Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 440

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 440
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 management aims to optimize maturities and costs, and to avoid undesired liquidity risks in funding Santander’s operations, and is based on these principles:

• Decentralized liquidity model.

• Medium- and long-term (M/LT) funding needs must be covered by medium- and long-term instruments.

• High contribution from customer deposits due to the retail nature of the balance sheet.

• Wholesale funding sources diversified by instrument, investor, market, currency and maturity.

• Limited use of short-term funding.

• Sufficient liquidity reserves (including standing facilities/discount windows at central banks) to be used in adverse situations.

• Group and subsidiary-level compliance with regulatory liquidity requirements.

To apply these principles effectively across the Group, we developed a unique, three-pronged management framework:

• Organization and governance. Strict organization and governance that involve subsidiaries’ senior managers in decision-making and our global strategy. Decisions about structural risks, including liquidity and funding risk, falls on the local asset and liability committees (ALCOs), which coordinate with the global ALCO. The global ALCO is empowered by Banco Santander, S.A.'s board of directors under the corporate Asset and Liability Management (ALM) framework.

This enhanced governance model is part of our risk appetite framework, which meets regulatory and market standards for strong risk management and control systems.

• Balance sheet and liquidity risk. In-depth analysis that supports decisions and controls to ensure liquidity levels cover short- and long-term needs with stable funding sources, and optimize funding costs.

Each subsidiary has a conservative risk appetite framework (based on their commercial strategy) which sets out the liquidity risk management framework. Subsidiaries must work within the framework limits to achieve their strategic objectives.

• Liquidity management adapted to the needs of each business. We prepare a liquidity plan every year to achieve:

• a solid balance sheet structure, with a diversified footprint in wholesale markets;

• stable liquidity buffers and limited asset encumbrance; and

• compliance with regulatory and other metrics included in each entity’s risk appetite statement.

We monitor all these plan's components throughout the year.

Santander continues to carry out the Internal Liquidity Adequacy Assessment Process (ILAAP) as part of its other risk management and strategic processes to measure liquidity in ordinary and stressed scenarios. The quantitative and qualitative items we consider are also inputs for the Supervisory Review and Evaluation Process (SREP).

Annual report 2024 415

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