Alfredo Sáenz Abad – Second Vice Chairman and CEO José Antonio Álvarez – CFO Alfredo Sáenz Abad: (Interpreted) Good morning. We are going to begin the Results Presentation for Q3. As usual, I will present the quarter’s fundamentals and the group results, and then José Antonio Álvarez will review the different business units in more detail. And finally, I’ll close with some conclusions. The quarter is taking place in a very unfavorable global context. Falling volumes in U.S. and Europe together with the uncertainty of the European sovereign debt crisis have increased risk premiums and affected consumer and business confidence. At the same time, there’s been strong corrections in assets and currencies and growing tensions in wholesale funding. And all of it has meant that global economy has grown a lot less than expected as seen in the latest IMF estimate. The key to our results overall, our underlying operating income has continued to perform well and has become our main profit driver. In our balance sheet, we have focused on liquidity and capital management. In liquidity, we have a very good structural position. And at the end of the quarter, we had already comfortably covered the medium and long-term maturities for the whole year. In capital, our ratios are still very solid and matched to our business model. We ended the quarter with core capital at 9.42%. That’s 62 basis points higher than at the end of 2010. Moreover, we will comply with the new capital requirement established by the EBA for June 2012 without requiring any capital increases. Finally, and in line with our group’s policy of prudent solvency management, we will use the capital gains of around EUR1.5 billion which will be recorded in the fourth quarter to strengthen the balance sheet even further. We’ll now look at each of these points in more detail. In the third quarter, attributable profit was EUR1.803 billion which demonstrates the group’s ability to generate earnings in complex environment. You should note the strength of basic revenues, the impact of markets on non-commercial revenues and continued high provisions. With this, profit for the first nine months was EUR5.3 billion. And I remind you that this profit was hit in the second quarter by a one-off charge of EUR620 million net of taxes related to payment protection insurance remediation in the UK. Finally, these results do not include the approximately EUR750 million in capital gains from the agreement obtained by divesting of our insurance factories in Latin America to Zurich nor do they include the EUR750 million from the transaction of Santander Consumer U.S. which we have recently signed, align the entry of new partners in order to enhance our future growth potential. Basic revenues – going into basic revenues, net interest income plus commissions plus insurance, we see a very solid trend in the last quarter. And their recurrence is the main driver of our result. Thus we see that Q3 was again a record quarter with the number slightly above that of the second quarter when seasonally it tends to be third quarter that’s weaker. And so, annually, a growth with 6% that is over EUR1.6 billion in absolute term. And the following breakdown, very dynamic growth in Latin America, up 46%. Quarter running with an inter-annual of 12% in local currency. Acceleration of volume since mid-2010, the gradual impact on revenues is the reason behind this evolution. The strong growth of Santander’s consumer finance had post organic growth as well as the entry of SEB in Germany and AIG in Poland. Positive impact of the six-months contribution of the polish banks accordingly. And also growth comfortably offset the foreign revenues in more mature markets particularly the cost of funding in the UK in corporate activity. If we look at total income in the group, we see a slight drop in third quarter due to smaller ROI income in our corporate center because of the unfavorable context of this activity and also reduced dividends because of a seasonal effect. Growth for the first nine months, however, has continued to rise up to 5.8%. This growth distinguishes us from our peer whose gross income is either flat or declining in the case of our European peers. Moreover, and it’s not just our income that’s grown more, but also the profitability of our balance sheet has grown particularly if we compare with our European peers. As for cost, cost have grown high single-digit rate versus last year as a result of a highly diversified policy depending on markets and businesses. Over 70% of cost increases came from emerging countries where we are investing in order to capture future growth. In Latin America, growth was connected to increased installed capacity. We have 200 more branches and 1,300 more employees than a year ago. We’ve also been launching new sales projects, been remodeling our point of sale, deploying new technology, et cetera. And today, if we must add some pressure in the signing of wage agreement and cost related to inflation in countries such as Brazil and Argentina, also in emerging countries, we have a perimeter effect mostly because of the integration of the Zachodni Bank. Most of the rest of the increase came from countries and unit where we are improving our franchises, are investing either in technology or in our commercial structures or in service improvement. Finally, in our retail units in Spain and Portugal, costs are declining at nominal rates between 1% and 2%. Overall, our cost income ratio has enabled us to continue to pay out the investment planned, and to continue to be the best in class in cost income ratio. We are second amongst our peer ahead of all our European competitors. And as a result, our cost income ratio is 14 percentage points better than the average. Loan loss provisions, our five provisions the last two quarters show the declining consumption of generic provision specifically on average EUR35 million in comparison with an average of EUR500 million in the previous five quarters. As a result, in the first nine months, we have released EUR800 million less in general provisions and in 2010, which offset the drop in specific provisions for the whole of the group. And that resulted, both effects, was our total net provisions in the year were at a similar level to last year’s; still high due to the cycle in some units. Specifically, there’s been increases in our retail businesses in Spain, Portugal and Brazil offset by the decline in Santander Consumer Finance and Sovereign, the UK and Latin America except for Brazil. In line with these trends, the group NPL ratio inched up slightly 8 basis points in the quarter up to 3.86%. This was largely due to Spain and Portugal where NPLs have continued to rise. On the contrary, Santander Consumer Finance and Sovereign have continued to improve. And for the last four quarters there, for STF, NPL dropped significantly. And for the last seven for Sovereign. Remaining units have remained basically stable with some small quarterly fluctuations. As for coverage, the rate for the group was 66% in the third quarter there’s been a slight decline in Spain but they have continued to rise strongly in Sovereign for the seventh quarter running, up to 93% and at SCF where our successful recoveries effort has blotted out to 132%. In Latin America, coverage ratios are over 100% both in Brazil and in the rest of the region in line with provisioning efforts made. As for these trends, they mean – although the cost of credit that is specific provisions as a percentage of total risk have already begun to improve in the group in line with what we announced in the Investor Day, the improvement in net provisions as a percentage of credit is not yet reflected in the income statement because of the reduced use of generate provisions. As you can see on this slide, Santander is not yet taking a full advantage of the following provisions as our peers are doing. And moreover, at this point in the cycle, our cost is higher than our market peers. Naturally, as provisions return to normal levels, we will have more leeway to improve our results. Trends in cost, income and provisions have meant that our net operating income after provisions was EUR10.75 billion, that’s almost 7% higher than in the first nine months of 2010 or 5% if we exclude the (inaudible) and exchange rate effects. It’s growth that were based on solid and consistent revenues, net interest income and fee income rising in spite of the current scenario and with provisions almost flat. This positive