Corporate Social. Report 2012 COMMITTED TO THE SUSTAINABILITY OF THE COMMUNITIES WE SERVE

Transcription

1 Corporate Social Responsibility Report 2012 COMMITTED TO THE SUSTAINABILITY OF THE COMMUNITIES WE SERVE

2 Contents message from 4 Corporate Information 14 sustainability Overview 18 Customers and 26 Being Committed to 34 santander and the CEO 6 Banco Santander, A 16 Corporate Social team Members Our Communities Higher Education global Financial Leader Responsibility: Sustainability 20 Putting Customers First 28 Committed to Our 36 Investing in Education 8 Santander in the U.S. 9 Sovereign Bank IN Action 23 Team Members: A Rewarding Place TO Work Communities 30 Giving Back: Sovereign Bank AND in Tomorrow s Leaders Foundation 32 Giving Back: 2012 Non Profit Partners General information: To access an electronic copy of this document please visit To learn more about our global commitment to sustainability please visit CustomerExperience@sovereignbank.com Santander Holdings USA, Inc. (SHUSA) is the parent company of Sovereign Bank, N.A. (The Bank), a national banking association. The Bank converted to a national banking association on January 26, 2012 from a federally chartered savings bank. In connection with its charter conversion, the Bank changed its name to Sovereign Bank, National Association. Also effective on January 26, 2012, SHUSA became a bank holding company. The Bank is headquartered in Boston, Massachusetts, and its executive offices are located at 75 State Street, Boston, Massachusetts. The Bank s main office is in Wilmington, Delaware. SHUSA is a wholly-owned subsidiary of Banco Santander, S.A. Banco Santander is a global retail and commercial bank, with a presence in 10 main markets: U.S., Germany, UK, Poland, Brazil, Mexico, Chile, Argentina, Spain and Portugal.

3 Message from the ceo On the evening of October 29th, Hurricane Sandy roared ashore near Atlantic City, New Jersey and New York, bringing devastating winds, rain and floods to many of the communities we serve and where many of our team members live. Immediately, we came together as an organization, offering support and demonstrating our commitment to our customers, communities and each other by providing both donations and low-interest loans. Though this was an unprecedented event, our response was rooted in one of the pillars that guide our business: to make a difference in the communities in which our team members and customers live. Our commitment to providing opportunities for those less fortunate and to helping future generations succeed runs deep within our institutional DNA. Our Corporate Social Responsibility efforts align with the Santander Group s sustainability strategy, which focuses on contributing to the economic and social progress of the communities in which we have a presence. We successfully completed year two of our three-year community reinvestment plan, which seeks to further the Bank s mission to meet the credit and financial service needs of low- and moderate-income individuals, families and businesses in our principal banking markets. Our total commitment per our three-year plan equals $5.3 billion and we have continued to maintain our outstanding Community Reinvestment Act (CRA) rating for the past 10 years. As a participant in the Santander Universities program, we partner with more than 35 U.S. colleges and universities, providing $9 million annually in scholarships and support. We are a bank centered on our customers committed to building the products and services our customers need and want, and to providing exceptional service in every customer interaction. In 2012, we made great progress in moving forward with our focus on meeting all our customers financial needs. We also continued with our efforts to implement processes to improve customer satisfaction and reduce complaints and incidences. We are already seeing positive results on all these fronts. We are also proud of our commitment to our team members. We continue to focus on diversity and on increasing opportunities for career progression. Finally, we have worked hard to develop a culture that embraces compliance as a way to build trust and transparency with our customers, communities and stakeholders. We look forward to 2013 as the year in which Sovereign will rebrand as Santander, positioning the Bank for growth and success for our customers, our team members and our communities. Jorge Moran Santander US Country Head and President & CEO of Sovereign Bank We look forward to 2013 as the year in which Sovereign will complete our transition to Santander, positioning the Bank for growth and success for our customers, our team members and our communities. 4 1

4 Founded in 1857, Banco Santander is the largest retail and commercial bank in the Eurozone. 1Corporate Information Banco Santander 2012 Awards EuroMoney - July Best Bank in the World Best Bank in the United Kingdom Best Bank in Poland Best Bank in Portugal Best Bank in Mexico Best Bank in Argentina The Banker - November Best Bank in the United Kingdom Best Bank in Mexico Best Bank in Poland Best Bank in Portugal Best Bank in Argentina Best Bank in Puerto Rico Bloomberg Markets The Greenest Bank in the World Interbrand/Deloitte Santander, Leading Bank among the world s top green brands Photographer: Roland Halbe

