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Madrid/Brussels - 28 February 2012


Banco Santander, S.A. ('Santander') and KBC Bank NV ('KBC') announced today that they have entered into an investment agreement to combine their Polish banking subsidiaries, Bank Zachodni WBK S.A. ('Bank Zachodni WBK') and Kredyt Bank S.A. ('Kredyt Bank').


Bank Zachodni WBK and Kredyt Bank, with the support of their parent companies, Santander and KBC, have also reached an agreement regarding cooperation with respect to the proposed merger.


Jan Vanhevel, KBC Group CEO, welcomed today's transaction, commenting as follows: "Today's transaction is another major milestone in implementing the updated strategy we agreed with the European Commission. Even in an extremely challenging macroeconomic environment and in very volatile market circumstances, we have succeeded in reaching agreement on one of our most important divestment files.

Taking the decision to divest Kredyt Bank and to leave the Polish banking market was a very difficult one but difficult times have forced us to make difficult choices. We believe in the potential of the Polish market and of Kredyt Bank, in the professionalism of its management and employees and in the good service they deliver to their customers. But we are also convinced that, by taking this step, both KBC and Kredyt Bank have a clearer view of the future. This proposed merger offers opportunities for Kredyt Bank's customers and employees alike."


Emilio Botin, Chairman of Banco Santander, said: "With this transaction, Banco Santander will significantly strengthen its presence in Poland, one of the most dynamic economies in Europe, obtaining the critical mass we seek in our core markets. The transaction also underlines the flexibility and other advantages of Banco Santander's model of stand-alone subsidiaries. From the outset, we will generate value for the shareholders of Banco Santander as well as those of the merged bank, and will create a more powerful institution for customers and employees in Poland."



Description of the transaction and key terms


The transaction will entail a share capital increase in Bank Zachodni WBK, where the newly issued shares in Bank Zachodni WBK will be offered and rendered to KBC and the other shareholders of Kredyt Bank in exchange for their shares in Kredyt Bank.


Under the agreements, and subject to independent evaluation and final agreement by Bank Zachodni WBK and Kredyt Bank, as well as to obtaining regulatory approval from the Polish Financial Supervision Authority (Komisja Nadzoru Finansowego) and relevant competition clearance, Bank Zachodni WBK will merge with Kredyt Bank at the ratio of 6.96 Bank Zachodni WBK shares for every 100 Kredyt Bank shares. At current market prices, the transaction values Kredyt Bank at PLN 15.75 a share and BZ WBK at PLN 226.4 a share. The combined bank's total pro forma value will be PLN 20.8 billion (EUR 5 billion).


Both Bank Zachodni WBK and Kredyt Bank are listed on the Warsaw Stock Exchange. The merged bank will continue to be listed on the Warsaw Stock Exchange.


Following the proposed merger, Santander will hold approximately 76.5% of the merged bank and KBC around 16.4%. The rest will be held by other minority shareholders.


Santander has committed to help KBC to lower its stake in the merged bank from 16.4% to below 10% immediately after the merger. For this purpose, Santander will seek to place a stake with investors. In this regard, Santander has also committed to acquire up to 5% of the merged bank to assist KBC. Furthermore, KBC intends to divest its remaining stake, with a view to maximising its value.



Strategic rationale


For Santander


With this transaction, Santander will increase its presence in Poland, one of its ten core markets, underlining its long-term commitment to Poland. The proposed merger will consolidate the merged bank's position as Poland's third largest bank by all measures, with a market share of 9.6% in deposits, 8.0% in loans and 12.9% in branches (899). With more than 3.5 million retail customers, the merged bank will also be Poland's third in terms of revenues and profit, significantly closing the gap to the leaders. Including the Santander Consumer finance business, the Group's total market share in business volumes will amount to around 10% in Poland.


The proposed merger will produce business synergies in addition to those announced following the acquisition of Bank Zachodni WBK by Banco Santander.


Santander estimates the impact of this transaction on its Group core capital ratio under Basel II criteria will be around 5 basis points.





For KBC, the transaction, taking place in challenging market circumstances, is another major milestone in the further implementation of the strategic plan agreed with the European Commission and a significant step towards repaying the state aid the group received.


Upon the deconsolidation of Kredyt Bank as a result of the proposed merger, and after a committed reduction of KBC's participation below 10% shortly after the registration of the merger, at current market valuations approximately EUR 0.7 billion of capital will be released, predominantly based on a reduction of Risk Weighted Assets - corresponding with a pro forma tier-1 impact at KBC-group consolidated level (calculated at year-end 2011) of approximately +0.8%.


Assuming a full exit and based on current market valuations, the pro forma tier-1 impact at KBC- group consolidated level (calculated at year-end 2011) is estimated at approximately +0.9%.


Moreover, based on current market valuations, the transaction will have a positive effect on KBC's income statement of approximately EUR +0.1 billion at the time of closing the transaction.


KBC will continue operating on the attractive Polish market through KBC Securities (brokerage) and KBC TFI (asset management).



Other aspects of the transaction


Under the investment agreement, Santander has also committed to acquire 100% of Zagiel, the consumer finance arm of KBC in Poland, at an adjusted net asset value, also subject to obtaining the relevant competition clearance.


Additionally, the existing cooperation between Kredyt Bank and KBC TFI (KBC's Polish asset management company) will remain in place for the foreseeable future. The merged bank will distribute KBC TFI's funds under a non-exclusive distribution agreement for a minimum term of two years from the proposed merger transaction.


The transaction is expected to close in the second half of 2012, subject to the registration of the merger between Bank Zachodni WBK and Kredyt Bank and to obtaining regulatory approval and relevant competition clearance.



More information can be found in the respective analyst presentations on and www.

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