Obligation ABANCA Corporación Bancaria S.A 6.125% ( ES0265936007 ) en EUR

ABANCA Corporación Bancaria S.A

100 % ▼

Espagne

ES0265936007 ( en EUR )

6.125% par an ( paiement annuel )

17/01/2029

Prospectus brochure de l'obligation ABANCA Corporación Bancaria S.A ES0265936007 en EUR 6.125%, échéance 17/01/2029

100 000 EUR

350 000 000 EUR

18/01/2025 ( Dans 13 jours )

ABANCA Corporación Bancaria S.A. est une banque espagnole opérant principalement en Galice, avec une présence également dans d'autres régions d'Espagne et à l'international, offrant une gamme complète de services bancaires aux particuliers et aux entreprises.

L'Obligation émise par ABANCA Corporación Bancaria S.A ( Espagne ) , en EUR, avec le code ISIN ES0265936007, paye un coupon de 6.125% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 17/01/2029

ABANCA CORPORACIÓN BANCARIA, S.A.
(incorporated as a limited liability company (sociedad anónima) under the laws of the Kingdom of Spain)
350,000,000 Fixed Rate Reset Subordinated Notes due 2029
The issue price of the 350,000,000 Fixed Rate Reset Subordinated Notes due 18 January 2029 (the "Notes") of ABANCA Corporación Bancaria, S.A. (the "Bank" or
"ABANCA") is 100 per cent. of their principal amount. The Notes were issued on 18 January 2019 (the "Issue Date"). The Bank and its consolidated subsidiaries are referred
to herein as the "ABANCA Group" and its parent company, ABANCA Holding Financiero, S.A. ("ABANCA Holding"), together with its consolidated subsidiaries are
referred to herein as the "ABANCA Holding Group".
As described in the terms and conditions of the Notes (the "Conditions") unless previously redeemed, the Notes will be redeemed at their principal amount on 18 January
2029. The Notes may be redeemed at the option of the Bank in whole, but not in part, at their principal amount, together with any accrued and unpaid interest thereon to (but
excluding) the date fixed for redemption, subject to the conditions set out in Condition 4.2 including, without limitation, obtaining prior Supervisory Permission, if a Tax
Event or a Capital Event occurs (as such terms are defined in the Conditions). See Conditions 4.4 and 4.5 in "Conditions of the Notes".
In addition, the Bank may at its option, subject to the conditions set out in Condition 4.2 including, without limitation, obtaining prior Supervisory Permission, redeem all, but
not some only, of the Notes on the Reset Date, at their principal amount, together with any accrued and unpaid interest thereon to (but excluding) the date fixed for redemption.
See Condition 4.3 in "Conditions of the Notes".
The Notes bear interest on their outstanding principal amount (i) at a fixed rate of 6.125 per cent. per annum from (and including) the Issue Date to (but excluding) the Reset
Date (as defined in the Conditions) payable annually in arrear on 18 January in each year, with the first Interest Payment Date on 18 January 2020, and (ii) from (and including)
the Reset Date (as defined in the Conditions), at the Reset Rate of Interest (as defined in the Conditions) plus 5.927 per cent. per annum (the "Margin"), as determined by the
Bank, payable annually in arrear on 18 January in each year, with the first Interest Payment Date after the Reset Date on 18 January 2025 (see Condition 3 in "Conditions of
the Notes"). Payments on the Notes will be made in Euro without deduction for or on account of taxes imposed or levied by the Kingdom of Spain to the extent described
under Condition 7 in "Conditions of the Notes".
The payment obligations of the Bank under the Notes on account of principal constitute direct, unconditional unsecured and subordinated obligations (créditos subordinados)
of the Bank, as more fully described in Condition 3 in "Conditions of the Notes". The Notes are expected to qualify as Tier 2 Capital (as defined in the Conditions) of the
Bank and the ABANCA Holding Group.