5 Banco Santander, a global financial Leader Rest of Europe 2% Santander is a global retail and commercial bank with a significant geographic diversification balanced between mature and emerging markets, which contributed, respectively, 45% and 55% of profit in The Bank is among the top 20 financial institutions worldwide in terms of market capitalization and one of the best capitalized banks in the world with a 10.33% capital ratio. 1 The organization follows an independent subsidiary model in each of its markets, where each business is governed under local regulation, and customer deposits are protected by the insurance funds of the local market. Santander s geographic diversification and commercial banking model provide substantial recurring results and continued growth for the global organization. The Bank has 102 million customers and 14,392 branches, the largest network of any international bank. With an efficiency ratio of 46.1%, Santander is also one of the most efficient banks in the world. 12% Mexico Rest of Latin America 2% United States 10% Brazil 26% United Kingdom 13% Portugal 1% Germany 4% Spain 15% Poland 5% DISTRIBUTION OF RECURRING ATTRIBUTABLE PROFIT BY OPERATING GEOGRAPHIC SEGMENTS Ten main markets Other markets where the Bank operates: Peru, Uruguay, Norway, Sweden, Finland, Denmark, Holland, Belgium, Austria, Switzerland and Italy Chile 6% Argentina 4% Banco Santander Update Balance and Results Gross Income Pre-Provision Profit (Net Operating Income) Core Capital Customers Branches Team Members 2012 $56.1 Billion $30.3 Billion 10.33% 102 Million 14, ,763 1 Basel II, Tier I Common Ratio as of 12/31/

6 Santander In the U.S. Sovereign Bank Santander s presence in the United States comprises five main operating businesses with more than 14,450 employees, over 825 branches and more than 2,400 ATMs. Sovereign Bank, N.A. (Northeast US) Retail and Commercial Banking Santander Consumer USA (Dallas, TX) Consumer Finance (Indirect Auto) Banco Santander International (Miami, FL) Private Banking SANTANDER BANCORP (PUERTO RICO) Banco Santander Puerto Rico Retail Banking Santander Financial Services Consumer Finance Santander Securities Retail Broker Dealer Asset Management Banco Santander (New York, NY) Banco Santander New York Wholesale Commercial Banking Santander Investment Securities Inc. Institutional Broker Dealer Sovereign Bank, N.A. is a retail and commercial bank and is among the top 25 banks 2 in the United States, with principal presence in Connecticut, Delaware, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. The Bank has 721 branches, 2,268 ATMs and more than 1.7 million customers. Sovereign is focused on meeting the needs of both retail and commercial customers by providing the highest level of service and offering comprehensive financial solutions that meet their needs. It also continues to be one of the strongest capitalized banks in the U.S., providing safety to its customers. In 2012, Sovereign obtained the national bank charter, which allows the Bank to offer a broader range of products and services in commercial banking. In 2012, Sovereign achieved its third consecutive year of profitability. Sovereign operates as a financially autonomous domestic bank in terms of capital, liquidity and governance. Sovereign conducts its business under a rigorous U.S. regulatory supervisory structure, and, as a national bank, its primary regulator is the Office of the Comptroller of the Currency. Sovereign is a member of the Federal Deposit Insurance Corporation and of the Federal Reserve System. Governance Structure Santander Holdings USA, Inc. (the parent company of Sovereign Bank, N.A.) is a wholly owned subsidiary of Banco Santander, S.A. As of December 31, 2012, Santander Holdings USA s board is comprised of a non-executive chairman, five executive directors including the chief executive officer, five non-executive directors and two parent company executives. The Federal Reserve Bank of Boston is the primary regulator of Santander Holdings USA. The Board Has Four Committees Executive Committee Audit Committee Board Enterprise Risk Committee Compensation Committee Sovereign Business Divisions Retail Banking Consumer Checking Savings Money Market Demand Accounts, Certificate of Deposits & Individual Retirement Accounts Mortgages Home Equity Loans & Lines of Credit Credit Cards Auto Loans Personal Loans & Lines of Credit Investments & Protection Small to Medium Size Enterprises Business Checking Money Market Demand Accounts Loans, Lines & Real Estate Cash Management Services Merchant Services Corporate Banking Commercial Banking Real Estate Commercial Real Estate Multi-Family Specialty Finance Asset-Based Lending Automotive Financing Equipment Finance & Leasing Mortgage Warehouse Lending Energy Finance International Trade Government, Institutional Banking Commercial Equipment & Vehicle Financing Global Banking and Markets Global Transaction Banking Trade Finance Bilateral Credit Facilities Cash Management Credit Markets Loan Markets Asset & Capital Structuring Debt Capital Markets Rates Fixed Income Sales Foreign Exchange Sales Corporate Finance Equity Capital Markets Mergers & Acquisitions Large Corporate Corporate headquarters located in Boston s financial district. 2 Based on total assets as of 12/31/

