Business Context and Reporting Period
This Form 6-K filing by Banco Santander, S.A. dated August 1, 2025, reports the results of the most recent stress test exercise conducted by the European Banking Authority (EBA) and the European Central Bank (ECB). The exercise covers a three-year projection period from the end of 2024 to the end of 2027, applying both baseline and adverse scenarios to the consolidated perimeter of Grupo Santander.
Key Financial Metrics: Capital Ratios
The filing focuses exclusively on projected Common Equity Tier 1 (CET1) capital ratios under regulatory stress tests. No revenue, profit, cash flow, or debt figures are provided in this document.
| Date | Scenario | Fully-loaded CET1 Ratio | Phased-in CET1 Ratio |
|---|---|---|---|
| 31/12/2025 | Adverse | 10.46% | 10.94% |
| 31/12/2025 | Baseline | 13.58% | 14.22% |
| 31/12/2026 | Adverse | 11.12% | 11.63% |
| 31/12/2026 | Baseline | 14.56% | 15.23% |
| 31/12/2027 | Adverse | 10.46% | 10.91% |
| 31/12/2027 | Baseline | 14.65% | 15.31% |
Note: The Fully-loaded CET1 ratio as of 31 December 2024 was 12.19%, and the Phased-in CET1 ratio was 12.78%.
Material Changes and Regulatory Adjustments
The stress test results reflect the application of new regulatory frameworks, specifically Regulation (EU) 2024/1623 ("CRR3"), which became effective on January 1, 2025. Key adjustments impacting the Fully-loaded CET1 ratio calculation include:
- Transitional Provisions: Application of CRR3 transitional provisions as if fully implemented resulted in a -0.25% adjustment.
- Operational Risk: Exclusion of the alternative standardized approach for operational risk (Articles 314.3 and 314.4 of CRR3) resulted in a -0.32% adjustment.
Under the adverse scenario, the Fully-loaded CET1 ratio is projected to decline from the 2024 baseline of 12.19% to 10.46% by the end of 2025 and 2027, before recovering slightly to 11.12% in 2026.
Guidance, Outlook, and Risks
Outlook: The filing projects capital adequacy under two distinct scenarios. The baseline scenario suggests a strengthening of capital ratios over the three-year period, while the adverse scenario indicates a temporary dip in capital ratios before stabilization.
Risks and Contingencies: The document includes standard disclaimers stating that past performance does not indicate future outcomes and that the document does not constitute a profit and loss forecast. It also notes reliance on third-party information without independent verification by Santander.
Unusual Items: The filing highlights the complexity of the transitional implementation schedule for CRR3, noting that the published Fully-loaded ratio is an estimate calculated according to EBA methodology.
Investor Verification Checklist
- Verify the specific assumptions used in the EBA/ECB adverse scenario to understand the drivers of the projected CET1 decline.
- Confirm the impact of CRR3 operational risk adjustments on the bank's overall capital planning beyond the stress test period.
- Review the full 20-F annual report for actual revenue, profit, and liquidity metrics, as this 6-K filing contains only stress test capital ratios.
- Monitor the bank's ability to maintain the Phased-in CET1 ratio above regulatory minimums under the adverse scenario (projected at 10.91% in 2027).