Subject to the prior Supervisory Permission and to compliance with the Applicable Banking Regulations, if a Capital Event or Tax Event has occurred and is continuing, the
Bank may substitute all (but not some only) of the Notes or vary the terms of all (but not some only) of the Notes, without the consent of the Holders (as defined below), so
that they become or remain Qualifying Tier 2 Notes (as defined in the Conditions).
The Notes are expected to be rated BB by Fitch Ratings España, S.A. Unipersonal ("Fitch") and Ba3 by Moody's Investors Service Limited ("Moody's"). Fitch and Moody's
are established in the European Union ("EU") and are registered under Regulation (EC) No 1060/2009 (as amended) on credit rating agencies (the "CRA Regulation"). Fitch
and Moody's appear on the latest update of the list of registered credit rating agencies (as of 10 October 2018) on the European Securities and Markets Authority ("ESMA")
website. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension, reduction or withdrawal at any time by
the assigning rating agency.
The Notes have been issued in denominations of 100,000. Application has been made for the Notes to be admitted to trading on the Spanish AIAF Fixed Income Securities
Market ("AIAF"). The Notes may also be admitted to trading on any other secondary market as may be agreed by ABANCA.
Amounts payable under the Notes from and including the Reset Date are calculated by reference to the 5-year Mid-Swap Rate which appears on the "ICESWAP2" screen,
which is provided by ICE Benchmark Administration Limited or by reference to EURIBOR 6-month (as defined in the Conditions) which appears on the "EURIBOR01"
screen, which is provided by the European Money Markets Institute. As of the date of this Prospectus, the European Money Markets Institute does not appear on the register
of administrators and benchmarks established and maintained by the ESMA pursuant to Article 36 of the Regulation (EU) No 2016/1011 (the "Benchmark Regulation"). As
far as ABANCA is aware, the transitional provisions in Article 51 of the Benchmark Regulation apply, such that the European Money Markets Institute is required to apply
for authorisation or registration before 1 January 2020. As at the date of this Prospectus, ICE Benchmark Administration Limited appears on the register of administrators and
benchmarks established and maintained by ESMA pursuant to article 36 of the Benchmark Regulation.
Title to the Notes is evidenced by book entries, and each person shown in the central registry of the Spanish settlement system managed by Sociedad de Gestión de los Sistemas
de Registro, Compensación y Liquidación de Valores, S.A. Unipersonal ("Iberclear") and in the registries maintained by the participating entities (entidades participantes)
in Iberclear ("Iberclear Members") as having an interest in the Notes shall be (except as otherwise required by Spanish law) considered the holder of the principal amount
of the Notes recorded therein (a "Holder").
The Notes are complex financial instruments and are not a suitable or appropriate investment for all investors. Prospective purchasers of the Notes should ensure
that they understand the nature of the Notes and the extent of their exposure to risks and that they consider the suitability of the Notes as an investment in the light
of their own circumstances and financial condition.
An investment in the Notes involves certain risks. For a discussion of these risks see "Risk Factors" beginning on page 10.
The Notes have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and are subject to United States
tax law requirements. The Notes are being offered outside the United States in accordance with Regulation S under the U.S. Securities Act ("Regulation S"), and may not be
offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the U.S. Securities Act.
Joint Lead Managers
BofA Merrill Lynch
Deutsche Bank
J.P. Morgan
UBS Investment Bank

