MADRID - Banco Santander (BME:SAN) S.A. announced Wednesday that the European Central Bank (ECB) has finalized the bank's minimum prudential capital requirements following the Supervisory Review and Evaluation Process (SREP), effective from January 1, 2025. The ECB has decided to maintain the Pillar 2 requirement (P2R) at 1.74% on a consolidated basis, with a minimum of 0.98% to be met with Common Equity Tier 1 (CET1) capital.
The capital requirements are a crucial measure of a bank's financial health and its ability to withstand economic stress. The CET1 minimum requirement will see a slight increase from 9.60% as of January 1, 2024, to 9.67% in 2025. The total capital requirement will also rise marginally from 13.86% to 13.93% over the same period. As of September 30, 2024, Santander reported CET1 and total capital ratios of 12.48% and 17.06%, respectively, indicating a capital surplus above the ECB's requirements.
The P2R is comprised of various elements, including the minimum capital requirement of Pillar 1, the capital conservation buffer, and additional buffers for banks identified as Other Systemically Important Institutions (OSII). For Santander, the OSII buffer has been set at 1.25% by the Banco de España, effective January 1, 2025. The systemic risk buffer requirement includes reciprocal arrangements with Italy and Portugal, and the countercyclical capital buffer requirement, which is subject to future increases over exposures located in Spain.
The ECB's decision underscores the importance of maintaining robust capital levels to secure financial stability. Santander's compliance with these requirements reflects its commitment to financial resilience.
The bank's disclosure, based on a press release statement, clarifies that the information should not be construed as a securities offer or a prediction of future financial performance. The historical performance of the bank is not indicative of future results, and no profit or loss forecasts should be inferred from the provided data. This announcement is in line with regulatory transparency practices and aims to inform stakeholders of the bank's regulatory capital situation as it prepares for the upcoming fiscal year.
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