growth in our net operating income is not seen in net profit due, on the one hand, to higher provisions in 2011 especially that one-off PPI charge in the second quarter. I’ll remind you that it was EUR842 million before taxes, EUR620 million net of tax, and also to the increased tax rate for the whole group which has meant increased tax payments. The combination of both effects, PPI and taxes, led to profit growth by 14 percentage points. Move on to point two in my presentation, liquidity. Santander has a very solid and sustainable liquidity structure. Our liquidity ratios have improved significantly in the last few years. For instance, our loans-to-deposit ratio has dropped from 150% at the end of 2008 to the current 118% where we feel very comfortable. And less improvement in our liquidity position has not just been quantitative, but also qualitative because the group has greater medium- and long-term wholesale issuance capacity even in high stressed period of which 2011 is a good example. At the end of September, we had covered 117% of the maturities for the whole year after issuing EUR36 billion to which we have to add EUR20 billion in securitization placed in the market. Even in a same quarter in which markets have been almost entirely closed, we have placed over EUR9 billion debt plus securitization, again, comfortably exceeding maturity. Meanwhile, our recourse to short-term wholesale funding has been very limited. In specific case, our positions in the U.S. market, the recourse to parent bank is less than EUR1 billion. And furthermore, we maintain a high discounting capacity with central banks of approximately EUR100 billion. So, in summary, we have a very solid starting point and deleveraging envisaged in the mature markets where we upgrade will be the drivers that will enable the group and its subsidiaries to continue to maintain a very comfortable liquidity position. As for our solvency ratios, we ended September with core capital at 9.42%. This demonstrates the group’s excellent ability to generate capital even in this difficult environment. Specifically, we’ve increased our core capital by 22 basis points in the quarter and by 62 basis points since December. And that’s after absorbing in the second quarter the integration of Zachodni Bank, a Polish bank we’ve recently acquired. Capital generation is boosted by high retained profits and also by optimized management of risk-weighted assets. So, in summary, our core capital ratio is above 9% under Basel II which is our target. This is a very solid ratio matching our business model, our balance sheet structure and our risk profile. And I’d like to share with you at this point our initial view on the potential impact on the Santander of the hypotheses of our new capital requirements of the recapitalization plan envisaged by the European Union for major banks. As you know, minimum core capital requirement will be 9% by June 2012 within framework established by the EBA. This framework would introduce Basel 2.5 and the application of some criteria anticipating Basel III, such as the mark-to-market of sovereign debt, reduction of intangibles, and impacts on financial stakes and securitization. In the case of the Santander, and starting with core capital 9.2 for June, the application of the new framework would mean that core capital adjusted to June 2011 would be 7.9% including convertible capital instruments. On this basis and considering the increased core capital registered in Q3, which I mentioned in the previous slide that is 22 basis points I mentioned, our adjusted core capital in September would be 8.12%. On the screen, you can see our forecast for core capital growth in the next quarter within the EBA framework. The Santander will remain in a comfortable position well above 9% by June 2012. And this is thanks to our ability to generate free capital organically, three quarters generating between 12 and 15 basis points each, the rollout of our internal model based on the schedules fixed up to 2014, and the optimization of risk-weighted assets. With these two drivers, our core capital will reach 9.2% by June 2012. But furthermore, the group has other financial drivers to generate additional core capital in an amount of a further 80 basis points, bringing us up to our objective of 10% core Tier 1 under EBA criteria. In short, our solid starting point coupled with our high capacity to generate capital will enable us to comfortably surpass the new solvency requirements without needing to do any capital increases or modify our payout policies. Finally, we will be obtaining around EUR1.5 billion net capital gain from the sale of our Latin American insurance to Zurich plus the new agreement to bring in partners into Santander Consumer USA. These capital gains will be fully recorded in the fourth quarter and will be used at the end of the year to strengthen our balance sheet. As is customized in the fourth quarter’s presentation, once allocation has been decided, we will give you full details. But it will include the right balance of assets in Spain. And now, I’m going to give the floor to our CFO, José Antonio Álvarez, so he can give you more detail about this business area. José Antonio Álvarez: (Interpreted) Good morning. Continuing with our results presentation, I will review the different business units. I’ll remind you, as usual, I’m sure you all know, that on the website we post even more detailed information about the different business units. Starting with profit and its evolution, you can see the contribution of each of the different geographies. Starting on the right with Latin America, Brazil, profit dropped 6% in local currency because of the bottom part of the income statement, net margin is growing or net operating income has been rising at 13% year-on-year and it’s been taxes and minority interests that have drive down our profit. In the rest of the Latin American countries, overall profit grew 17%, partly in this case, due to the decline in minority interests in Mexico. The UK cost Sovereign – well, Sovereign, starting with Sovereign continued to register strong year-on-year growth in line with clearly with our targets at the time of the acquisition of EUR715 million profit in the year. The UK is affected in the year-on-year comparison by regulatory changes, PPI charges, and a difficult low-growth environment we explained in detail during our Investor Day rising liquidity cost in the UK which affected our profit line. In Continental Europe, without including the Polish business, dropped 17% largely due to Spain and Portugal where macroeconomic context is very difficult, and they’re mostly due to the reduced availability of generic provisions. Finally, the Polish bank, the Zachodni Bank, has performed very well, wonderful result, EUR172 million in the six months since it joined our group. Moving down to different units, starting with Continental Europe and for incorporating the Zachodni Bank business, the income statement reflected the difficult business environment with significant deleveraging in the main economies in this area with low interest rates, therefore, more volumes plus low interest rates. And in the third quarter, also ROF has been strongly impacted by market conditions. And last quarter, ROF was almost zero when the running rate is between EUR100 million and EUR200 million quarterly profit. In the year-on-year comparison, there are some elements which makes us feel reasonably optimistic about the future. Basic revenues are already rising 4%. In the slide on the top right-hand side, you can see the trend on the other part of the income statement with a strong recovery of the Santander branch network and Banesto and an excellent performance of Santander Consumer Finance cost, down 1% on retail network increased overall due to the perimeter effect and also investment in global businesses because the position reached in previous years and to launch new initiatives. Provisions dropped slightly, offsetting the drop in provisions by lower release of generic provisions. The net result of all of these was a profit of EUR2.269 billion. If we look at the breakdown by units, starting at the Santander retail network, again, we’re seeing a widespread deleveraging in Spain with falling volumes but a significant improvement in spread. The combination of both is what had shown a slight upward trend in basic revenues, up 9% versus the same period last year. That’s again because of rising spreads on lending and also a drop in the cost of