Banco Santander, S.A. filed a Form 6-K with the SEC on October 28, 2026, disclosing the European Central Bank's decision on minimum prudential capital requirements effective January 1, 2027, following its Supervisory Review and Evaluation Process.

Key Highlights

  • P2R reduced to 1.65%: The ECB set a Pillar 2 requirement of 1.65% at the consolidated level, down from 1.74% applicable in 2026, with at least 0.93% to be covered by Common Equity Tier 1 capital.
  • Minimum CET1 requirement rises to 9.92%: The consolidated minimum CET1 requirement as of January 1, 2027 increases by 7 basis points compared to the January 1, 2026 level of 9.85%.
  • Minimum total capital requirement rises to 14.14%: The consolidated minimum total capital requirement as of January 1, 2027 increases by 3 basis points from the January 1, 2026 level of 14.11%.
  • Santander's reported ratios exceed requirements: According to the filing, Santander's phased-in CET1 ratio stood at 12.69% and total capital ratio at 17.01% as of September 30, 2026.
  • Countercyclical buffer drives requirement increase: The filing attributed the net rise in requirements to a 13 basis point increase in the countercyclical capital buffer, partially offset by the P2R reduction of 5 basis points on CET1 and 9 basis points on total capital.
  • P2R add-ons removed: The P2R reduction reflects that, as of January 1, 2027, no add-ons arising from the ECB's supervisory expectations regarding the provisioning calendar for non-performing exposures will apply.

ECB SREP Decision Sets Santander's 2027 Capital Floor

Banco Santander disclosed that the European Central Bank communicated its Supervisory Review and Evaluation Process decision establishing minimum prudential capital requirements effective January 1, 2027. The ECB set a Pillar 2 requirement of 1.65% at the consolidated level, of which at least 0.93% must be covered with Common Equity Tier 1 capital. The filing noted this represents a reduction from the 1.74% P2R that applied in 2026.

According to the filing, the overall minimum CET1 requirement at the consolidated level increases by 7 basis points, from 9.85% as of January 1, 2026, to 9.92% as of January 1, 2027. The minimum total capital requirement rises by 3 basis points, from 14.11% to 14.14% over the same period. The filing explained that these increases are attributable to changes in the countercyclical capital buffer, which rises by 13 basis points, while the reduction in P2R offsets this by 5 basis points on CET1 requirements and 9 basis points on total capital requirements.

The filing detailed the components of the January 1, 2027 CET1 minimum requirement, which includes a Pillar 1 minimum of 4.50%, a P2R portion of 0.93%, a capital conservation buffer of 2.50%, an Other Systemically Important Institution buffer of 1.25% set by Banco de España, a systemic risk buffer of 0.0572%, and a countercyclical capital buffer of 0.6836%. The filing stated that Santander, on a phased-in basis, reported a CET1 ratio of 12.69% and a total capital ratio of 17.01% as of September 30, 2026, and described Santander as maintaining "a surplus of capital over these requirements, both in CET1 and total capital terms."

What Was Disclosed

Banco Santander filed a Form 6-K on October 28, 2026, communicating the ECB's SREP-based decision on 2027 minimum capital requirements, including a reduced P2R of 1.65% and the company's capital ratios as of September 30, 2026.