and banking transactions of all kinds.

b)    To arrange, modify, subrogate to and terminate finance lease agreements for all manner of movable property and real estate, on the terms and conditions freely determined by it, and to acquire the assets leased under such agreements, with no limitation as to their amount or quantity.

c)    As security for the obligations of third parties, and on their behalf, whether they be individuals or legal entities, with no limitation as to the amount, vis-à-vis all manner of individuals and legal entities, public or private agencies or bodies, specifically for the purposes of the Public Authority Contracts Law and supplementary provisions thereto, and with such conditions and clauses as it may deem appropriate, the Committee may arrange, modify, withdraw or cancel guarantees of any kind or any other type of security, by making, as appropriate, any cash or securities deposits that may be required of it, with or without security, and may bind the Company, even jointly and severally with the principal debtor, thereby waiving the benefits of order, discussion and division. 

Per Article 15.3 of the Rules and Regulations of the Board, its functions are as follows:

a)    To propose to the Board the risk policy for the Group, which will include in particular:

(i)    The various types of risk (operational, technological, financial, legal and reputational, inter alia) to which the Company is exposed, including contingent liabilities and other off-balance-sheet items in the financial or economic risks;

(ii)    The information and internal control systems to be used to control and manage the aforementioned risks;

(iii)    The level of risk deemed acceptable by the Company;

(iv)    The measures envisaged to mitigate the impact of identified risks in the event that they materialise; 

b)    To conduct systematic reviews of the Group's exposure to its main customers, economic activity sectors, geographical areas and types of risk.

c)    To be acquainted with and update, where appropriate, the management tools, improvement initiatives, project development and any other significant risk control actions, specifically including the characteristics and behaviour of the internal risk models and the result of their internal validation.

d)    To assess and implement the indications issued by the supervisory authorities in the performance of their functions.

e)    To ensure that the Group's actions are consistent with the previously established level of risk tolerance and to empower lower-ranking committees or executives to assume risks.

f)    To decide on transactions outside the powers delegated to lower-ranking bodies and on the overall limits for pre-classified risk categories in favour of economic groups or in relation to exposure by type of risk.

SIGNIFICANT AGREEMENTS ENTERED INTO BY THE COMPANY WHICH WILL COME INTO FORCE, BE MODIFIED OR TERMINATE IN THE EVENT OF A CHANGE IN CONTROL OF THE COMPANY RESULTING FROM A TAKEOVER BID 

No such agreements exist.

AGREEMENTS BETWEEN THE COMPANY AND ITS DIRECTORS, MANAGEMENT PERSONNEL OR EMPLOYEES WHICH PROVIDE FOR TERMINATION BENEFITS WHEN THE LATTER RESIGN OR ARE DISMISSED WITHOUT JUSTIFICATION OR IF THE EMPLOYMENT RELATIONSHIP ENDS AS A RESULT OF A TAKEOVER BID

In addition to those described in Note 5 of the Group's annual report for executive directors, the Bank has established certain termination benefit clauses in favour of its non-director senior executives. Had the aforementioned circumstance arisen at 31 December 2008, it would have given rise to termination benefits totalling EUR 86.6 million for these executives.

23 March 2009

 

END

 

 

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