deposit after renewing the deposits we attracted in the second quarter of 2010. Therefore, revenue is growing 9% versus the same quarter last year and up 2% versus the previous quarter. Provisions are still high as a result of economic context. Specific provisions remained at quarter level of EUR350 million, EUR450 million, well below the average of EUR600 million in 2010. So, in short, the underlying context is improving, and both in terms of revenues and falling provision. And we believe that in the next quarters, keeping cost flat and as revenues and spreads continue to rise, profit should improve. As for Banesto, I’m not going to go into too much detail. They have presented their own results. The underlying fundamentals are the same. Falling volumes but improving spreads, recovering revenues, good cost control and the same impact of generic provisions as in the Santander network. So, I don’t think I need to go into further detail because it’s the same thing we just heard from our CEO. And as for Spain as in previous quarters, let me just show you the evolution of our current portfolio spend. Still falling, EUR3 billion in the quarter, up for EUR229 billion to EUR226 billion in the quarter, 4% reductions in the year-to-date and almost three times more in balances with real estate purposes, falling 11%; same trend as in previous year. NPL ratio is rising from 4.8% to 5.1%. That is 100% from our real estate purpose loans. As you see in this slide, the rest of our portfolio whom mortgage and individual loan are at the same level as in 2009 and the rest of the portfolio is at 3.4% and it’s only the real estate development portfolio which (inaudible) with a rising NPL ratio. NPLs of standard loans with a real estate purpose remains stable in the quarter and I should likely know that at the end of 2010 was of course when we look at NPL ratio as the overall size of the portfolio dropped that also makes NPL ratio look larger. But if we look at the launch with real estate footprint, again, dropped in the overall volume of (inaudible) portfolio down EUR13 billion and foreclosed assets in this period EUR3.8 billion, gross net EUR1.5 billion. As for foreclosed properties, I’ll add just about the quarter that the interest was very – or additions were very small, the smallest in the last few years, only EUR100 million coverage remained at 32%. Back in the previous quarter with coverage between 42% for land to 25% for finished building, with an average of 32% which I mentioned earlier. Moving on to Portugal, the entire last results presentation, the new Portuguese government has continued to implement measures to guarantee compliance with the adjustment program agreed with EU and the IMF. Financial sector has continued to deleverage focused on boosting deposits which have been growing 7% in the system in an environment which is, of course, extremely price competitive and has been cutting lending by 1.5% particularly consumer lending. In this context, Santander Totta has reduced the size of its balance sheet in the period December, September by EUR5 billion, but slightly over 10%. We’ve reduced lending by 13% year-on-year, and deposits rising at 15%. As a result the commercial gap has improved significantly. We said at the Investor Day, well we gave lots of detail about the different maturities of our wholesale funding, that the bank is in a very comfortable liquidity position with these current maturity rates. If we look at the rest of our income statement, volume and lending has dropped, deposits rising, strong competition for deposits affecting our net operating income and basic revenues even the cost have fallen. Rising NPLs in this context we had anticipated some time ago that NPLs would double in this scenario in Portugal. We are seeing trends as expected and high provisions are having a significant impact on our profit line. Net margin after provisions or net operating income after provisions, down 44% year-on-year. The fourth unit that we have in Continental Europe, the Santander Consumer Finance, has performed completely differently, much more positive, supported by anticipated position in the cycle and by the business diversification. It has four elements that support a very good performance. Growth in production and volume; the volume is growing in lending, 10% and deposits, 34% of a change in the perimeter. But also the businesses are doing very well. Germany and Nordic countries are also doing very well this year with spreads that remain at very high levels. And the costs remained the same as perimeter. And in this business, the fact that less loan loss provisions are required are in line with the reduction in the risk premium and the better credit, the quality where coverage for NPLs is 132%. All of these produced profit growth, particularly in Germany, Spain and Nordic countries and the U.S., and pushed up attributable profit to EUR990 million for the first nine months. And a very good third quarter where profit about EUR325 million, 6% more than in the second quarter. In Poland, I said this when we’re talking about continental Europe. The situation is quite positive. Lending and deposits are growing; lending, 10%; deposits, 6% up. So, revenue is growing at 10%. And the costs are growing at 4% which is slightly more than the inflation. There is a fall in provision of 11%. Although in the past quarter they grew a little bit because of higher volume, basically, because of business mix meant that they have to grow a little bit. As a summary, profit increased 40% and the – what we expect for the next few quarters in account of the slowdown in Poland, so we think that we can grow a little bit more than the system which will grow by 5%. And therefore, we think that we can continue to generate favorable result in line with what we had expected in our business plan when we acquired the franchise. In the UK, the income statement is still very affected by lower activity and very low interest rates with one-off impact like the PPI charts that we talked about earlier. But if we didn’t take into account the effect of the PPI, then revenue would fall 8% for three reasons: flat volumes in mortgages and the deposits which are the two main items. Of course we are gaining significant market share in SMEs where we are growing very well. In SMEs we’re growing at very high rates, more than 20% and in the core business with other companies is also growing strong by 20%. And now they are higher regulatory cost with higher funding cost. Wholesale funding is much more expensive. The funding mix is growing from shorter term to longer term and therefore, the cost of funding is more expensive. Interest rates continue to be very low. And so that has an effect on the spreads. There is a strong reduction in provisions. The NPL rate is doing better than what we expected in mortgages, which was where we have the best NPL ratios as well as in consumer loans. All in all, the net operating income after provisions declined 4% and profit before the PPI charge fell 9% in the first three quarters of the year. Brazil kept up its good trend in business volumes in the quarter and in their transfer to the top part of the income statement. In the nine months, attributable profit was $2.773 million. With strong activity, lending is growing at 20% with stronger growth in loans to individuals 25% and SMEs growing 14%. Deposits are also double-digit growth. The results, basic revenues rose for the six quarter running 13% year-on-year. This is very good. For the six quarter in a row, they continue to rise. Cost also increased 11%, but this is for two reasons. First of all, the increased distribution capacity; we’ve opened 167 branch offices, 8% in the branch network; and the pressure on cost from inflation of 7.3% and also from a high employment rate. The efficiency ratio or cost-to-income is still improving, 36.8%. And this allows us to absorb larger provisions due to greater lending and a slight rise in NPLs in the sector in the first half. Santander Brazil NPL ratio was unchanged. And provisions declined a little. Business costs is not reflected in the bottom line because of high provisions partly due to labor dispute and a negative impact of 5 percentage points from the higher tax rate and larger minority interest. In short, the bank continues to gain business drive and improve its market position and meet the targets announced at Investor Day where we – although we have the impact that I just mentioned. And in the rest of the region, Latin