Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 466

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 466
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 to test i) the feasibility, effectiveness and credibility of the recovery measures; and ii) the suitability of the recovery indicators and their respective thresholds, above which decision-making would be escalated to cope with stress situations.

It sets out macroeconomic and/or financial crisis scenarios that could materialize in idiosyncratic, systemic and combined events that could lead the Group to trigger the plan.

The recovery plan should not be considered an instrument separate from our structural mechanisms to measure, manage and supervise risk. It is aligned with the risk appetite framework (RAF), the risk appetite statement (RAS), the risk profile assessment (RPA), the business continuity management system (BCMS), the internal assessments of capital and liquidity (ICAAP and ILAAP) and other tools. It is also integrated into the Group's strategic plans.

Progress in 2024. In January, the new 'Guidelines on Total Recovery Capacity in Recovery Plans' came into force, which require us to incorporate more severe scenarios that reach the near-default point and calculate the recovery capacity in a dynamic way and taking the moment the indicator was breached as a starting point. These requirements were already taken into account in the 2023 plan.

In May 2024, the ECB sent us a letter with their annual priorities, recommending that: i) entities should focus their efforts on improving liquidity recovery capacity and demonstrate that they have sufficient recovery options that can be implemented within a short time frame (less than one month); ii) simulations should be carried out to demonstrate the feasibility of these measures; and iii) liquidity scenarios should incorporate idiosyncratic and rapidly evolving events that lead to a point close to default in less than three months.

As it does every year, the 2024 recovery plan fully covers all the recommendations and priorities required by the ECB, including:

• A more conservative recalibration of capital indicators with regulatory requirements. They also expanded information on all indicators and the justification for their calibration.

• More extreme scenarios, so that all scenarios reach a near-default point according to the guidelines.

• A complete and detailed analysis of the risk profile of the entity at different times in each of the scenarios.

• A report including the characteristics of the two simulations carried out, with a critical evaluation of the lessons learned and possible follow-up actions.

• A new recovery measure.

The key takeaways from our review of the 2024 corporate plan were:

• there are no material interdependencies between main subsidiaries;

• we have ample recovery capacity in all scenarios through available measures. Our geographically diversified