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    Unassociated Document

April 11, 2012

Mr. Kevin W. Vaughn

Accounting Branch Chief

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.; mail stop 4561

Washington, D.C. 20549

U.S.A.

Re: Banco Santander, S.A.

Form 20-F for Fiscal Year Ended December 31, 2010

Filed June 6, 2011

Form 6-K Furnished October 31, 2011

Form 6-K Furnished February 7, 2012

File No. 001-12518

Dear Mr. Vaughn:

On behalf of Banco Santander, S.A. (“Santander” or the “Bank”), I hereby submit Santander’s responses to the comments of the staff of the Division of Corporation Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) set forth in your letter dated March 28, 2012 in connection with the above referenced Annual Report on Form 20-F (the “20-F”) and Form 6-Ks of Santander.

I set forth below our responses to each of the Staff’s comments, indicating each comment in boldface text with our response below. All references to page numbers in Santander’s responses are to pages in the filed version of the 20-F and 6-Ks. I have also underlined and italicized our proposed changes to our Form 20-F and to our consolidated financial statements that will be included in future filings and I have struck through the text that will be deleted in future filings.

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Risk Factors, page 13

1. As a public company, your auditor is required by law to undergo regular Public Company Accounting Oversight Board (PCAOB) inspections to assess its compliance with U.S. law and professional standards in connection with its audits of financial statements filed with the SEC. The PCAOB, however, is currently unable to inspect the audit work and practices of your auditor (see

http://pcaobus.org/International/Inspections/Pages/IssuerClientsWithoutAccessList.aspx).

As a result of this obstacle, investors in U.S. markets who rely on your auditor’s audit reports are deprived of the benefits of PCAOB inspections of auditors. Therefore, please state this fact under a separate risk factor heading. Explain that this lack of inspection prevents the PCAOB from regularly evaluating your auditor’s audits and its quality control procedures.

We acknowledge the Staff’s comment and we present below the proposed disclosure to be included in our future filings until the PCAOB is able to inspect the work of auditors in Spain:

“The lack of PCAOB inspections to our auditor in Spain may reduce the confidence in our reported financial information.

Our auditor, Deloitte, S.L., as auditor of companies, including the Bank, that are traded publicly in the United States and a firm registered with the US Public Company Accounting Oversight Board (United States) (“the “PCAOB”), is required by the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and applicable United States professional standards.

Because our auditor is located in Spain, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the Spanish authorities, our auditor is not currently inspected by the PCAOB. Inspections of other firms that the PCAOB has conducted outside Spain have identified deficiencies in those firms’ audit procedures and quality control procedures.  This lack of PCAOB inspections in Spain prevents the PCAOB from evaluating our auditor's audit and quality control procedures and deprives investors in our securities and those of other Spanish companies of the potential benefits of such inspections.”

Credit, market and liquidity risks may have an adverse effect on our credit ratings…, page 20

2. Refer to your response to prior comment one where you state that an additional downgrade of Santander UK’s long-term senior debt ratings would lower Santander UK’s credit ratings below the minimum allowed by certain of its derivative and other financial contracts and could require that such counterparty contracts be renegotiated. We acknowledge your statement that the impact of any such downgrade cannot be accurately predicted; however, we believe it would be useful to disclose the amount of derivative and other financial contracts that are at risk of being renegotiated in the event of an additional downgrade of Santander UK’s credit ratings below the minimum allowed by such contracts. Please revise your disclosure in future filings to quantify the amount of such derivative and financial contracts that will be at risk of being renegotiated in the event of an additional downgrade.

We acknowledge the Staff’s comment and we present below the revised proposed disclosure to be included in our future filings:

“The derivative and financial contracts that would be at risk of renegotiation as a result of a one-notch downgrade of Santander UK's long-term credit rating primarily are basis swaps with a consolidated special purpose entity used in Santander UK's covered bond programme. The aggregate notional amount of these swaps as at December 31, 2011 was approximately £40 billion. The derivative and financial contracts that  would be at risk of renegotiation as a result of a two -notch downgrade of Santander UK's long-term credit rating primarily are basis swaps and currency swaps with consolidated special purposes entities used in Santander UK's Residential Mortgage Backed Securities (“RMBS”) and covered bond programmes. The aggregate notional amount of these swaps as at December 31, 2011 was approximately £83 billion (in addition to the £40 billion notional amount of swaps that would be at risk of renegotiation as a result of a one-notch downgrade). Santander UK would also be required to take action in relation to the bank account arrangements with the consolidated special purposes entities under these programmes. Such accounts are currently held by Santander UK. The action required could involve obtaining guarantees, transferring the accounts to another bank or re-negotiating the account bank agreement.”