America, as the trend remains, strong growth in loans and savings, which increase our double-digits rates favored by the macroeconomic environment. Attributable profit rose 17% due to the good evolution of basic revenues by retail banking. The net interest income reflects the larger business volume. Three or four quarters ago, the situation was quite different and improving since then. Fee income is increasing 11% and improved cost of credit as the result of lower provisions. There’s also a favorable effect from lower minority interest in Mexico. By countries, well, I will say a few words about Mexico and Chile separately Argentina because Puerto Rico registered high double-digit or double-digit growth in attributable profit. If we look at Mexico in more detail, we’ll see that the business is growing strong 22%. Lending will be perimeter of the acquisition of mortgage portfolio from the GE portfolio. It would grow ex-perimeter at 24%, therefore, strong growth in the business with an improvement in our shares, in cards deposits, mortgages, et cetera so very well there. Basic revenue is already showing the change of the trend that started at the beginning of the year and returned to notable growth in the third quarter. Good performance of net interest income from larger volumes particularly in consumer credit mortgages and cards, and also a good performance on fee income basically from insurance. The costs are increasing there is a commercial strategic plan where the significant investment in IT and that is reflected in the cost provisions for – and we’ve been talking about this for some quarters now because it’s linked to the stronghold of the risk premium in the world of credit cards and that means that the net margin is increasing of 12% the net operating income after provisions. Profit before minority interest set a new quarterly record and were 25% more than the first nine months of 2010 and attributable profit was 59% higher. Truly, the business is growing well. Volumes – well, deposits more than 20%, lending 14%, a significant comparison of the margins of the spreads. This is because inflation was particularly low in this first half of the year. Part of the portfolio is index to installation and that had an impact and there’s been an increase in rate which also exerted pressure on the spreads. There’s an impact of the effort in capturing deposits, and the market situation also affected fee income and gains on financial transactions. Provisions rose in the third quarter because of the more conservative stance in the risk policies. As a result, the third quarter results interrupted the favorable trend of previous quarters, but the net change, the underlying performance for the coming quarters. I think there is a series of impacts here, for an amount of $100 million which is not going to affect the future quarters. We would go back to normal. If we look at Sovereign now, I would say that their delivery is very good in Sovereign. Good growth in lending and deposits. The market is not growing so there’s a clear improvement in our commercials activities. In activity, deposits rose 15%, increasing at the most core lines and at good prices. Lending rose 5%. If we eliminate the portfolio effect because when we acquired the bank, there was a 20% – the portfolio was in run-off. But the rest of the lending increased at rates of 8%. End results, the main points are net interest income at a quarterly high and gross income 9% more than in the first nine months of 2010. Operating expenses rose 8% because we are investing in IT. We’re changing the technological platform. And we are also hiring people to improve commercial activity. The NPL has an excellent performance. A few quarters ago, we had higher NPL rate that the rest of the industry. Now it’s lower than the average of the industry. So, we’re performing very well in this regard. And although this means that the net operating income after provisions rose 58% and profit 44%. Finally, in corporate activities, this is what we present – this is a different – well, there’s losses of EUR89 million less than 2010 due to the following factors. The first was a higher cost of wholesale funding, which made net interest income more negative than in 2010. And the liquidity position maintained by the group, which is conservative, also entails a certain cost. And the second factor is the lower recovery of taxes. Here, we recovered part of the taxes that the units that are part of the parent company paid. And the parent company, we have the wholesale banking, the corporate, et cetera, et cetera. Therefore, the other units paid less taxes here. Here, we recovered less taxes. And that is offset by better trading gains in the year. And this change in trading gains is due to the hedging of exchange rates. We have an improvement in revenues of close to EUR500 million over the first nine months of 2010. As in 2010, these hedging recorded loses compared to profits this year. The euro depreciated 1% against churn and against Latin American currencies, Brazilian reals, 7%; the Mexican peso, 8%; Chilean peso, 6%; and Argentine peso, 5%. So, this year, we have 300 in this trading line – trading gain line, and this is what explains this change in the trading gains. And now, I’d like to hand over to the CEO so that he can finish with the conclusion. Alfredo Sáenz Abad: Right, we have reviewed the group’s performance and that of its main business groups. And I’d like to finish with some points that summarize today’s business trends and those for the coming quarters. The first is that Santander has a great capacity to generate solid profits even in an environment like that in the third quarter. And this is because the group’s underlying business continues to improve as compared to last year strongly backed by sustained growth in basic revenue. I would like to emphasize that this is something that set us apart in the current banking scene where revenues are scant and few of our competitors offer growth higher than inflation. This trend is not fully reflected in profits because of the larger provisions made particularly the one-off charge for PPI and the higher tax pressure as group level. The second point is the advantage for the group of its diversification and capacity to adapt to the environment of its various units. On the one hand, we have our commercial unit in Europe and the UK which are tackling the difficult challenge of recovering revenues and growing in environment of reduced activity with low interest rates and much more demanding regulation. Other units such as Santander Consumer Finance Poland and Sovereign are enjoying the risk growth. Their main task is to construct the future income statement in the countries and businesses where the group has a great potential. Lastly, the Latin American units are busy transferring to profit, the revenue strength emanating from economies growing strongly and benefiting from greater bank (inaudible) or banking penetration rate. And all of these without helping investment to capture a larger share of future growth. And the third idea is these trends of our balance sheet, and I’d like to insist on this. Santander is one of the banks with the strongest balance sheet, with strong liquidity and capital position in which we continue to boost every quarter. We’re very strong in liquidity. Thanks to our great capacity to capture medium and long-term wholesale fund combined with the power of our almost 50,000 branches to capture savings. On our low recourse to short-term wholesale funding coupled with our high discounting capacity in Central Banks. And all of these in an environment in which mature market units generate liquidity due to the deleveraging processes of the economy. We are also strong in capital backed by two structural features. On the one hand, the high quality of the balance sheet, the result of our business model and low risk profile. And on the others, a strong capacity to generate profit and so to – so, free capital with a – within a prudent and sustained payout policy. These features combined with active management of risk-weighted assets will enable us to comfortably meet the new capital requirement of the European Banking Authority, the EBA. Lastly, I remind you that in the fourth quarter, Santander intends to further bolster its balance sheet by applying its recent capital gains. In short, the trends in result at the balance sheet of Grupo Santander are in line with what we announced at the Investor Day for the coming quarters.