The date of this Prospectus is 14 January 2019

IMPORTANT NOTICES
ABANCA has not authorised the making or provision of any representation or information regarding ABANCA
or the ABANCA Group or the ABANCA Holding Group or the Notes other than as contained in this Prospectus
or as approved for such purpose by ABANCA. Any such representation or information should not be relied
upon as having been authorised by ABANCA or the joint lead managers named under "Subscription and Sale"
below (the "Joint Lead Managers").
None of the Joint Lead Managers, nor any of their respective affiliates, has separately verified the information
contained or incorporated by reference in this Prospectus. Neither the Joint Lead Managers nor any of their
respective affiliates have authorised the whole or any part of this Prospectus and none of them makes any
representation or warranty or accepts any responsibility as to the accuracy or completeness of the information
contained or incorporated by reference in this Prospectus or any other information supplied by ABANCA in
connection with the Notes. Neither the delivery of this Prospectus nor the offering, sale or delivery of any Notes
shall in any circumstances create any implication that there has been no adverse change, or any event reasonably
likely to involve any adverse change, in the condition (financial or otherwise) of ABANCA, the ABANCA
Group or the ABANCA Holding Group since the date of this Prospectus or that any other information supplied
in connection with the Notes is correct as of any time subsequent to the date on which it is supplied or, if
different, the date indicated in the document containing the same. The Joint Lead Managers shall not be
responsible for, or for investigating, any matter which is the subject of, any statement, representation, warranty
or covenant of ABANCA, the ABANCA Group or the ABANCA Holding Group contained in the Prospectus,
or any other agreement or document relating to the Notes, or for the execution, legality, effectiveness, adequacy,
genuineness, validity, enforceability or admissibility in evidence thereof.
Neither this Prospectus nor any such information or financial statements of ABANCA, the ABANCA Group or
the ABANCA Holding Group are intended to provide the basis of any credit or other evaluation and should not
be considered as a recommendation by ABANCA or the Joint Lead Managers that any recipient of this
Prospectus or such information or financial statements should purchase the Notes. Each potential purchaser of
Notes should determine for itself the relevance of the information contained or incorporated by reference in this
Prospectus and its purchase of Notes should be based upon such investigation as it deems necessary. None of
the Joint Lead Managers undertakes to review the financial condition or affairs of ABANCA, the ABANCA
Group or the ABANCA Holding Group during the life of the arrangements contemplated by this Prospectus nor
to advise any investor or potential investor in the Notes of any information coming to the attention of the Joint
Lead Managers.
This Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, any Notes.
The distribution of this Prospectus and the offering, sale and delivery of Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by ABANCA and the Joint
Lead Managers to inform themselves about and to observe any such restrictions. For a description of certain
restrictions on offers, sales and deliveries of Notes and on distribution of this Prospectus and other offering
material relating to the Notes, see "Subscription and Sale".
In particular, the Notes have not been and will not be registered under the United States Securities Act of 1933,
as amended ("U.S. Securities Act") and are subject to United States tax law requirements. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons.
In this Prospectus, unless otherwise specified, references to a "Member State" are references to a Member
State of the European Economic Area ("EEA"), references to "USD" are to United States dollars and references
to "", to "EUR" or "euro" are to the currency introduced at the start of the third stage of European economic

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and monetary union, and as defined in Article 2 of Council Regulation (EC) No 974/98 of 3 May 1998 on the
introduction of the euro, as amended. References to "billions" are to thousands of millions.
Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures
shown for the same category presented in different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures which precede them.
Words and expressions defined in the Conditions (see "Conditions of the Notes") shall have the same meanings
when used elsewhere in this Prospectus unless otherwise specified.
Potential investors are advised to exercise caution in relation to any purchase of the Notes. If a potential investor
is in any doubt about any of the contents of this Prospectus, it should obtain independent professional advice.
Prior to making an investment decision, potential investors should consider carefully, in light of their own
financial circumstances and investment objectives, all the information contained in this Prospectus or
incorporated by reference herein. A potential investor should not invest in the Notes unless it has the expertise
(either alone or with its financial and other professional advisers) to evaluate how the Notes will perform under
changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on
the potential investor's overall investment portfolio. See further "Risk Factors--The Notes may not be a suitable
investment for all investors" for additional information.
PROHIBITION OF SALES TO EEA RETAIL INVESTORS  The Notes are not intended to be offered,
sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail
investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail
client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a
customer within the meaning of Directive 2002/92/EC, as amended or superseded ("IMD"), where that
customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II.
Consequently, no key information document (KID) required by the PRIIPs Regulation for offering or selling
the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore
offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be
unlawful under the PRIIPs Regulation.
MIFID II PRODUCT GOVERNANCE / PROFESSIONAL INVESTORS AND ELIGIBLE
COUNTERPARTIES ONLY TARGET MARKET  Solely for the purposes of each manufacturer's product
approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the
target market for the Notes is eligible counterparties and professional clients only, each as defined in MiFID II;
and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are
appropriate. The target market assessment indicates that Notes are incompatible with the needs, characteristic
and objectives of clients which have no risk tolerance or are seeking on-demand full repayment of the amounts
invested. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take
into consideration the manufacturers' target market assessment. However, a distributor subject to MiFID II is
responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or
refining the manufacturers' target market assessment) and determining appropriate distribution channels.