Form 6-K Furnished on October 31, 2011

3. Refer to your response to prior comment ten, and please clarify the following in your response:

·

The strategic, financial and operating decisions that require a majority vote and those decisions that require a unanimous decision.

·

Whether each shareholder contributes a one-third vote, and if so, why the transaction was structured in this fashion given the varying degrees of ownership percentages.

·

Whether board representation is equal among each of the three shareholders.

·

How you accounted for the put option where Auto Finance Holdings and DDFS will be entitled to sell to you their ownership interests in the share capital of SCUSA at market value on the fourth, fifth and seventh anniversaries of completion of the transaction, unless a public offering of SCUSA shares has taken place prior to those dates. In your response, reference the accounting literature you applied for recognition, measurement, and valuation of the put option.

·

How you accounted for the put option in the event of a situation of impasse in relation to any of the matters subject to joint approval by the general meeting or the board of directors of SCUSA. In your response, reference the accounting literature you applied for recognition, measurement, and valuation of the put option.

·

The circumstances that would trigger a situation of impasse.

·

Whether there are restrictions on the sale of shares by Auto Finance Holdings or DDFS. If the entities have agreed not to sell the shares for a certain period of time, clarify how long this period is.

·

To the extent the other shareholders can sell their shares in SCUSA in the future, please clarify how this affects the voting rights allocated to each shareholder and tell us how the sale of any of their shares affects your consolidation conclusions.

·

Additionally, please clarify if they are required to sell the shares back to you prior to selling them to someone else.

In order to facilitate the understanding of the response, we present first a summary of main ideas that are relevant to the Staff’s comments and then develop each point in more detail.

•              Power to control – decision taking

As agreed by contract, all material strategic, financial and operating decisions within Santander Consumer USA Inc. (“SCUSA” or the “Company”) are considered Board Reserved Matters (as defined and discussed in more detail below) and require the affirmative vote of a majority of the directors nominated by Santander Holdings USA, Inc. (“SHUSA”) and the affirmative vote of a majority of the directors nominated by the other shareholders, who act and vote collectively as a group. This governance structure creates a unanimous decision making process among the shareholders for all material strategic, financial and operating decisions.

•              Reasons for structuring transaction such way notwithstanding the shareholders’ varying ownership percentages

Santander Group (the “Group”) wanted the private equity investors to actively participate in the control of the Company because the growth plans for the Company cover areas in which the Group has limited or no expertise in the U.S. markets. A joint control agreement was considered suitable to achieve this goal.

•              Accounting consideration of IPO Put Option

The IPO Put Options are not currently exercisable and do not currently give the Group the right to acquire shares held by the other shareholders, and thereby obtain control of the Company.  In addition, because SCUSA is accounted for as an equity method joint venture and not a consolidated subsidiary of the Group, such put option does not constitute a liability over own equity for the Group but a derivative that is recorded at its fair value with corresponding changes in profit and loss. Given that its exercise price is the fair value at the exercise date, the valuation of such put option is not currently significant.

•              Accounting consideration of Deadlock Put/Call Options

The objective of the Deadlock put/call option provision is to provide for an exit mechanism in those rare circumstances when reaching agreement on a critical matter (defined as those that will likely cause the Company or any significant subsidiary to default on any material obligation or cease to continue as a going concern) becomes impossible.

The Deadlock options meet the definition of a contingent derivative and given their nature and the fact that the strike prices would always be out of the money due to the premium/discount over fair value, they have no monetary value for any of the parties and therefore there will be no accounting effect in the consolidated financial statements of the Group until the option is exercised, if ever.