7 We consider the U.S. a key market for the future growth of Santander. In fact we have an ambitious goal; we want to become one of the best financial institutions in the U.S. that is committed to meeting our customers needs and supporting the communities we serve. Emilio Botín Santander Chairman 2012 Financial Highlights Sovereign s capital ratio % one of the highest in the United States In 2012, the Bank nonperforming loan ratio 2.29% In 2012, Sovereign Bank achieved its third consecutive year of profitability, with profits of $438.1 million. Lending grew at 5%, supporting economic growth throughout the footprint of the Bank, and customer deposits increased 5%. Sovereign s risk quality continued to improve with its non-performing loan ratio (NPL) dropping to 2.29%. The Allowance for Loan and Lease Losses (ALLL)/NPL ratio was 86.2%. Sovereign s capital ratio 3 at 12.86% is among the best in the U.S. In Retail Banking, we experienced strong growth in mortgage production, as well as an increase in loan production from small businesses, in line with the Bank s strategy to support economic prosperity. The year concluded with the full certification of over 50% of the banking branches in the Steps To Achieve Remarkable Results (STARR) program, the transformational sale culture program in the branch network. Four Pillars of Success Customer acquisition continued to be a priority, and the repositioning of products and services of the premier banking package for the mass affluent segment resulted in favorable growth of new clients. Our Global Banking and Markets division for wholesale commercial banking also experienced growth from impressive global companies as a result of the strong offering that the Bank provided to multi-national companies looking to grow locally and internationally. The Corporate Banking division also experienced a 4.5% growth in loan production resulting from a commitment to strong customer relationships through our regional banking teams and comprehensive local and global capabilities. Sovereign Bank Branch at Patriot Place in Foxborough, MA. Key Figures Balance and Results Assets Deposits Loans Capital Net Income Ratios Capital Ratio Non-Performing Loans 2012 $83.1 Billion $51.1 Billion $53.2 Billion $12.8 Billion $438.1 Million % 2.29% To build products that our customers need and want To provide exceptional service in every customer interaction and build loyalty To attract and develop the most talented, driven team members to meet our customers needs Other Data Customers Team members Branches ATMs Million + 8, ,268 To make a difference in the communities in which our customers live 3 Basel I, Tier I Common Capital Ratio as of 12/31/

8 Sovereign Bank became a National Bank in 2012 Key Accomplishments of 2012 A Nationally Chartered Bank In January 2012, Sovereign converted from a thrift to a national bank providing greater opportunity to expand its retail and commercial capabilities and to serve a wider variety of clients. A New Technological Platform In May 2012, Sovereign completed the migration of all of its customer accounts to the Santander IT Core corporate technological system. The new IT platform enables the Bank to build more efficient relationships with its customers to improve their banking experience. Lending to Communities In 2012, the Bank committed over $2 billion to support the credit and financial service needs of low- and moderate-income individuals, families, businesses and communities. Through its continued commitment, the Bank has been selected as a preferred lender in Pennsylvania, Massachusetts, Connecticut and Rhode Island by the Small Business Administration, the government agency that provides support to entrepreneurs and small businesses. Team Members show their pride at the first annual Santander US Convention in September Looking Ahead to 2013 Sovereign Bank Branch located in North Atherton, PA We expect 2013 to be a key year in our growth, as Sovereign focuses on boosting our position in retail banking, the middle market and large corporate segments and by continuing to offer our experience and capabilities to local and global clients. We will continue our investments in our core IT platform, new products and services, and business segments in order to keep improving our customer offering and overall experience with the Bank. Significant upgrades and improvements to our branch network and alternative channels (ATMs, online, and mobile banking services) will occur throughout Our efforts to recruit and retain the best talent are a high priority, as well as strengthening our compliance culture, offering quality of service, accountability and transparency to all our customers. By year-end, we will complete a branding effort that will culminate in the Bank s conversion from Sovereign to the Santander brand a step that will position us to move ahead in the marketplace and reap the benefits of the combination of our local expertise and our association with a global financial leader. Sovereign will rebrand to Santander in 2013 Santander is the 4 th most valuable brand in the world, according to the 2012 Brand Finance ranking 12 13

9 2 Santander Considers SUSTAINABILITY as Maintaining stable and lasting relations with the main stakeholders in order to understand their expectations and respond to their needs. Sustainability Overview s s s s s Santander defines sustainability as integrating ethical, social and environmental criteria into the business: Taking a long term view on the development of activities Maintaining stable and lasting relations with the main stakeholders in order to understand their expectations and respond to their needs Anticipating the challenges of the changing environment Having the best corporate governance Contributing to social and economic progress in the communities in which it operates 12