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TABLE OF CONTENTS
Page
OVERVIEW ....................................................................................................................................................... 5
RISK FACTORS ................................................................................................................................................ 9
INFORMATION INCORPORATED BY REFERENCE ..................................................................................24
CONDITIONS OF THE NOTES ......................................................................................................................26
USE OF PROCEEDS ........................................................................................................................................48
TAXATION .......................................................................................................................................................49
SUBSCRIPTION AND SALE ..........................................................................................................................59
MARKET INFORMATION ..............................................................................................................................61
GENERAL INFORMATION ............................................................................................................................91

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OVERVIEW
The following is an overview of certain information relating to the Notes, including the principal provisions of
the terms and conditions thereof. This overview must be read as an introduction to this Prospectus and any
decision to invest in the Notes should be based on a consideration of this Prospectus as a whole, including the
documents incorporated by reference. This overview is indicative only, does not purport to be complete and is
qualified in its entirety by the more detailed information appearing elsewhere in this Prospectus. See, in
particular, "Conditions of the Notes".
Words and expressions defined in the Conditions shall have the same meanings in this overview.
Issuer
ABANCA Corporación Bancaria, S.A.
Joint Lead Managers
Deutsche Bank AG, London Branch, J.P. Morgan Securities plc,
Merrill Lynch International and UBS Limited.
Risk Factors
There are certain factors that may affect the Bank's ability to
fulfil its obligations under the Notes. These are set out under
"Risk Factors" in the Registration Document and under "Risk
Factors" below. In addition, there are certain factors which are
material for the purpose of assessing the market risks associated
with the Notes which are described in detail under "Risk
Factors" below.
Issue size
350,000,000.
Issue date
18 January 2019.
Issue details
350,000,000 Fixed Rate Reset Subordinated Notes due 18
January 2029.

ABANCA has requested that the Notes qualify as Tier 2 Capital
of ABANCA and the ABANCA Holding Group pursuant to
Applicable Banking Regulations.
Denomination
100,000 per Note.
Use of Proceeds
The Bank intends to use the net proceeds from the issue of the
Notes for its general corporate purposes.
Interest
The Notes bear interest on their outstanding principal amount as
follows: (i) in respect of the period from (and including) the Issue
Date to (but excluding) the Reset Date at the fixed rate of 6.125
per cent. per annum; and (ii) in respect of the Reset Period, at the
rate per annum equal to the aggregate of the 5-year Mid-Swap
Rate (quoted on an annual basis) and the Margin, payable
annually in arrear on 18 January in each year, with the first
Interest Payment Date after the Reset Date on 18 January 2025.

For further information, see Condition 3. Payments on the Notes
will be made in euro without deduction for or on account of taxes
imposed or levied by the Kingdom of Spain to the extent
described under Condition 7 in the Conditions.
Status of the Notes
The payment obligations of the Bank under the Notes on account
of principal constitute direct, unconditional, unsecured and
subordinated obligations of the Bank in accordance with Article

5

92.2º of the Insolvency Law and Additional Provision 14.3º of
Law 11/2015, but subject to any other ranking that may apply as
a result of any mandatory provision of law (or otherwise). The
Notes are expected to constitute Tier 2 Capital of the Bank and
the ABANCA Holding Group.

