Further re Acquisition

Banco Santander Central Hispano SA
21 November 2000


                    ADDITIONAL NOTE ABOUT BANESPA ACQUISITION

Brazilian Financial System. Differentiating Features

The Brazilian financial system represents around 40% of the banking business of
Latin  America. Some distinctive features compared to the rest of the financial
systems of the region are:

*  Large sized banks. For example, the main Brazilian private bank (with a 10% 
market share) has 1.3 times more asset volume than the main Mexican bank (with a
25% market share).

*  Progressive banking concentration process. Since 1995 acquisitions/mergers
totalling USD95,000 mill. in assets have taken place.

*  Highly extensive distribution networks, both physical and virtual (e-banking,
telephone banking, WAP).

*  The main banks are very diversified in terms of business lines, which allows
them to generate a high level of commissions.

*  High profitability. ROEs of between 16% and 24% in the case of the main
banks.

*  Loyal customer base particularly in the A/B/C segments.

*  Low level of efficiency. Expenses represent 8% of assets.

*  High capital ratios. The average capital/weighted asset ratio is around 17%
among the leading banks (the minimum stands at 11 %).

*  Progressive reduction in liquid banking asset requirements which leads to a
greater value derived from customer deposits.

*  Low foreign bank presence, 11% market share, well below the average for the
Region. Large weight of public banks (50% market share)

75% of the Brazilian financial services market is concentrated in the South
Southeast (the region from Minas Gerais to Rio Grande do Sul). The banking
penetration level in this region is above the Brazilian and Latin American
average.

The State of Sao Paulo, with 36 million inhabitants and a GDP of around
USD200,000 million, is the most important economic and financial center in Latin
America, with an adjusted GDP per capita of USD8,564, 45% of the country's
deposits and 40% of branches.

Added Value of Banespa to the Santander Central Hispano Group

Banespa balances and complements BSCH's regional presence in Latin America,
allowing greater diversification and a lower risk profile in aggregate terms and
consolidates BSCH's position as leading financial institution in Latin  America.
Banespa represents around 15% of the Group's pro-forma assets in the region.

If the current presence of the Group in Brazil is added (Banco Santander     
Brazil - Meridional), this country will represent 10% of BSCH's total assets and
around 30% of the assets in Latin America, a level in accordance with the
relative size of Brazil in the region and with the level of diversification
sought.

Banespa allows an optimal scale to be reached in Brazil, both in terms of
customers and distribution network, to become one of the leading banks in the 
South Southeast region and the State of Sao Paulo. Following the incorporation 
of Banespa, the Group will have 4 million customers to become the second private
bank in Sao Paulo with 676 branches, the first private bank in Rio Grande do Sul
with 118 branches and the third private bank in the Sur Sudeste Region (846
branches in this region, over a combined total of 928).

The combination of Santander Brazil and Banespa allows an adequate critical mass
to be achieved in the state of Sao Paolo, reaching market shares of 9% in
assets, 11% in deposits, 8% in funds and 5% in loans.

Banespa - Current Business Model

BANESPA (Banco del Estado de Sao Paulo) is the sixth bank of the Brazilian 
financial system by deposits (seventh by assets). It has USD15,500 million in 
assets, USD6,100 million in deposits, USD2,400 million in loans and USD3,600
million in mutual funds. The Bank has USD2,400 million of capital and reserves,
which ranks it fifth in the system. The Bank has 22,620 employees.

The Bank's distribution system is very extensive: 573 branches, 742 PABs
(branches located in companies, public organizations, universities etc.) and 
692 PAEs (electronic points of assistance or ATMs not located at a branch) and
598 ATMs. The Bank has one of the most extensive networks of ATMs, 'call
centers', telephone and internet banking (offers WAP services) in the State. 58%
of customer generated transactions are channeled through complementary channels.

94% of its branches and PABs are located in the State of Sao Paulo. In the 
Capital and the metropolitan area of Sao Paulo, the Bank has a branch and PAB
market share of 9%; in the interior, the Bank's relative presence increases,
reaching a market share of 23%.

Its activity is mainly retail with 2.8 mill. customers of which 2 mill. are 
public servants, considered one of the most attractive segments due to their 
high income level and stability of employment. 1.8 million of the customers are
A, B or C. Also, 100,000 companies are clients of the Bank. Over half the
customers receive their salary through the Bank which provides a high level of
customer loyalty.

The Bank emphasizes the capture of customer resources, both sight as well as
time deposits.

The Bank has a 1.3% market share in loans, lower than its natural share or its 
deposit share (3.9%). The loan portfolio is very dispersed, reflected by the
fact that the 10 largest debtors only represent 8% of the total portfolio. As  a
result of the low level of intermediation, about 45% of its assets are public
securities.

The Bank offers a range of products which are typical of a retail oriented bank:
deposits, savings accounts, loans, credit cards, leasing, mutual funds and
insurance. Cross selling and product penetration among the customer base is
still very low, offering great growth potential. For example, only 10% of
customers have a mutual fund at the Bank, 20% have a credit card y 23% a
personal loan. On the other hand, over 75% of the customer base have a current
account with the Bank.

Banespa's shareholder structure                                        

Banespa's capital comprises 37,440,000 shares, of which 50% are ordinary voting
shares and the remaining 50% are preference shares, without voting rights.

The auction was held for 60% of the ordinary shares which represent 60% of the
control of the institution and a 30% financial stake. The Bank's capital and
reserves total USD2,400 million.

Following the auction, Banespa's shares are distributed as follows:

                                      Ordinary shares       Preference shares

Banco Santander Central Hispano             60%                     -
National Treasury                          6.7%                     -      
Cabesp                                    15.5%                     -
Employees                                  1.4%                  3.4%
Banesprev                                  3.9%                  0.1%
Others                                    12.5%                 96.5%
                    


Valuation and price of the acquisition

Banco Santander Central Hispano has undertaken an exhaustive 'due diligence and
valuation of Banespa, concluding that the value of the franchise is situated
between R$10,093 million and R$11,093 million for 100% of the shares. This
valuation relates to management targets set out by the Group for Banespa and to
an IRR in the range of 20.6% to 17.6%. The valuation is the equivalent to a
multiple in the range of 2.3 to 2.5 times book value and to a P/E ratio of 10.1
to 11.1 times projected 2001 earning restructuring (excluding restructuring
costs).

The price to be paid for 60% of shares with voting rights amounts to R$7,050
million (USD3,550 million) including the control premium. The implicit valuation
is R$10,593 million, the median of the valuation range, and implies an IRR of
19.0%.

Merrill Lynch has advised Santander Central Hispano on the valuation of Banespa
and has issued a 'fairness opinion' regarding the price.


           Management Targets for Banespa under the Santander Central
                                  Hispano Group

1.  Net income in the range of USD750 - USD800 mill. in 2003. This profit level
is compatible with a ROE of 25% that year.

2.  12% annual customer deposit growth, through active management of traditional
products and the launching of new 'star' products.

3.  Growth of treasury intermediation operations to take advantage of the Bank's
excess capital

4.  15% annual loan growth.

5.  Efficiency improvement and simplification of operations - the target is to
reach a cost/income ratio of under 50% in three years (today it is 72%). This
requires a reduction of 33% of the cost base in 3 years.

6.  Enhance the profitability of the customer base through an increase in the 
penetration of products to generate commissions - the target in three years is 
for commissions to represent 35% of earnings (today 22%). This means increasing
commissions US$275 million in 3 years, a 61% rise over 2000 (18% accumulated
annual growth).