10 Corporate Social Responsibility: Sustainability in Action Our principal commitment is to work under the highest standards of ethical and professional conduct, to promote a culture of sustainability and to be a long term partner to our clients. In addition, our philanthropic efforts, higher education partnerships and team member volunteerism allow us to make a meaningful difference in the communities we serve. Carlos Garcia Chairman of the Corporate Social Responsibility & Community Affairs Committee Sovereign Bank s Corporate Social Responsibility (CSR) strategy is focused on investing in programs that contribute to the economic and social progress of the communities that we serve. This philosophy is deeply embedded in Santander s commitment to sustainability, a guiding principle that informs the strategy, policies and internal processes of the company and affects the way the company deals with its customers, team members and society. s s s s s The Corporate Social Responsibility and Community Affairs Committee To further Sovereign s CSR activities, the Bank formed the Corporate Social Responsibility and Community Affairs Committee in Its purpose is to: Ensure strategic philanthropy and team member community involvement Ensure compliance with the Community Reinvestment Act (CRA) Oversee the Bank s emphasis on environmental protections in banking activities Contribute to the social and economic development of the low- and moderateincome individuals, families and businesses throughout the footprint Oversee the integration of sustainability within the Bank s business model This committee, which reports to the CEO and meets quarterly, includes senior executives from all business lines and departments, including community development, universities, shareholders, marketing, government affairs, manufacturing, legal and compliance. Responsible Banking The foundation of Santander s global commitment to sustainability is the integration of ethical, social and environmental criteria into the Bank s management. At the Bank, we rely on solid corporate governance and a culture of compliance to ensure both sustainable management and our long-term vision. We have strict policies and procedures concerning risk management, compliance and anti-money laundering. Reputational Risk In 2012, the Bank developed a specific policy for managing reputational risk. Reputational risk is the potential that a corporate practice, or a new fact or rumor concerning products and services sold by the Bank, could change the public s perception of the Bank in a negative fashion. Consequences of reputational risk events include loss of customers, increased litigation costs and/or reductions in revenues. In addition to the CEO and his management team, several of the Bank s governance structures are involved in reputational risk management including: the Board of Directors, the Audit Committee, Asset and Liability Management Committee, the New Product Review Committee, the Compliance and Internal Control Executive Committee and the Executive Complaints and Incidents Oversight Committee. Compliance Sovereign is committed to the highest standards of ethical and professional conduct, and team members undergo significant training to assure the appropriate level of knowledge and awareness of expected standards of behavior. Our team members comply with the letter as well as the spirit of laws and regulations, including those related to the Bank Secrecy Act and the USA PATRIOT Act. 4 Compliance is core to the culture of Sovereign and is part of the foundation of our Bank s identity. Our customers depend on and trust us to make honest decisions and to provide products that add value commensurate to their cost. Our customercentric approach is focused on quality of service, accountability and transparency. Sovereign s collaborative approach to meeting the needs and expectations of our stakeholders, including our regulatory partners, sets us apart. Anti-Money Laundering Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance involves a comprehensive system to assist law enforcement agencies in the prevention of money laundering and the financing of terrorist activities while complying with established regulations. Sovereign s BSA/AML Program consists of a Board-appointed BSA/AML Chief Officer; policies, procedures and internal controls associated with BSA/AML risks; comprehensive training; and independent testing. A strong AML program begins with awareness of every team member in terms of the AML risks that exist in Sovereign s business activities. Consequently, all 8,900 Sovereign team members complete mandatory BSA/AML training at the time of hire and on an annual basis, and BSA/AML compliance is reinforced through the annual performance review process. Consistent with our customer-centric philosophy, BSA/AML policies and procedures help us to better know our customers and understand their business needs so that we can manage risks prudently and serve our customers better Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of

11 WE ARE A BANK THAT MEETS OUR COMMITMENTS AND STRIVING TO PROVIDE an EXCEPTIONAL CUSTOMER EXPERIENCE IS ONE OF OUR MOST IMPORTANT COMMITMENTS. Jorge Moran, Santander US Country Head AND SOVEREIGN PRESIDENT AND CEO 3Customers and team members s s s Fast Facts 2012: Improved Customer Experience Began developing Simple Facts about Your Account, a document to support customers on how to manage their accounts and provide clarity on fees and banking policies for checking accounts. Improved process for new issuance and emergency replacement of debit cards to provide customers with instant purchasing power. Upgraded ATMs to 100% compliance with the Americans with Disabilities Act. 16

