Business Context and Reporting Period
This Form 6-K filing by Banco Santander, S.A. (Santander) is dated June 24, 2025. The report discloses "Other Relevant Information" regarding a capital management transaction involving the tender offer for existing contingent convertible perpetual preferred securities and the issuance of a new series of similar securities.
Key Financial Metrics and Capital Structure
- Existing Securities: €1,500,000,000 aggregate nominal amount of 4.375% Non-Step-Up Non-Cumulative Contingent Convertible Perpetual Preferred Tier 1 Securities (ISIN: XS2102912966).
- New Securities: €1,500,000,000 aggregate nominal amount of new contingent convertible perpetual preferred securities.
- New Coupon Rate: 6.00% per annum for the first six years (until July 2, 2031), thereafter reviewed every five years with a margin of 381.9 basis points over the 5-year Mid-Swap Rate.
- Capital Ratio: As of March 31, 2025, the consolidated Common Equity Tier 1 (CET1) ratio was 12.9%.
- Conversion Trigger: New securities convert to ordinary shares if the CET1 ratio falls below 5.125%.
Material Changes and Transaction Details
Santander has announced a tender offer to purchase up to €1,500,000,000 of its existing Preferred Securities for cash. Simultaneously, the bank intends to issue a new series of Preferred Securities with an aggregate nominal amount of €1,500,000,000 to replace the tendered instruments. The Maximum Acceptance Amount for the tender offer is set at €1,500,000,000, though the Offeror reserves the right to decrease this amount at its sole discretion.
Guidance, Outlook, and Risks
- Timeline: The tender offer commenced on June 24, 2025, and expires at 5:00 p.m. CET on June 30, 2025. Settlement for both the tender offer and the new issuance is expected on July 2, 2025.
- Listing: The New Preferred Securities will be admitted to listing on the Global Exchange Market of Euronext Dublin.
- Investor Restrictions: The New Preferred Securities are complex financial instruments intended solely for eligible counterparties and professional clients. They are not suitable for retail investors in the EEA, UK, or other specified jurisdictions.
- Contingencies: The offer is subject to conditions including a "New Financing Condition." The final acceptance amount will be announced after the offer closes.
Key Facts for Investor Verification
- Verify the final acceptance amount of the tender offer, as Santander may reduce the Maximum Acceptance Amount.
- Confirm the settlement date of July 2, 2025, remains unchanged.
- Review the Tender Offer Memorandum for detailed terms, conditions, and the basis for the conversion of the new securities.
- Note that the new coupon rate (6.00%) is higher than the existing rate (4.375%), reflecting current market conditions for the first six-year period.
- Ensure compliance with jurisdictional restrictions, as the new securities are not available to retail investors in the EEA or UK.