SecProbe.io

August 24, 2012

Via E -mail
José Antonio Álvarez
Chief Financial Officer
Banco Santander, S.A.
Ciudad Grupo Santander
28660 Boadilla del Monte
Madrid, Spain

Re: Banco Santander, S.A.
Form 20-F for the Fiscal Year Ended December 31, 2011
Filed April 27, 2012
Form 6 -K filed July 27, 2012
  File No. 001 -12518

Dear Mr. Álvarez :

 We have reviewed your filings and have the following comments.   In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within ten business days by amending your filings, by
providing the requested information, or by advising u s when you will provide the requested
response.   Where we have requested changes in future filings, please include a draft of your
proposed disclosures that clearly identifies new or revised disclosures.  If you do not believe our
comments apply to your fa cts and circumstances or do not believe an amendment is appropriate,
please tell us why in your response.

After reviewing any amendment to your filings and the information you provide in
response to these comments, including the draft of your proposed di sclosures, we may have
additional comments.

Form 20 -F for the Fiscal Year Ended December 31, 2011

Item 4.  Information on the Company, page 22
B. Business overview , page 37
Latin America, page 41

1. We note your disclosure on page 42 that some v ariations in your balance sheet data are
calculated in the currency of the country that is being described.  We also note
discussions throughout this section that refer to amounts and percentage changes in
income in “local currency.”  Based on your disclos ure that these amounts eliminate the

José Antonio Álvarez
Banco Santander, S.A.
August 2 4, 2012
Page 2

 effect of exchange rates from the local currency to Euros, these measures appear to be
non-GAAP measures as defined by Item 10(e) of Regulation S -K.  Please revise your
future filings to provide a reconciliation of thes e amounts to your results reported under
IFRS.

Assets, page 53
Exposure to sovereign counterparties by credit rating, page 60

2. We acknowledge that you are located within the peripheral Eurozone, and therefore, you
have a significant amount of direct risk exposure to that geographical region.   We also
note your disclosure of direct sovereign and private sector exposure to the perip heral
countries of the Eurozone at December 31, 2011 as well as your CDS purchased and sold
that you have identified as indirect exposure.   Please revise  your disclosure in future
filings to clarify how you define and identify indirect exposure to risks in  the peripheral
countries of the Eurozone, and describe the indirect risk exposures that you have
identified.   Also, address how you are monitoring and/or mitigating the effects of such
indirect exposure as it relates to your overall risk management proces s.  Note that we
believe indirect exposure could include the following:

 exposure to other entities that are highly concentrated in the affected areas and to
affected counterparties;
 a slowdown in global economic activity and wider economic contraction in the
corporate sector; and
 the potential for redenomination and devaluation risk and related effects to payment
and clearing systems or global exchanges.

Classified Assets, page 62
Allowances for Credit Losses and Country -Risk Requirements, page 67
The pro cess: credit rating and parameter estimation, page 68

3. You disclose that you include a measure of indirect costs in determining the appropriate
level of loss given default.  Please tell us how you considered paragraph AG84 of IAS 39
when determining that i ndirect costs of selling the collateral should be included in this
measure.

Movements in Allowances for Credit Losses, page 71

4. We note that the net charge -offs against loan loss allowance to average loans ratio for
borrowers in Spain has been lower than the same ratio for borrowers outside Spain for the
most recent five years.  Please revise future filings to disclose  the underlying factors that
contribute to the lower net charge -offs to average loans ratio in Spain as compared to
outside Spain.  If the v ariance results from a difference in charge -off policies in foreign
jurisdictions as compared to Spain, revise your disclosure on page 70 to also disclose the

José Antonio Álvarez
Banco Santander, S.A.
August 2 4, 2012
Page 3

 policies at your foreign subsidiaries and discuss any impact the different policies have on
this ratio .

5. Additionally, we note that a separate ratio calculated based upon the amounts that you
disclose highlights a difference between your foreign and domestic allowance
methodologies.  Specifically, the a llowance for credit losses for borrowers outside Spain
(€12.081 billion) covered your gross charge offs outside Spain (€9.632 billion) by 1.25
times as of December 31, 2011 ; whereas, the a llowance for credit losses for borrowers in
Spain (€6.907 billion) covered your gross charge offs in Spain (€ 2.798  billion) by 2.47
times as of December 31, 2011.  Please revise future filings to disclose why your
allowance  coverage of loans outside Spain is roughly half of your coverage of loans in
Spain.  In your response, clarify the factors that contribute to  lower coverage of loans
outside Spain, including how your foreign loan types and loan terms differ from your
domestic  loan types and loan terms, and whether losses emerge on foreign and domestic
loan portfolios in differing ways.