12 Putting Customers first We have a strong commitment to our customers. We are continuously working to improve the customer experience and provide exceptional service in every customer interaction. We have made it every team member s responsibility to create a welcoming environment, listen, identify and offer the right solutions and foster long-term customer relationships. David Miree Managing Director of Sovereign s Retail Network The customer is the center of the Bank s business model. We build long term relationships by listening to our customers, understanding their needs and responding with the right solutions. In this way, we earn the trust which is at the core of Sovereign s commitment to each of its 1.7 million customers. Increased Small Business Specialists by 14% creating more involvement in the local community Increased Business Banking Relationship Managers 35% creating more support to small businesses in their area Understanding our Customers Needs In 2012, we continued with our Steps to Achieve Remarkable Results (STARR) program, certifying a total of 424 branches. This aligns with our mission to move from a transactionbased business model to a customer-centric needs-based model that is about listening and understanding our customers needs and offering the right solutions. Helping U.S. Businesses Grow We support our Small to Medium Size Enterprise (SME) customers as a business partner, not just a finance provider. We also aspire to become the SME bank of choice for our customers. To accomplish this, we focus on providing appropriate products and services at each stage of the business cycle. In 2012, Sovereign made significant investments to deliver a strong value proposition to the marketplace. We increased the number of small business specialists and business banking relationship managers by 14% and 35%, respectively. These team members have been tasked with becoming actively involved in their local communities to support small businesses in their area. We also made a significant investment in our business specific contact center to better support the needs of our SME customers. The Bank also launched a new range of simple, straightforward and value-oriented products, including business checking accounts, business online banking and mobile merchant solutions. We also streamlined cash management product sales fulfillment through our contact center, simplifying the process for our customers. Improving the Customer Experience Developing company wide customer experience programs that align our actions to customer expectations was a key strategic priority in Our Service Quality & Customer Experience team continues to evolve the robust program in place. The Voice of the Customer Service Quality performs two surveys regularly as part of the corporate Santander model. Target 100 and the competitor peer survey have been implemented by using best practices from other countries. Target 100 is a program that tracks the Voice of the Customer by each customer interaction to ensure that Sovereign is providing consistently great service to our customers with a target of 100% satisfaction. The surveys are performed on a monthly basis. In 2012, interviews with nearly 12,000 branch and contact center customers were conducted. The survey will expand to include other channels to improve customer experience on a corporate level. The competitor peer survey is performed biannually to see how we rank against competitors. We get specific customer feedback on our products, channels, and brand so we can target areas of improvement. Collaborative Approach The Service Quality team has partnered with different departments to bring more awareness of how each department impacts the customer journey and evaluate how to best improve the customer experience. An example is the roll-out of Quality Meetings that hold departments accountable and develop detailed corrective action plans, such as re-evaluating a vendor relationship that is adversely affecting customers, to measure if we are meeting customer expectations. Complaint Management The process to handle complaints was enhanced during We implemented a dedicated complaints management system that enables us to react quickly to customer issues, monitor potential trends early and take action to deliver the highest level of customer service and appreciation. The Bank also introduced a range of other initiatives and processes to better understand the root cause of service quality issues. Reducing Incidents In March 2012, Sovereign implemented MIRO, Santander s corporate tool for handling customer incidents, in 721 branches and all contact center sites. In addition to tracking incidents, we can now more effectively monitor service requests, positive feedback and suggestions. Customer Privacy and Security At Sovereign, we value the trust our customers place in us to safeguard and protect the privacy of their information. Our Privacy Notice describes our policies as well as the choices available to consumers as to how their information is shared. The security measures we take to protect personal information from unauthorized access and use comply with Federal law. These include computer safeguards and secured files and buildings. In addition, all employees understand their duty to ensure that the information the Bank has been entrusted with remains safe and secure. For that reason, employees have access to information only on a need-to-know basis in order to perform specific job functions. Business Banking and Environment Our Environmental Risk Unit (ERU) and Real Estate Appraisal Unit (REAU) oversee development and maintenance of the Commercial Real Estate Environmental Risk Assessment Policy to ensure that the Bank s lending procedures are environmentally responsible. All loans secured by commercial real estate require some level of environmental due diligence prior to closing as a condition of approval. Environmental risk assessment can include questionnaires, site inspections and interviews regarding storage facilities, business operations and location analysis, as well as a review of federal, state and local environmental agency records. By the end of 2012 the corporate Target 100 program had been measuring the Voice of the Customer for 6 full months 20 21

13 Team members: A Rewarding Place to Work At Sovereign, attracting and developing the most talented team members is one of our top priorities. We pride ourselves on recognizing and rewarding team members for their contributions and commitment to our growth. This philosophy enables committed team members to share in the Bank s success. In 2012, Sovereign s management team committed to connecting with team members from every region across the Bank s footprint. This resulted in meetings with over 2,000 team members through visits to branches, our first Santander US team member Convention, team member lunches and other events. These efforts provided management with the opportunity to solicit team member feedback and ideas on how we can successfully continue to move the Bank forward. We also recognized the outstanding service of 79 team members with the esteemed Santander Golden Pin. Employment and Recruitment Sovereign fills open positions with qualified candidates, whether from inside the Bank or externally. We value every team member s contributions and believe that everyone s ideas count. The company has a confidential and objective appraisal system, linked to competitive salary and performance-based incentive plans. Professional Development and Recognition We recognize that our team members are our most valuable asset and the key to our success. Therefore, professional growth is one of our key priorities. In 2012, we offered talent development projects and programs for new managers, as well as individual professional advice. 1,180 team members promoted out of nearly 8,900 Along with our customers, our team members are our most important asset. We are committed to providing opportunities to strengthen their skills and expertise through training and professional development. Jorge Moran, Santander US Country Head AND SOVEREIGN PRESIDENT AND CEO Team member recognition is an extremely important part of our corporate culture. each quarter, team members who have gone above and beyond are presented with a Gold Flame Pin Award for demonstrating exceptional effort in at least one of the following categories: Outstanding Customer focus; innovation/exceptional efficiency; collaboration/teamwork and leadership, and community impact. 23

