Instrumentos de recolección y análisis de datos

This segment, managed by Santander Global Banking & Markets, contributed 11% of operating areas total gross operating income and 16% of profit before tax (EUR 1,830 million, 28.4% more than in 2006).

These good results were due to three factors:

• First, the strong growth in customer revenues (+24%), which accounted for more than 77% of total revenues, as a result of the increasing contribution of greater value-added businesses (markets, investment banking and cash management). Of note was the 42.2% year-on-year rise in fees, driven by corporate finance activities, structured financing and trading of securities.

The increased revenues were the result of the investments made to strengthen the global management capacities of the product and business areas, applied to markets very active in corporate operations, particularly in the first half of the year, as well as extending Santander Global Connect.

• Second, the small contribution of the results of trading activity in the second half of the year, affected by instability in markets, compared with the first half’s excellent results. These revenues for the whole year were lower than in 2006.

• Third, lower generic provisions in 2007 compared with large allocations in 2006, generated by certain operations. These factors were reflected in the income statement. Gross operating income grew 12.6%, backed by commercial revenue which increased 27.8% as gains on financial transactions were 28.9% lower because of the lower contribution from trading.

Operating expenses (+23.1%) continued to reflect the investment made in developing markets and global transactional banking. The efficiency ratio was 32.5%.

Net operating income was 8.5% higher at EUR 1,928 million and profit before tax increased at a much faster pace (+28.4%) because of lower needs for generic provisions.

Santander Global Banking & Markets combined this solid contribution to the Group in 2007 with an intensified global business focus, which, structured in a double (customer-product) vector, strengthens the base for future growth and widens its capacity to extract synergies from the Group’s commercial positioning.

In the customer vector, the Global Customer Relationship Model, which manages the main corporate and institutional customers, continued. The incorporation since the beginning of 2007 of new customers (121, mostly from Latin America), the restructuring of the coverage area and the development of specialised units, as well as stronger links with product areas, particularly global investment banking in a period of strong corporate activity, pushed up the Model’s revenues to EUR 1.243

million, 27% more than in 2006 on a like-for-like basis. All countries registered growth.

Of note was the better composition of revenues, with a greater share in the Model of higher value-added activities and, consequently, a lower one of basic financing (from 18% in 2006 to 16%).

The product vector’s three areas also registered significant progress in line with their strategic priorities:

1. Global Transaction Banking

In this area, which comprises various corporate products (global cash management, trade finance, basic finance and global securities – custody), the Group continued to strive to attain leadership in its natural markets. Gross operating income grew 16% for the whole year, a faster year-on-year pace than in previous quarters.

Of note by products was cash management, which embraces the families of transactional products (payments to and by suppliers, payroll), financing (discounting, advances, factoring, confirming) and funds. Its gross operating income, which accounted for more than one-third of the total, increased 20% year-on-year, spurred by Brazil and Argentina (+38% and +46%, respectively).

2. Global Investment Banking.

This area covers corporate finance (mergers and acquisitions, equity capital markets), structured finance (project finance, acquisition finance and syndicated loans) and asset and capital structuring. Its objective is to consolidate our leadership in Spain and Portugal and in Latin America and continue to accompany our clients in other markets. All these businesses performed well in 2007: revenues where 66% higher.

In Corporate Finance, Santander participated in the

intermediation and advisory services for 150 operations, 53% of them outside of Spain. Total revenues more than doubled, with a good contribution from all activities.

PROFIT BEFORE TAXES

NET OPERATING INCOME

Million euros Million euros

GLOBAL WHOLESALE BANKING

2006 2007 2006 2007

1,425

1,830

+28.4%

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Of note in Mergers and Acquisitions were the following operations:

• In Europe, the acquisition of stakes in Endesa and Repsol by Acciona and Sacyr-Vallehermoso, respectively the sale of Ferrovial Inmobiliaria, the sale by Repsol of 10% of CLH, the purchase of Endemol by the consortium including Telecinco and other takeover bids of Acciona/Enel for Endesa, Nefinsa for Uralita and Imperial Tobacco for Altadis.

• In Latin America, of note was the privatisation of Ecogas, Colombia’s largest privatisation, in which Santander advised the Colombian government; the sale in Costa Rica of assets of Grupo Pujol-Martí; the acquisition of Gas de Atacama by Southern Cross in Chile; the sale of assets by Petribú in Brazil; the purchase of INCO by CVRD; the acquisition by grupo Gerdau of Mexico’s Siderurgia Tutitlan; the takeover bid of Arcelor for its subsidiary Arcelor Brasil and in Mexico advising the consortium of ICA/Goldman Sachs on the privatisation of FARAC.

In Equity Capital Markets, there was a great deal of activity in primary markets in Europe and Latin America, particularly in Brazil. Of note in Europe was Santander’s participation in the listing in Spain of Iberdrola Renovables, Fluidra, Laboratorios Almirall, Criteria and Realia and the capital increases of La Seda, Fersa and Zeltia; and in Portugal the placement of REN. In Latin America, we participated in the capital increase of Grupo ICA in Mexico and the listings in Brazil of Dufry South América, MPX Energía and Providencia, and the capital increases of Hering and Paranapanema.