•              Restrictions on transfer (lock up period)

Consistent with common business practice for joint venture arrangements and the business objectives of SCUSA, the shareholders’ are subject to transfer restrictions.

We concluded that such transfer restrictions do not have any accounting consequences for any of the shareholders.

After the expiration of the applicable transfer restrictions, transfers by the shareholders of all or a portion of their shares could cause the joint control provisions of the Shareholders Agreement (as defined below) to terminate if certain ownership percentages are not maintained. Only at such time will an analysis of the accounting consequences, if any, be made.

As mentioned above, we develop in more detail our response to each of the Staff’s comments:

·

The strategic, financial and operating decisions that require a majority vote and those decisions that require a unanimous decision.

·

Whether each shareholder contributes a one-third vote, and if so, why the transaction was structured in this fashion given the varying degrees of ownership percentages.

·

Whether board representation is equal among each of the three shareholders.

A summary of the relevant agreements relating to the representation and voting rights of each of the shareholder parties and the governance of SCUSA with respect to material strategic, financial and operating decisions is as follows. Matters defined as Board Reserved Matters and Shareholders’ Reserved Matters require the unanimous decision (see explanation below) of the parties of the agreement. Following this summary of relevant agreements, we provide an explanation of how we concluded our assessment of these provisions in our consolidation analysis and why the transaction was structured in this manner.

·

Board of Directors

-

Composition of the Board of Directors

SCUSA’s board of directors consists of twelve members.

SHUSA has the right to appoint seven directors (the “SHUSA Directors”) and Sponsor Auto Finance Holdings Series LP (“Auto Finance Holdings”)1 and DDFS LLC (“DDFS”), acting collectively as a group, (the “Acquirer Group” and, together with SHUSA, the “Shareholders”) have the right to appoint five directors (the “Acquirer Group Directors”).

-

Quorum, Voting and Board Reserved Matters

At all meetings of the board of directors, the presence of a majority of directors then in office constitutes a quorum for the transaction of business; provided, however, that the presence of a majority of directors then in office, including at least three Acquirer Group Directors, constitutes a quorum for purposes of voting on any Board Reserved Matter (as defined below) at any meeting of the board of directors.

Except as otherwise provided by law, the articles of incorporation, or the bylaws, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors. At all the meetings of the board of directors, each director shall have one vote.

With respect to material strategic, financial and operating matters (the “Board Reserved Matters”), the affirmative vote of at least four SHUSA Directors and three Acquirer Group Directors is required. Board Reserved Matters include:***

1 Auto Finance Holdings is jointly owned by, among others, investment funds affiliated with Warburg Pincus LLC, Kohlberg Kravis Roberts & Co. L.P. and Centerbridge Partners L.P.

*** Indicates omission of material, which has separately been filed, pursuant to a request for confidential treatment.

·

Shareholders’ Meetings

-

Quorum, Voting and Shareholders Reserved Matters

At all shareholder meetings, the presence in person or by proxy of shareholders of record holding a majority of the total number of shares of the Company then issued and outstanding and entitled to vote constitutes a quorum for the transaction of business.

Except as otherwise provided by law, the articles of incorporation or the bylaws, the vote of a majority of votes cast at a meeting of shareholders is required to authorize any action. Each share of common stock of the Company is entitled to one vote.

With respect to certain matters (the “Shareholder Reserved Matters”), the affirmative vote of 100% of the shares held by the Shareholders is required. Shareholder Reserved Matters include:

(i) Commencement of any proceeding for the voluntary dissolution, winding up or bankruptcy of the Company.

(ii) Any non-pro rata reduction to the share capital of the Company, except as required by law.

(iii) Certain amendments to the articles of incorporation or by-laws of the Company, including amendments to the shareholder approval requirements for Shareholder Reserved Matters.

(iv) Any appointment to the board of directors contrary to the provisions regarding appointment of directors set forth in the Company’s bylaws or Shareholders Agreement.

(v) Any merger, amalgamation or consolidation of the Company with any other entity or the spinoff of a substantial portion of the business of the Company.

(vi) The disposition of all or substantially all of the assets of the Compa