14 I feel very proud working at Sovereign Bank because it is a local bank with a global reach that has shown solid growth and a strong business strategy. I also get a tremendous sense of satisfaction knowing that we always put our customers first and they really can count on us. Monisha Malhotra Branch Manager Team members participate in one of the training sessions offered at the Bank s corporate headquarters in Boston. Learning and Training Sovereign believes that knowledge and continuous learning enable team members to strengthen their skills and expertise to better serve customers. We are part of an organization that innovates and invests in learning. Sovereign team members can also take advantage of global resources offered by the Santander Corporate Learning and Development Center. Fast Facts Team members Number of Female Team Members Number of Male Team Members Total Number of Team Members Number of Part-Time Team Members Number of Full-Time Team Members Number of Promoted Team Members Training Total Investment in Training Total Training Hours Total Team Members Trained ,868 2,689 8,557 1,026 7, $4,867, ,715 8, ,839 3,058 8, ,908 1,180 $5,711, ,721 8,847 International mobility Santander strongly promotes international mobility within the Group as a way to encourage the sharing of best practices and to experience corporate culture on a global scale. Mundo Santander is one of the main mobility programs with 250 participants in 2012, who worked for four months in other countries on Group projects. Retirement Planning The Santander 401(k) Plan is an important resource to help team members achieve their retirement goals. The 401(k) Plan allows team members to accumulate retirement savings with pre-tax contributions and Sovereign s matching contributions. Enhanced Benefits We offer a comprehensive flexible benefit program for full-time and part-time team members and their eligible dependents. These include core coverage, providing financial support to families in the event of the employee s death or serious accidental injury, as well as a range of optional benefits that team members can elect based upon their needs. The latter include health and dental insurance, as well as Work/Life programs and Paid Time Off (PTO). We recently added a Volunteer PTO program to our offerings to support team members who engage in activities that enhance and serve the communities in which we live and work. Creating An Inclusive Workplace At Sovereign, we are committed to supporting diversity and to creating an inclusive culture where all our people can contribute to and enjoy our success. We are part of a global organization, with multicultural teams taking part in global projects and sharing best practices in more than 40 countries. Community Involvement Sovereign is a socially responsible company committed to the communities we serve. Our team members are encouraged to be leaders in their own communities by giving of their time and talents. In 2012, 662 team members took part in volunteer activities, providing over 9,484 volunteer hours. Team members contributed over 9,484 volunteer hours in

15 4Being Committed TO Our Communities Recognition for our Community Reinvestment Act Efforts in 2012 s s s s Pennsylvania Housing Finance Agency Award of Excellence as top lender for affordable housing Neighborhood Housing Services of New York City Community Service Award for our support of affordable housing and financial literacy programs Philadelphia Urban Affairs Coalition Community Economic Development Committee Award for our continued support of housing and community programs Massachusetts Housing Partnership Home Safe Award as top lender in the SoftSecond first-time homebuyers program The Bank was honored by the Boston Business Journal as one of the Top 100 Charitable Contributors in Massachusetts. 24

16 Committed To Our Communities Sovereign is committed and dedicated to serving the needs of our banking communities through the bank s resources and team member participation. Our products and services are designed to support first-time home buyers, affordable rental housing, health care and education while creating and supporting jobs and services in low- and moderateincome communities. Jack Killen Corporate CRA Officer Sovereign is committed to contributing to the communities we serve and where our team members live and work. In 2012, Sovereign has committed $2 billion and provided $2 million in grants to non-profit organizations in its nine-state market to support low and moderate income individuals, families and businesses. Outstanding CRA Rating For the past four examination cycles covering 10 years, the Office of Thrift Supervision has awarded the Bank an Outstanding CRA Rating for our efforts to meet the needs of low- and moderate-income families and neighborhoods throughout our footprint. Community Investment and Economic Development Supports the creation of affordable housing, small business growth and job skills or workforce development for lowand moderate-income individuals and communities. Financial literacy programs and environmental projects and organizations are also included in this category. Youth and Education Supports organizations that enrich the educational opportunities, including after school programs, early childhood development, special education programs and college preparatory and college readiness programs for low- and moderateincome children. OUR SUPPORT OF THE UNITED WAY, A COMMUNITY-BASED ORGANIZATION OPERATING IN 45 COUNTRIES AND TERRITORIES, is AN IMPORTANT PART OF OUR COMMITMENT TO THE COMMUNITIES WE SERVE. TEAM MEMBER CONTRIBUTIONS AND VOLUNTEERISM PROVIDE MUCH-NEEDED SUPPORT TO LOW- AND MODERATE-INCOME INDIVIDUALS AND FAMILIES ACROSS OUR FOOTPRINT. Health and Human Services Supports organizations that help provide basic human needs and social services for low- and moderate-income people, such as shelters, food pantries and community health clinics. Arts and Culture Supports organizations, such as libraries, museums, cultural centers and public radio and television stations, that provide access to the arts and culture for low- and moderateincome individuals and children. Sovereign Community Reinvestment Plan In 2011, Sovereign extended its Community Reinvestment Plan through 2013, committing to $5.3 billion in new lending and investment from 2011 to 2013 in support of low- and moderate-income individuals, families and businesses in its principal banking markets. $2 Billion In community loans and investments in 2012 (million dollars) Affordable Housing Initiatives Loans to Low- and Moderate- Income Borrowers Multi-Family Loans Modification, Extension, Consolidation Agreement Lending (MECA) Subtotal Small Business Support Small Business Loans Small Business Administration Loans Subtotal Consumer Finance (Low-and Moderate- Income Borrowers) Community Development Loans CRA Investments Contribution and Grants Grand Total Commitment 2, , , , Goals , , Actuals , ,073 Key 2012 Achievements Affordable Housing The bank provided over $840 million in affordable mortgage loans to firsttime homebuyers in Small Business Lending In 2012, Sovereign closed over $639 million in small business loans and continues to be active in Small Business Administration (SBA) lending, closing over $35 million in SBA loans. The Bank is a preferred lender in Pennsylvania, Massachusetts, Connecticut and Rhode Island. Community Development Lending In 2012, Sovereign provided over $50 million in commercial community development loans, $129 million in multi-family lending and $256 million in MECA (Modification, Extension, Consolidation Agreements) lending in low- and moderate-income census tracts. Consumer Loans In partnership with the Pennsylvania and Massachusetts Assistive Technology loan programs, Sovereign provided over $4 million in low-interest loans in 2012 to help individuals with disabilities purchase useful technological devices that improve their quality of life

