Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 566

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 566
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     | Business model and strategy |     | Sustainability statement |     | Corporate governance |     | Economic and financial review |     | Riskmanagementandcompliance |

#### 4. CAPITAL RISK
4.1 Introduction

Grupo Santander’s structural risk includes the risk that the bank has insufficient capital to absorb losses stemming from its operations or to meet internal business objectives, regulatory requirements and market expectations.

We oversee first-line capital management and check that our capital adequacy and coverage match our risk profile and Group strategy through our Capital Risk area, which is part of our second line of defence. We also oversee transactions that could be considered significant risk transfers (SRT).

Capital management falls under the Group’s capital framework and model. It brings together capital planning and adequacy, budget execution and tracking, and the ongoing measurement, reporting and disclosure of capital data.

4.2 Capital risk management

We independently oversee the capital activities carried out by the first line of defence. These activities are split into four workflows to promote an appropriate level and efficient use of capital, meet internal solvency targets and regulatory requirements, and match our risk profile:

Capital planning

We draw up a capital plan (consistent with the strategic plan) that sets out our solvency targets and the actions required to execute it. The control area reviews the plan’s viability to identify, assess and quantify the risks that may impact on fulfilling it.

Capital adequacy

We measure capital levels against the risk assumed, based on a risk profile assessment and our risk appetite framework, and under stress scenarios. Oversight of this process aims to:

• cover all significant risks in the course of our operations;

• confirm that results are reasonable and consistent with business strategy, the macroeconomic environment and system variables; and

• check that planning methodologies and assumptions are appropriate.

Capital risk assessment

Capital measurement is an internal risk management process to calculate the metrics we use in capital management, supervisory reporting and market disclosures regularly.

The continuous monitoring of our capital measurement is an additional control function to achieve the right capital risk profile. It involves a review of capital metrics and set thresholds, as well as oversight of compliance with solvency risk appetite to keep capital levels above internal and regulatory requirements, and market expectations.

Origination (risk transfer initiatives)

Origination is where we oversee the structuring and launch of the Group’s initiatives to release shareholder equity and their subsequent monitoring.

We oversee securitizations that might be significant risk transfers originated by Santander in order to release capital, according to articles 243 and 245