Good morning. As always, we’re going to answer the questions that we received over the Web. And if there is time, then we will take the questions that we have received over the telephone. The presentations are already available in Spanish and English for those of you who would like to follow them. But they are all of the slides presented by the CEO and the CFO available to you. First of all, let us begin with the questions on strategy and regulations, follow up questions on the European Banking Authority. I’m going to group the questions. Sergio Gamez from Merrill Lynch and (inaudible) from Bernstein asked whether we can say something about the latest news from the EBA. What are the consequences of that for the group, particularly in future acquisitions or divestments. And if you think the European Union will somehow limit or impose?

The Q&A session will begin now. (Operator Instructions)

Well, I think we give lots of details in the presentation that we just made on the requirements of the EBA, on the one hand, and it’s also very clear in the different activities that the bank is going to carry out. Some of them are already underway. But we’re going to do other things as well to meet the requirement. We have an internal objective of reaching 10% by June 2012, more specifically in the chart that I presented a moment ago. We indicate three levels that we will be reaching in the future – organic generation of capital, which is very expensive. But we have been achieving this, a reduction in the risk-weighted assets basically due to the progressive rollout that comes from the past of the rolling out of models for our assets – risk asset to – our efforts to convert them into risk asset and then continues optimization of our operations which will lead to reductions of the risk-weighted assets. So, all of these will allow us to meet the limits set by EBA. So, I wanted to insist that we don’t need to do a capital increase to achieve this and nor will we change our dividend payout policy. I think I’ve answered the question.