17 Giving Back: Sovereign bank Foundation In 2012, Sovereign provided over $2 million in charitable grants to organizations promoting community investment and economic development, youth and education, health and human services, and arts and culture programs. Led by senior management, Sovereign team members delivered supplies to their colleagues impacted by Hurricane Sandy Funding Allocation by Type of Organization REPRESENTATIVE 2012 Non-Profit Partners Include: Hurricane Sandy Relief Community Investment and Economic Development 34% Youth and Education 29% Health and Human Services 23% Arts and Culture 14% COMMUNITY Investment AND ECONOMIC DEVELOPMENT Boston Earned Income Tax Credit Coalition Easter Seals Massachusetts New Jersey Citizen Action Massachusetts Affordable Housing Alliance Money Management International Community Economic Development Fund Local Initiatives Support Corporation Capital Good Fund Pennsylvania Assistive Technology Foundation Clarifi Community First Fund Food Bank for New York City Habitat for Humanity Fifth Avenue Committee Neighborhood Housing Services of New York Youth and Education Dever-McCormack K-8 School Year Up Building Educated Leaders for Life (BELL) New Hampshire Jump$tart Green Tree School Junior Achievement of the Delaware Valley Eagle Academy for Young Men Red Hook Initiative HEALTH AND HUMAN SERVICES My Sisters Place New Horizons for New Hampshire Meeting Street Salvation Army Council of Senior Centers and Services of New York City Arts and Culture Shakesperience Productions Arden Theatre Company Ifetayo Cultural Arts Academy When Hurricane Sandy brought devastation to the communities we serve in the Mid-Atlantic, Sovereign responded immediately with support and services. The Bank and its team members donated over $500,000 to Hurricane Sandy relief efforts, including more than $400,000 to the American Red Cross. In addition, we created a special Financial Assistance Program to offer emergency loans for clients and small businesses affected by the storm. DON SMOLENSKI, PRESIDENT OF THE PHILADELPHIA EAGLES, JUDGE RENEE CARDWELL HUGHES, CEO SOUTHEASTERN PENNSYLVANIA RED CROSS AND JORGE MORAN. THE DONATION TOOK PLACE AT Lincoln Financial Field, THE PHILADELPHIA EAGLES STADIUM. The Bank and its team members came together to raise over $500,000 for Hurricane Sandy Relief Efforts PRESIDENT OF THE Greater New York Chapter of AMERICAN RED CROSS JOSH LOCKWOOD, FERRARI FORMULA 1 DRIVER FERNANDO ALONSO AND JORGE MORAN. THE DONATION TOOK PLACE AT THE NEW YORK STOCK EXCHANGE

18 Giving Back: 2012 Non-Profit Partners Boys & Girls Clubs, Dorchester, MA Sovereign is a partner of the Boys and Girls clubs, which provide a safe place to learn and grow after school. Through our sponsorship of the New England Revolution soccer team, Sovereign offers children access to the Revolution Community Clinics, a series of free soccer clinics in low- and moderate-income neighborhoods. Santander s global soccer ambassador, Pelé, took part in one of these events. Dever-McCormack K-8 School, Dorchester, MA The Dever-McCormack K-8 School is the largest non-high school in the city of Boston, with nearly 1,300 students and 110 staff members. The school houses a large special education student population. Sovereign supports a number of activities, including academic and sports achievement banquets, a Reading is Fundamental program and assistance with supplies such as furniture and identification cards. New Jersey Citizen Action (NJCA), Newark, NJ Salvation Army Reading, PA Food Bank for New York City New York, NY Local Initiatives Support Corporation (LISC) New Hampshire Jump$tart Hillsborough, NH Fifth Avenue Committee (FAC) Brooklyn, NY As the state s largest citizen watchdog coalition, NJCA organizes campaigns to improve economic development, housing, racial equality and political action. The Sovereign Bank Foundation provides support to NJCA s operations. In addition, the Sovereign Bank mortgage group works closely with NJCA, providing affordable mortgage loans to lowand moderate-income borrowers. The Salvation Army provides vital services such as food and clothing for thousands of impoverished families. During the 2012 Thanksgiving holiday, Sovereign team members volunteered to assemble hundreds of food baskets. At Christmas, team members came together to sort thousands of gifts and toys that were delivered to children across the city. For 29 years, Food Bank For New York City has been the city s major hunger-relief organization, working to end food poverty throughout the five boroughs. As the city s hub for integrated food poverty assistance, the Food Bank tackles hunger through food distribution, nutrition education, support for food stamps access and income tax services. LISC mobilizes corporate, government and philanthropic support to invest in locally defined community development projects through loans, grants and equity investments. The Sovereign Bank Foundation provides funding annually to support programs in Massachusetts, Connecticut, Rhode Island and Pennsylvania. In addition, Sovereign team members participate on advisory boards and are actively involved in loan decisions. New Hampshire Jump$tart Coalition seeks to improve the personal financial literacy of young adults by developing, disseminating and encouraging programs that promote the teaching of personal finance from kindergarten through college. In addition to annual support from the Sovereign Bank Foundation, Sovereign Retail team members provide coaching in financial literacy to help young people learn the power of money. FAC is a community organization in South Brooklyn that advances economic and social justice by building vibrant, diverse communities where residents have genuine opportunities to achieve their goals, as well as the power to shape the community s future. Sovereign Bank Foundation provides general operating funds for all FAC programs, including affordable housing development for first-time homebuyers