Evolution of Impaired Ba lances, page 75

6. Per your disclosure on page 74, your domestic non -performing loan (NPL) balances
increased by €2.866 billion in 2011.  Also , we note your disclosure on page 76 that i n
2011, NPLs rose in both of the economies most affected by the crisis, namely Spain and
Portugal.   Please revise your disclosure in future filings to more clearly identify the
underlying factors that caused your NPLs to rise in Spain by 23% in 2011, including
whether there were certain factors related to your Enterprise loan segment in Spain that
contributed to this increase.

7. Please revise your tabular disclosure in future filings to separately present gross additions
to the balance of impaired loans as well as the balance of loans which remain outstanding
but are no longer c onsidered impaired and the balance of loans that have paid off or
otherwise refinanced.  Discuss the reasons for any material differences between reported
periods.  We believe this disclosure would more accurately reflect the various drivers
behind changes  in the levels of impaired loans in addition to the other categories
presented.

Foreclosed Assets, page 79

8. In regards to your foreclosed assets, we noted the following disclosures:

 You disclose that at December 31, 2011, the net balance of assets , both foreclosed
and acquired in payment of customer’s debts, amounted to €4,274 million , net of an
allowance of €4,278 million.  Therefore, it appears that the gross balance of these
assets was €8,552 million at December 31, 2011 .
 In the tabular disclosure on t his page, the gross  closing balance  of foreclosed assets
was €5,453 million ( €3,770 million net of allowances).

José Antonio Álvarez
Banco Santander, S.A.
August 2 4, 2012
Page 4

  On page 21 of Form 6 -K filed April 30, 2012, you disclose that t he gross balance of
foreclosures  at December 31, 2011  was €8,590  million .

Please reconcile these disclosures and explain how the amounts reported relate to each
other.  Also, revise your future filings to provide a separate roll -forward of assets
received in satisfaction of a customer’s debts and clearly disclose the amount of t hese
assets in Spain and outside of Spain for each period presented.

Item 5. Operating and Financial Review and prospects, page 100
Critical Accounting Policies, page 100
Impairment, page 104

9. You disclose on page 105 that as of December 31, 2010, none of your other cash -
generating units with significant goodwill had a recoverable amount below or near its
carrying amount. Given that you recorded an impairment charge of €660 million related
to the goodwill of your subsidiaries in Portugal in 2011, it is not clear what you mean by
“near” in your disclosure.  Please clarify what you mean by the term “near,” and revise
your future filings to provide the following information for each cash generating unit that
is at risk of impairment:

 Disclose t he percentag e by which the fair value of your cash generating units
exceeded carrying value as of the date of the most recent test.
 Disclose the amount of goodwill allocated to each cash generating unit.
 Provide a more detailed description of potential events and/or c hanges in
circumstances that could reasonably be expected to negatively affect the key
assumptions.

Clarify how you determine the carrying value of your cash generating units  for the
purposes of determining whether goodwill is impaired.  For example, clar ify whether you
allocate specific assets and liabilities, use the economic capital assigned to the cash
generating units  as a proxy for the carrying value or use some other basis for allocation.
If you use a systematic basis for allocation, discuss this m ethodology and quantify  and
discuss the reasons for any unallocated amounts .

10. Your disclosure on page F -45 indicates that your cash generating units represent your
geographical and/or business segments.  You provide various disclosures throughout your
filing that indicate you monitor and record goodwill internally on a more granular  basis.
For example, your disclosure on page F -56 indicates  that you have a “Santander
Consumer Holding GmbH cash -generating unit”, on page F -101 you provide disclosure
of goodwill balances at various subsidiaries , and on page F -102 you disclose that you
recorded goodwill impairment on your subsidiaries in Portugal, which appears to be a
subset of your Continental Europe segment.  Please revise future filings to reconcile these

José Antonio Álvarez
Banco Santander, S.A.
August 2 4, 2012
Page 5

 disclosures , and clearly disclose how you concluded that your business segme nts
constitute the lowest level at which cash flows are generated independently of other cash
flows.