Yes, what about the assets?

No. We don’t have any need to adopt any other measures than the ones I just mentioned.

Francisco (inaudible) is asking that in order to reach the guidance of repeating recurrent benefits in 2011, you would need a net profit of EUR2.3 billion in the fourth quarter. Are you still going to keep that guidance for 2011? And to you think that the agreements that were reached last night in Europe will allow markets, debt markets to open for Santander and Spanish banks at viable prices?

With regards to the first question, in effect, arithmetically speaking, we are lacking that amount to reach the same level of profits that we had last year, but there’s still a quarter left and the third quarter is always worse than the other. So, we still have the idea that we expect in the Investor Day that we would like to repeat our largest profit or slightly less than that. But basically, yes, we would like to equal last year’s profit. And with regards to your second question, I would say that we hope that these measures that were decided on last night will open market, would put market at ease. But taking into account the recent history, I dare not do any forecast yet.

There’s a question from Carlos Berastain from Deutsche Bank. The organic generation of capital; (inaudible) low taking into account the profits that we are obtaining in the traditional generation of capital. And those 40 basis points for three quarters. We have been conservative because as you know we have been generating quite more than that. So, that’s because we wanted to give out a conservative message when we talk about the future capital figures.

(Inaudible) is asking the EBA says that those banks that don’t reach 9%, they expect not to pay out any dividend or bonuses. So, can we therefore draw the conclusion that Santander will not pay out dividend until it reaches that 9%?

I don’t think we apply to this because as I’ve said we are going to have more than that 9%. Even in December of this year, it is possible that we might reach that figure, that 9%. Therefore, we are not in that situation.

There are several questions on the capital gains generated by the selling of the business in the U.S. Sergio Gamez from Merrill Lynch and Raoul Leonard from RBS asked, first of all why did those capital gains – why are they used to reinforce provisions and not – and are not included in the capital? And can you shed some more light on how provisions are going to be dealt with? And there’s another technical question on what could be the impact in the capital of minority interest.

The impact of capital, I can answer that. It’s very small. And it affects the risk assets, the goodwill, and minority interests, and that netting is a very small impact. So, basically the question is can you shed some more light on the provisions and why do you put the money into provisions and not capital.

Well, the 1.5 billion in capital gains can be used as we wish, and right now we – there are different alternatives, of course, total or partial to make use of that 1.5 billion. And we want to have the chance at the end of the year to decide with flexibility. So, our idea right now, but that’s just the first thought, is that we don’t need to reinforce our capital, nevertheless, we do think it is a very good signal to the market if we reinforce our provisions particularly in Spain, and particularly in Spain for real estate assets. And therefore, I repeat, it’s just the first thought that we haven’t reached a binding decision yet is to go along those lines. And most probably a significant part of this 1.5 billion will be used for provisions for real estate assets. But so far we haven’t yet made the final decision on how much we would dedicate to that, so we prefer not to say anything more. But as I said, that’s what we’re thinking of right now.

There’s a question from Marco Trellano about the impact of risk-weighted assets and the Greek bonds and so.

We specified that in the EBA stress test already. So, if you want, we can give you the technical detail of the weight of each of the assets at risk.

More questions about EBA. Andrea Filtri from MedioBanca is asking what do we think will be the impact of all the measures adopted on the Spanish banking sector overall, not just us? Jaime (inaudible) is asking about dividend payment which we’ve already answered, and whether this includes scrip dividend or not, the EUR15 billion that we mentioned.

Yes, it is.

And Martha Romero from Keefe is asking whether we could give more detail about the additional buffer of 70 basis points we mentioned. And Frederic Chenot from Natixis about the evolution of core Tier 1 capital in Q – no, in Q3 which we’ve already answered, too.

So, that’s just two questions, really. Detail about that extra – our additional buffer of 70 basis points and the overall impact on the Spanish financial sector.

Question is more details about additional 70 basis points buffer.

Well, this whole range of measures, this whole series (audio gap) Hold on. It seems we have a slight technical problem. Okay. My microphone seems to be back. Okay, So, my apologies, something went wrong with our microphone. Okay. So, the additional 80 basis points I mentioned are part of a really long list of small measures that bring in 3 basis points, 5 basis points, 8 basis points each. I suppose to the person asking the question, it was quite well that the things that can be done to optimize and to make assets or risk as efficient is possible is really long. In fact, our plans, which we’ve been working on for months now – huge long list of things and all of them together will bring in those additional 80 basis points plus, of course, our own sale of assets, mostly in Spain but also in other countries. And all of these things will add up to 80 or approximately 80 or maybe more. But it doesn’t really make a lot of sense for me to go into each and every one of these things because what matters is 9% and we’ve shown clearly that we will be comfortably above that level.

Okay. And to finish this part on strategy regulatory framework and capital ratio, there’s a question from Santiago López and from Benjie Creelan about why core capital dropped in absolute terms in the quarter? And same thing about negative adjustments and there’s a series of questions about this.