19 Our partnership with more than 1,000 universities around the world sets us apart from other financial institutions. This alliance enables us to support improvements in research, innovation, entrepreneurship and knowledge transfer. This unique, strategic, long-term partnership, aligned with our business, allows us to become involved in society and remain connected with the youth as well as with those institutions that wield tremendous influence in the countries where we operate. Emilio BotÍn, Santander chairman 5Santander and Higher Education s s In 2012, Banco Santander provided over 31,712 grants and scholarships, totaling more than $168 million, to cooperative projects with universities in 20 countries. Of that total, 965 grants and scholarships amounting to almost $9 million were made available to students, researchers and faculty at U.S. colleges and universities. 32

20 Investing in Education and IN Tomorrow s Leaders A core component of our corporate social responsibility policy is the Bank s commitment to higher education through Santander Universities. Santander Universities was created in 1996, inspired by the vision and empowered by the drive of Emilio Botín, Santander chairman, and with the conviction that supporting higher education is one of the best ways to contribute to the economic and social development of the countries in which the Bank operates. Ernesto Zedillo, past president of Mexico; Jorge Moran, Santander US country head, and Peter Salovey, president-elect of Yale University. Emilio Botín, Santander chairman, surrounded by students from Northeastern University in Boston. Santander maintains a long-term alliance with 1,027 universities throughout America, Asia and Europe. Today, Santander Universities maintains a stable alliance with 1,027 universities from America, Asia and Europe. The program encourages the international exchange of students and teaching staff and promotes innovation and entrepreneurship. It also facilitates access to a university education for economically underprivileged students, promotes research and the specialized training of teachers, and the development of professional practices. Giving Back Through Santander Universities With the help of Santander Universities, Boston University (BU) student Katia Gomez has built EDUCATE 2 ENVISION (E2E), a nationally recognized non-profit program that creates a better life for children in remote communities in Honduras by providing them with a secondary education and the opportunity to learn and practice skills essential to their careers. Katia is supported by Santander Universities through the Field Practicum Program at BU s School of Public Health. KATIA Gomez: I was able to accomplish so much more because of this financial support. Every year, between grants and work placements, the Santander Grants Program benefits more than 31,712 individuals. It is the largest investment in grants and mobility programs by any private institution in the world. Santander Universities was introduced in the United States in 2009 and has resulted in agreements with 26 universities and colleges. In 2012, the program funded over 950 scholarships. REPRESENTATIVE Programs in higher education TOP USA - Massachusetts program Coordinated by the Brazilian university, UNICAMP, this program facilitates exchange between teaching staff and researchers from seven Brazilian and six U.S. universities, including the Massachusetts Institute of Technology (MIT), Harvard, Brown, Northeastern, Boston University (BU) and UMass Boston. COLUMBIA UNIVERSITY Columbia s Global Centers is a network across four continents of eight centers to promote and facilitate international collaboration, new research projects, academic programming and study abroad opportunities for students. Rockefeller Center Harvard University This program is a collaborative arrangement with the David Rockefeller Center for Latin American Studies (DRCLAS) at Harvard University to support student mobility and faculty research. Brown University The program provides a platform for promising young faculty from the Global South and emerging economies to engage in intellectual and policy dialogue at the Brown International Advanced Research Institutes (BIARI). Bryant University The Sophomore International Experience (SIE) at Bryant University in Smithfield, Rhode Island, is a semester-long academic course that provides second year students with travel-study opportunity. Boston University The Field Practicum Program is run by the University s School of Public Health. Scholarships are given to students of limited economic means and also to students who have completed internships or fieldwork in Latin America, as well as students selected to take part in the Kenya Field Practicum in Public Health & Environment. Santander Universities US Agreements: Babson College Baruch College Bentley University Boston College Boston University Brown University Bryant University College of the Holy Cross Columbia University Fordham University Harvard University Long Island University Massachusetts Maritime Academy Massachusetts Institute of Technology Monmouth University Northeastern University New York University Princeton University Providence College Suffolk University The State University of New York Tufts University University of California Los Angeles University of Pennsylvania Yale University 36 37