For further information, see Condition 2.
Optional Redemption
All, and not only some, of the Notes may be redeemed at the
option of the Bank, subject to the prior Supervisory Permission
and otherwise in accordance with Applicable Banking
Regulations, on the Reset Date, at their principal amount,
together with any accrued and unpaid interest thereon to (but
excluding) the date fixed for redemption.

The Notes are also redeemable on or after the Issue Date at the
option of the Bank in whole but not in part, at any time, at their
principal amount, together with any accrued and unpaid interest
thereon to (but excluding) the date fixed for redemption if there
is a Capital Event or a Tax Event, subject, in each case, to the
prior Supervisory Permission and otherwise in accordance with
the Applicable Banking Regulations then in force.

For further information, see Conditions 4.3, 4.4 and 4.5.
Substitution and Variation
Subject to Supervisory Permission and otherwise in accordance
with the Applicable Banking Regulations, if a Capital Event or
Tax Event has occurred and is continuing, the Bank may at any
time substitute all (but not some only) of the Notes or vary the
terms of all (but not some only) of the Notes, without the consent
of the Holders, so that they become or remain Qualifying Tier 2
Notes.

For further information, see Condition 4.6.
Purchases
The Bank, or any member of the ABANCA Group or the
ABANCA Holding Group, may purchase (or otherwise acquire)
or procure others to purchase (or otherwise acquire) beneficially
for their account, Notes in any manner and at any price in
accordance with Applicable Banking Regulations in force at the
relevant time and subject to Supervisory Permission, if required.
For further information, see Condition 4.7.
Waiver of set-off
No Holder may at any time exercise or claim any Waived Set-
Off Rights against any right, claim, or liability the Bank has or
may have or acquire against such Holder, directly or indirectly,
howsoever arising and each Holder shall be deemed to have
waived all Waived Set-Off Rights to the fullest extent permitted
by applicable law in relation to all such actual and potential
rights, claims and liabilities.
Meetings of Holders
The Conditions contain provisions for convening meetings of
Holders to consider matters affecting their interests generally.
The provisions governing the manner in which Holders may

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attend and vote at a meeting of the holders of Notes must be
notified to Holders in accordance with Condition 10 and/or at the
time of service of any notice convening a meeting.

For further information, see Condition 9.
Withholding Tax and Additional
All payments of interest and any other amounts payable
Amounts
(excluding, for the avoidance of doubt, any repayment of
principal) in respect of the Notes by or on behalf of the Bank will
be made free and clear of and without withholding or deduction
for or on account of any present or future taxes, duties,
assessments or governmental charges of whatever nature unless
such withholding or deduction is required by law. In the event
that any such withholding or deduction is imposed or levied by
or on behalf of the Kingdom of Spain or any political subdivision
thereof or any authority of agency therein or thereof having
power to tax in respect of payments of interest and any other
amounts (excluding for the avoidance of doubt, any repayment
of principal), the Bank shall pay such additional amounts as will
result in Holders receiving such amounts as they would have
received in respect of such payments of interest and any other
amounts had no such withholding or deduction been required,
subject to the exceptions provided in Condition 7.

For further information, see Condition 7.
Form
The Notes have been issued in uncertificated, dematerialised
book-entry form in euro in an aggregate nominal amount of
350,000,000 and denomination of 100,000 each.
Registration and settlement
The Notes have been registered with Iberclear as managing
entity of the Spanish Central Registry (both, as defined in the
Conditions). Holders of a beneficial interest in the Notes who do
not have, directly or indirectly through their custodians, a
participating account with Iberclear may participate in the Notes
through bridge accounts maintained by each of Euroclear Bank
SA/NV and Clearstream Banking, S.A. with Iberclear.
Title and transfer
Title to the Notes is evidenced by book entries, and each person
shown in the Spanish Central Registry managed by Iberclear and
in the registries maintained by the Iberclear Members as having
an interest in the Notes shall be (except as otherwise required by
Spanish law) considered the holder of the principal amount of
the Notes recorded therein. For these purposes, the "Holder"
means the person in whose name such Notes is for the time being
registered in the Spanish Central Registry managed by Iberclear
or, as the case may be, the relevant Iberclear Member accounting
book (or, in the case of a joint holding, the first named thereof)
and Holder shall be construed accordingly.