A. Operating Results, page 107
Results of Operations by Business Areas, page 120
Corporate Activities, page 128

11. We note that you recorded the impairmen t on assets related to real estate charges in Spain
in the Corporate Activities segment for the year ended December 31, 2011 and also for
the six month period ended June 30, 2012 , as discussed  in your Form 6 -K filed July 27,
2012.  As these activities appe ar to relate to your business in Spain and would be directly
relevant to the business operations reported for your Continental Europe segment, please
tell us and revise future filings to disclose the reasons for including these charges in the
Corporate Act ivities segment .  Also, tell us if your assessment of whether goodwill is
impaired would change if you did include these charges within the Continental Europe
segment at either reporting period.

F. Tabular disclosure of contractual obligations, page 142

12. We note that your table of contractual obligations appear s to exclude the related interest
expense on your  marketable debt securities, subordinated debt, and interest -bearing
deposits.   To promote transparency of your total contractual obligations, p lease revise
these tables in future filings to include  the following disclosures:

 Disclose the estimated interest payments on your long -term debt and interest -bearing
deposits and any assumptions you made to derive these amounts.
 We note in your correspondenc e dated October 28, 2011 that you are unable to
include payments related to interest rate  derivatives in your disclosure .  Revise future
filings to provide disclosure similar to your response , and provide quantification of
the amount of your long -term debt  covered by these derivatives.
 Finally, to the extent that you have excluded certain types of interest payments from
the table, such as for variable rate debt, provide quantification of the amount of long -
term obligations that have these types of interest  rates and thus , have been excluded
from the table.

G. Other Disclosures, page 143
Declines in Collateral Value, page 144

13. You disclose that d eclines in collateral value are not relevant in your portfolio given that
Spanish residential mortgages with LTV s up to  80% amount to only approximately 2% of
your total lending as of December 31, 2011.   Your disclosure seems to indicate that
having fewer loans with relatively low LTVs (i.e., less than  80%) means that declines in
collateral values are not relevant.  Please tell us why you believe that is the case.

José Antonio Álvarez
Banco Santander, S.A.
August 2 4, 2012
Page 6

 Alternatively, tell us whether you mean that Spanish residential mortgages with LTVs in
excess of  80% amount to only 2% of your loan portfolio, given that higher LTVs increase
the risk of adverse effects on  residential mortgages due to declining collateral values.  If
the latter is true, revise your disclosure as appropriate.

Notes to the consolidated financial statements for the year ended December 31, 2011, page F -9
2. Accounting policies and measurement bases, page F -18
v. Classification of financial liabilities for presentation purposes, page F -26

14. We note your disclosure that o ther financial liabilities  include  the amount of payment
obligations having the nature of financial liabilities not included in other items, as well as
liabilities under financial guarantee contracts, unless they have been classified as
doubtful.   Please describe the situations where you would have a liability under a
financial guarantee contract that is classified as doubtful, and describe how and why you
classify these liabilities differently.  As part of your response, describe how you account
for these liabilities, and quantify the amounts classified in this manner for each period
presented.

d) Measurement of financial assets and liabilities…, page F -27
iii. Valuation techniques, page F -29

15. Please address the following in future filings relate d to your tabular disclosures on page
F-33:

 Revise your disclosure of level 2 and level 3 assets to provide the balances of each
class of financial assets and liabilities for each level disclosed.  Refer to paragraph 26
of IFRS 7.
 Your disclosure on page F-33 identifies “observable market d ata” as the inputs for
certain of your financial instruments valued using a present value technique.  Refer to
paragraph 27 of IFRS 7 , and revise to more clearly identify the assumptions applied
in determining fair value s of each class of financial assets or financial liabilities.

g) Impairment of financial assets, page F -36
i. Definition, page F -36

16. We note your disclosure on page 103 that a loan is considered to be impaired when
principal or interest becomes 90 days or  more past due.  Please revise your future filings
to disclose the factors considered when removing a loan from impaired classification to a
non-impaired classification.  For example, discuss whether you remove the loan from the
impaired classification whe n a borrower becomes less than 90 days past due, after
demonstrating a satisfactory repayment history, etc.

José Antonio Álvarez
Banco Santander, S.A.
August 2 4, 2012
Page 7

 ii. Debt instruments carried at amortized cost, page F -37

17. Please revise your future filings to disclose that there is no “material” difference in the
calculation of allowances for loan losses between the provision that you calculate
according to Bank of Spain regulation and in accordance with the internal models that
comply with IFRS -IASB, if true.

l) Accounting for leases, page F -43
Finance leases, page F -43

18. We note your disclosure that when consolidated entities act as lessors of