You have to think about the exchange rate adjustments. They impact both capital and assets and risks, especially in Latin America. I answered – there several questions about accident risk and the deferred capital, and these are the factors that affect them mostly. Hence, you have to consider the impact of the exchange rate. This quarter was significant. And final question about capital ratio, it says that the price of convertible bonds that we issued sometime ago is substantially below listed price. What do we plan to do with these convertible bonds? Are we going to compensate holders in any way? Well, this is a question that has come up several times already. It did come up several times at the Investor Day. And also, I think in the last result presentation last quarter, and the bank will convert based on the terms of the issue. Bondholders in the same position as our shareholders, there will be no chance of any kind of compensation. Okay. Moving on to financial management, there’s a question about – or from Santiago Lopez about the loan-to-deposit ratio which according to him is at 139% considering deposits, and we don’t know how you came up with that number. Our number is loan-to-deposit ratio of 118%. So, we can go through your figures later if you like. And you can explain how you came up with that number. Andrea Filtri is asking whether given the regulation that has just been approved in terms of liquidity and financial management, do we plan to use other kinds of liquid assets other than sovereign debt bond especially the general hedge. I don’t really get the question but will you take what I mentioned. We hedge our interest rate in those units where loans are predominantly at variable rates like Spain, Portugal, Mexico are very typical example. So, the state bonds are hedged our core deposit. So, how many fixed rate assets. I suppose the question is that since if we will consider these instruments in the future. But there are, of course, other alternative methods like interest rates and swaps although of course those would require kind of macro hedge. But the hedge were not just from the economic point of view but accounting point of view, if that was your question.

(Inaudible) from UBS is asking about the evolution of our ROS particularly in Spain and the comparison work with (inaudible) the corporate center. Can we talk about the trend in both Spain and in the corporate center? And what – how do we expect these two variables to evolve? And then another question about spreads for the whole group from our loaner. We’re saying that spreads, in general, are suffering. And whether we’re worried about this trend and what kind of management measures are we considering for asset spread in general. All right. As for our net interest income, in Spain, I think the quarter has been basically flat, the Santander retail network. And this was sort of the low season. But we still see positive trend on spreads on loans, and we had a significant drop on the cost of deposits when we renewed those expenses, deposits, but volumes aimed are not helping, and there’s – nor do we expect them to help. As was said in the Investor Day, we expect the loan portfolio in Spain to keep shrinking by about 3%. So, volumes won’t help. But I do think lending spread will continue to rise and in the process, there could be some additional negative impact if, as the market believes, the ECB lowers interest rates. And we reported in the Investor Day the impact, which is 100 basis points, would represent in the Eurozone and in the different areas. I’m speaking from the top of my head, but I think it was EUR140 million in the Eurozone. And I think it was £180 million. So, that’s basically the payable volumes in lending spread which are improving and possible changes which would be basically interest rates. And as for the corporate center, there are two basic functions there. One is to fund the different units. And that is done with market spreads, and that changes on month, may have another function which is from the holding. And, of course, with rising rates in absolute term versus last year and with higher funding cost in terms of lending spread, the corporate center has more negative income. The general question about whether spreads are suffering throughout the group. The idea – it’s always hard to speak in general terms. But I’d say in general, lending spreads are rising in almost all our unit. I think the only unit that I can think of in which they’re not is Chile, and that’s because as I’ve had showed you in the presentation lending is fixed rate, and there’s been a significant hike in interest rate. And that meant pressure on our spread. In the other countries, spreads are less stable of rising, of course, because of the mix. The greater growth in corporate activity and lowering card may give that impression but segment by segment in general lending spreads are rising. Where spreads are suffering is on deposits particularly in those countries where interest rate is very low, almost zero. You have not a slow but also low in the UK, and the Latin American countries where rates have been – it dropped slightly at Mexico, and now in the last 20 days during the last months, Brazil. But in general the idea is about lending spread tending to rise and spreads on deposits and the pressure from low interest rates.

Question from Ignacio Cerezo about whether we can say something about that guidance we issued of about 80 basis points of EBA impact. So, it think that slide showed all the detail, the impact of 90 basis points without the mark-to-market of the assets, and that’s basically what we mentioned. A question from Marcelo Palermo about sensitivities of basis point variation and interest rates. And José Antonio Álvarez has already explained that. A question from Raul is about whether we can say anything about the fall in the assets in the quarter and also the change in derivatives mark-to-market. And then there are simple questions from Antonio Ramirez and some other analysts about our sovereign debt portfolio exposures’ back to maturity.

There’s a slide from the Investor Day with each of our exposures. We have no healthy maturities, all FSS in the group. And in the presentation for the Investor Day, you have 35 for each country, exactly what we have. Okay. The drop in assets available for sale in the quarter is basically Brazil. In Brazil, we have a debt – a public debt portfolio, and I think the basis in the Investor Day that José was just referring to, I think it was about EUR18 billion, EUR19 billion. I’m not sure if it was euro or dollar. It wasn’t specified. And this in part was brought when we did the capital increase. There was surplus liquidity in Brazil which we invested in sovereign debt. The non-portfolio is growing strongly as we showed in the presentation. And we sold bonds in Brazil, and that’s the main aspect of the drop in available for sales. And as for the mark-to-market derivative versus market trend, so mark-to-market by definition, so that’s it. In general, our exposure to derivative year assets with customers from fixed rates to variable rates through the evolution of interest rate, up or down is what changes this figure, but there’s nothing really on top of that as far as I can remember. Moving to Spain, there’s a question about M&As, about whether we’re planning anything. A question from Daiwa Asset Management, are we planning to buy some banks or perhaps savings banks in Spain. And Britta Schmidt and Raoul Leonard from Autonomous and RBS have a similar question about the possible sale of our EUR3 billion portfolio real estate assets in Spain, are we selling, are we not, what is our position, do we plan to sell these assets off aggressively?