The Notes are issued without any restrictions on their
transferability. Consequently, the Notes may be transferred and
title to the Notes may pass (subject to Spanish law and to

7

compliance with all applicable rules, restrictions and
requirements of Iberclear or, as the case may be, the relevant
Iberclear Member) upon registration in the relevant registry of
each Iberclear Member and/or Iberclear itself, as applicable.
Each Holder will be (except as otherwise required by Spanish
law) treated as the absolute owner of the relevant Notes for all
purposes (whether or not it is overdue and regardless of any
notice of ownership, trust or any interest, or any writing on, or
the theft or loss of, the Certificate issued in respect of it), and no
person will be liable for so treating the Holder.
Rating
The Notes are expected to be rated BB by Fitch and Ba3 by
Moody's.
Listing and admission to trading
Application has been made for the Notes to be admitted to
trading on AIAF. The Notes may also be admitted to trading on
any other secondary market as may be agreed by ABANCA.
Governing Law
The Notes and any non-contractual obligations arising out of or
in connection with the Notes shall be governed by, and construed
in accordance with, Spanish law.
Selling Restrictions
There are restrictions on the offer, sale and transfer of Notes in
the United States, the EEA, the United Kingdom and Spain.
Regulation S, category 2 restrictions under the U.S. Securities
Act apply. The Notes have not and will not be eligible for sale in
the United States under Rule 144A of the U.S. Securities Act.

8

RISK FACTORS
Before deciding to invest in the Notes the risks set out below, and also those outlined in the Registration
Document drawn up pursuant to Annex XI of the Prospectus Regulation, approved by and registered with the
CNMV on 31 October 2018 regarding the Bank and its business as updated in this Prospectus, among others,
must be taken into account.
Any investment in the Notes is subject to a number of risks. Prior to investing in the Notes, prospective investors
should carefully consider risk factors associated with any investment in the Notes, the business of ABANCA
(and its group) and the industry in which it operates together with all other information contained in this
Prospectus, including, in particular the risk factors described below. Words and expressions defined in the
"Conditions of the Notes" below or elsewhere in this Prospectus have the same meanings in this section.
The following is not an exhaustive list or explanation of all risks which investors may face when making an
investment in the Notes and should be used as guidance only. Additional risks and uncertainties relating to
ABANCA or the ABANCA Group that are not currently known to ABANCA or that it currently deems immaterial,
may individually or cumulatively also have a material adverse effect on the business, prospects, results of
operations and/or financial position of ABANCA or the ABANCA Group and, if any such risk should occur, the
price of the Notes may decline and investors could lose all or part of their investment. Investors should consider
carefully whether an investment in the Notes is suitable for them in light of the information in this Prospectus
and their personal circumstances.
Risks relating to the Notes
The Notes may not be a suitable investment for all investors
The Notes are complex financial instruments and are not a suitable or appropriate investment for all investors.
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor may wish to consider, either on its own or with the help of
its financial and other professional advisers, whether it:
(i)
has sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and
risks of investing in the Notes and the information contained or incorporated by reference in this
Prospectus, taking into account that the Notes are a suitable investment for professional or institutional
investors only;
(ii)
has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the Notes and the impact the Notes will have on its overall
investment portfolio;
(iii)
has sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,
including where the currency for payments in respect of the Notes is different from the potential
investor's currency;
(iv)
understands thoroughly the terms of the Notes, including the provisions relating to redemption or
substitution of the Notes and any variation of their terms, and is familiar with the behaviour of financial
markets; and
(v)
is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its
investment and its ability to bear the applicable risks.
A potential investor should not invest in the Notes unless it has the expertise (either alone or with its financial
and other professional advisers) to evaluate how the Notes will perform under changing conditions, the resulting