In Structured Finance, all products and geographic areas performed well. Of note among the 106 operations were: • In Europe, financing Enel’s takeover bid for shares of Endesa

(bookrunner, as well as leading the issue and underwriting the guarantees before the National Securities Market Commission), Imperial Tobacco’s takeover of Altadis

(mandated lead arranger, as well as participating in the issue and underwriting of the guarantee), Iberdrola’s acquisition of Scottish Power, FCC’s purchase of Waste Recycling Group, Vodafone’s purchase of Hutchinson Essar, the sale of Ferrovial Inmobiliaria, the acquisition of Caprabo by Eroski (structuring and underwriting the whole operation) and the acquisition of Avanza.

We also led various financings such as those of FCC and Abengoa (bookrunner). Other noteworthy operations were: mandated lead arranger (MLA) in the financing of Porsche’s acquisition of a stake in Volkswagen, MLA in the revolving credit lines of PSA, Casino, Telecom Italia, Volkswagen, Merck and Holcim; and sub-underwriter in the financing of Rio Tinto’s purchase of Canada’s Alcan and in the financing of

Continental’s purchase of VDO.

• In Latin America, Santander Mexico was the financial advisor and underwriter of the FARAC project, the largest privatisation of roads in Latin America in recent years (600 km for more

than $4 billion). It also acted as adviser and financer of the consortium that won the tender to build a hydroelectric plant in Brazil, and in Colombia’s privatisation of Ecogas.

Several prizes were awarded in 2007 including one for Best Bank in Project Finance in Latin America and Best Deal of the Year (FARAC).

In Asset & Capital Structuring, focused on innovation and the design of structures for financing assets and optimization of capital, the Group strengthened its international position with specialised units in Brazil, Mexico and Chile. Of note was the structuring of the leasing of two LNG ships for Gas Natural and Repsol (EUR 500 million), and completion of the first operations to acquire carbon emission rights in Latin America associated with the development and financing of clean energy projects.

3. Markets

This area, which covers the Group’s treasury activities and distribution of equities, made progress in its two objectives: on the one hand, leverage the Group’s commercial networks to distribute risk management solutions for companies and individuals; and, on the other, develop additional product capacities in order to expand the franchise with corporate and institutional clients in core markets,

This produced sustained growth in revenues generated by customers (+14% including equity business), which partly offset the weak performance of trading activity in the second half of the year. For 2007 as a whole, the revenue of the markets area was 5% lower than in 2006.

The focus in global treasury on business with customers, whose revenues (+9%) already account for two-thirds of the total, produced a good relative performance, as it limited the impact of instability in the financial markets and enabled opportunities arising from this situation to be taken advantage of.

The two main revenue generators are Santander Global Markets and Santander Global Connect. The first one, for corporate and institutional customers, leveraged its performance

GROSS OPERATING INCOME BREAKDOWN

Million euros

GLOBAL WHOLESALE BANKING

2,577 +31% +66% +16% +9% -15% +13% 657 2006 2007

Proprietary trading and portfolios Treasury - customers Investment Banking Global Transaction Banking 738 745 Equity 2,902 Customers +24% Total 535 227

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on increasing participation in operations with wholesale customers and more value-added solutions together with the synergies of crossed transactions between treasuries in Europe and Latin America. The second, for retail customers in cooperation with the retail banks of various countries, increased its gross revenues (including those recorded by the networks) as a result of extending its products to other Group treasuries and the strength of Spain’s market.

Of note in Spain and Portugal was the good performance of Santander Global Markets whose revenue from sales to clients registered high double digit growth, backed by participation in major operations with wholesale clients. Santander Global Connect’s contribution remained solid, with stronger growth in Portugal. The increased volatility in the second half, however, meant a less good performance in management of flows and books associated with customer activity.

In Latin America, where Santander is the region’s benchmark in treasury, activity was affected by the impact on trading positions of tensions in the financial markets. This hid the good performance of customer revenues (+21% in euros). Extending Santander Global Connect to new markets, combined with an increasing

participation in wholesale operations, were the main drivers behind this growth.

Brazil, the main source of our revenues in Latin America,

comfortably met its targets in all areas. Of note was stronger business with corporate and institutional customers, which resulted in customer revenues rising 35% in euros, and the correct positioning of proprietary trading taking advantage of the market’s performance to partially offset the tensions of the second half of the year.

Mexico’s customer revenues rose 32% in euros and were the main source as the contribution of trading was weak. These revenues were mainly generated by the institutional segment and growth in sales of structured products to retail customers, particularly SMEs, companies and private banking, via Santander Global Connect.

In Chile, Santander Global Connect was also one of the main drivers in treasury revenues, both in volume (gross revenues were triple those of its first full year and made a significant

contribution to the total) and in quality terms (emphasis on higher value-added products).

Lastly, revenues from equity distribution remained strong (+31%), due to our leadership in brokerage business in Spain (market share of 13.9% including Banesto Bolsa) and participation in significant operations, already mentioned, in primary and secondary markets.

RANKINGS 2007

Activity Concept Country / Region Source

Nº 1 Project Finance Loans MLA Latin America Dealogic

Nº 2 Trade Finance Loans MLA Latin America Dealogic

Nº 5 Project Finance Loans MLA Global Dealogic

Nº 2 Interest Rate Products Volume Spain Risk Spain Awards

Nº 2 Currency Products Volume Spain Risk Spain Awards

Award Equity Research Spain and Portugal Thomson Extel Surveys

Award Equity Research Spain and Portugal Institutional Investors

Award Exchange Trade Derivatives Spain MEFF (Trading and Clearing)

Award Bank of the Year in Project Finance Latin America PFI Awards Award Santander Best Arrenger of Spanish Loans Spain Euroweek Awards Award Best at Treasury Management in Latin America Latin America Euromoney

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