Well, the first part, I think, we’ve repeated many times, we are, of course, looking at each opportunity in the market. It’s our responsibility and professionally we do have to analyze each of these opportunities and that’s all I have to say to that. And then the second point, it is true that our recovering units are having talks of all types with lots of intermediaries to study possible transactions of this type. But in any case, the transaction you just mentioned is not really advanced at all, just some preliminary contacts and talks. I can’t really be more explicit. And moving on to risk, Spain. There are several questions from Benjie Creelan in Macquarie and Francisco Enriquez from N+1 about the evolution of the NPL Spain and Matteo Ramenghi from UBS, are there any segments that are specifically deteriorating? How do we expect the rising interest rates this quarter? And we believe that the peak NPL – or have we reached the peak NPL in Spain yet? When do we think we will reach the peak? That’s another question. And do we plan to create a bond bank and transfer all those NPLs there and sell them off?

Well, there’s a chart which I think Matías Rodríguez Inciarte showed in the Investor Day showing the breakdown of the NPL by segment: individual mortgages, businesses, others and then the real estate developer business, mostly. And there you can very clearly see that the trends for NPL other than real estate developers were pretty flat or growing only very slightly. However, well, we still saw significant NPL rises is in developer loans, maybe because it’s a big percentage. So, that’s the first part of my answer. We don’t see real changes in trend in NPL in segments other than the real estate developer. That’s my first point. The second point is that we were thinking a year ago, that towards the end of the year NPLs in Spain would have peaked. But now, we no longer think so. We think that they could still rise 5 potentially, especially real estate developers, mostly. So, it went up in Q3 over 5 percentage points, which we did not expect to happen a year ago. And we think that in 2012, it will continue to rise. Perhaps not very significantly, but we don’t think that it has yet peaked, and probably won’t in the next quarter either. We have to wait and see what happens next year. And we expect some ranges. So, it’s going to be in that same assessment with real estate developers. Oh, and José Antonio is right about the bad bank thing. Well, I don’t know what that means, nor do I understand what you mean by that question. Of course, a lot of people are talking up there about dividing up the bank and creating a bad bank, but we certainly have not thought anything about that. And if you have any idea about it, go ahead and tell us. But we’re certainly not considering any such thing.

Next question is about what do we expect to happen with the quality of loans to developers and so on (inaudible) that. And Matteo Ramenghi is asking whether we’re comfortable with the current coverage levels in Spain. And finished with risk, there’s another question, also from Fuji from Brazil, how about Brazil, if we can explain the situation with loans and risk quality in Brazil. Do we think or how do we think NPLs will evolve? Have they peaked in Brazil?

Well, in Brazil, what has happened in Q3, we already anticipated last month. We said that in Q3 there was going to be a rise in NPL. It was going to be rising but then it would normalize in the following quarter. And after that, we didn’t expect to see anything particularly unusual. So, the cost of lending would remain, more or less, constant. And loan growth would be the driver for rising NPLs but ratios would remain the same because there’s no change foreseeable. And as coverage in Spain, are we comfortable? Yes, we are comfortable. Maybe as I’ve said earlier, we may reconsider the coverage of some of the real estate asset towards the end of the year as a possible way to allocate the capital gains we’re generating. That might be the only area where we might allocate some of our capital gains to improve those coverage levels for some specific real estate asset. But in general, we are comfortable with the coverage level we have. Plus if you compare with our peers of Spanish and elsewhere, it is also very good. It’s above average. And as for the NPL ratio in Brazil, remember that in the Investor Day, we said that it could worsen by an additional 30 basis points, and it’s actually been quite flat, and early in the quarter, reasonably flat too. The evolution has been as our CEO has pointed out in line with our target or better.

And finally, Spain, the top part of the income statement, a couple of questions from Benjie Creelan from Macquarie. He’s saying that’s we’re growing deposits, but it seems with higher costs. Have we seen any deposit wars in Spain, or how do we expect this to evolve in Spain, and can we shed some light on net interest income over lean assets and ratio medium term or in the next quarter?

Well, I think there was a question about that already where we basically explained what we thought. We saw widened spreads on loans and for deposits, I think the main impact would be interest rates, percent to European banks were to lower rates, that would have an impact on spreads for deposits. As for deposit wars, well, there is intense competition for deposits, but I wouldn’t call it a war. There are different strategies at different times, but I wouldn’t say there’s an all-out deposit war.

Similar question from Jaime Becerril from JP about covered bonds in Spain, do we think that this could be a product that might be used more in our particular case, how our sales going, can we give some idea about volumes or amount?

Well, the main reason for those maturities are significantly longer for deposits. So, that gives you more stability than time deposits, particularly when liquidity – when there’s so much competition for liquidity and the wholesale market are so limited. They’re not the figures here but generally, we will place what was scheduled.

Okay. And finally, for other unit, Andrea Filtri in the UK is asking whether we can remind them of the regulatory impact and other impacts for ‘12 and ‘13.

We also specified this during the Investor Day. We talked about total impact, combining regulation and other things between £500 million and £600 million annual. Alexander Bernadski from ING is asking about the drop in lending in Latin America, suppose that’s an exchange rate impact could it actually eliminate growing in Latin America. And he’s also asking about tax rate in Brazil which explains what José Antonio said in this presentation the negative impact on our profit. Alfredo Sáenz Abad: (Interpreted) Well, that is the end of all the questions we’ve received over the Internet. I don’t think we have any time left for questions over the phone but there aren’t any. So, we’ll leave it there. Thank you very much. If you have any other questions or if you can think of anything else, you get in touch with Investor Relations. Thank you.