9

effects on the value of the Notes and the impact this investment will have on the potential investor's overall
portfolio.
The Notes may be subject to the exercise of the Spanish Bail-in Power by the Relevant Resolution
Authority. Other powers contained in Law 11/2015 or the SRM Regulation could materially affect the
rights of the holders of the Notes under, and the value of, any Notes
Directive 2014/59/EU, of 15 May, establishing a framework for the recovery and resolution of credit institutions
and investment firms (the "BRRD") (which has been implemented in Spain through Law 11/2015, of 18 June,
on the recovery and resolution of credit institutions and investment firms ("Law 11/2015") and Royal Decree
1012/2015, of 6 November, implementing Law 11/2015 ("Royal Decree 1012/2015")) is designed to provide
authorities with a credible set of tools to intervene sufficiently early and quickly in unsound or failing credit
institutions or investment firms (each an "institution") so as to ensure the continuity of the institution's critical
financial and economic functions, while minimising the impact of an institution's failure on the economy and
financial system.
In accordance with Article 20 of Law 11/2015, an institution will be considered as failing or likely to fail in any
of the following circumstances: (i) it is, or is likely in the near future to be, in significant breach of its solvency
or any other requirements necessary for maintaining its authorisation; (ii) its assets are, or are likely in the near
future to be, less than its liabilities; (iii) it is, or is likely in the near future to be, unable to pay its debts as they
fall due; or (iv) it requires extraordinary public financial support (except in limited circumstances). The
determination that an institution is no longer viable may depend on a number of factors which may be outside
of that institution's control.
As provided in the BRRD, Law 11/2015 contains four resolution tools and powers which may be used alone or
in combination where the Fondo de Reestructuración Ordenada Bancaria (the "FROB"), the Single Resolution
Board (the "SRB") established pursuant to Regulation (EU) No 806/2014, of 15 July, establishing uniform rules
and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework
of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010
(the "SRM Regulation"), as the case may be and according to Law 11/2015 or any other entity with the
authority to exercise any such tools and powers from time to time (each, a "Relevant Resolution Authority")
as appropriate, considers that (a) an institution is failing or likely to fail, (b) there is no reasonable prospect that
any alternative private sector measures would prevent the failure of such institution within a reasonable
timeframe, and (c) a resolution action is in the public interest.
The four resolution tools are: (i) sale of business (which enables the Relevant Resolution Authority to direct the
sale of the institution or the whole or part of its business on commercial terms); (ii) bridge institution (which
enables the Relevant Resolution Authority to transfer all or part of the business of the institution to a "bridge
institution" (an entity created for this purpose that is wholly or partially in public control)); (iii) asset separation
(which enables the Relevant Resolution Authority to transfer certain categories of assets to one or more publicly
owned asset management vehicles to allow them to be managed with a view to maximising their value through
eventual sale or orderly wind-down (this can be used together with another resolution tool only)); and (iv) bail-
in (which gives the Relevant Resolution Authority the right to exercise certain elements of the Spanish Bail-in
Power (as defined below)). This includes the ability of the Relevant Resolution Authority to write down
(including to zero) and/or to convert into equity or other securities or obligations (which equity, securities and
obligations could also be subject to any future application of the Spanish Bail-in Power) certain unsecured debt
claims and subordinated obligations (including capital instruments such as the Notes).
The "Spanish Bail-in Power" is any write down, conversion, transfer, modification, or suspension power
existing from time to time under, and exercised in compliance with any laws, regulations, rules or requirements
in effect in Spain, relating to the transposition of the BRRD, as amended from time to time, including, but not

10