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Santander Central Bank Mandatory Reserves Coverage

$247 million
Project Brief

On November 29, 2018, MIGA agreed to issue guarantees of up to US$247 million covering the risk of expropriation of Santander Rio’s mandatory reserves held at the Central Bank of Argentina, for a period of up to 2 years.

Spain-based Banco Santander is one of the largest global financial institutions in the world in terms of market capitalization with retail and commercial operations in countries across Europe, Latin America, and North America. Its subsidiary banks abroad are required to maintain reserves at the central banks in their respective jurisdictions, based on the volume of customer deposits that these subsidiaries have. Mandatory reserves contribute to Santander’s overall risk-weighted assets (RWA) at the consolidated level, resulting in less headroom for other assets at a given level of capital.

Environmental Categorization

This project is a Category FI-1 project according to MIGA’s Policy on Environmental and Social Sustainability. Santander is an existing MIGA client and this project would involve additional MIGA support under the Santander Central Bank Mandatory Reserves Program in Argentina

MIGA analyzed the portfolio of Santander Rio for types of transactions, tenor, size, industry sectors, and exposure to MIGA’s exclusion list. Santander Rio’s portfolio has significant corporate finance exposure including to potentially high risk environmental and social sectors such as downstream oil and gas, mining, manufacturing and chemicals. The main E&S risks of this project are associated with Santander Rio’s lending activities in high risk sectors and its capacity to manage these risks. The applicable environmental and social requirements are MIGA’s Exclusion List; applicable national social and environmental laws and regulations; and MIGA’s Performance Standards.

MIGA assessed Santander Rio’s existing environmental and social management system (ESMS) and labor practices against the requirements of Performance Standards 1 and 2. Banco Santander Group is signatory to the Equator Principles that constitute E&S assessment for project and corporate financing benchmarked to the Performance Standards. As part of its commitment to the Equator Principles Santander reports annually on the total number of Project Finance transactions and total number of Project Related Corporate Loans that reached Financial Close considering appropriate confidentiality considerations. Santander also submits project name data of project finance transactions directly to the Equator Principles Association for publication on their website. Santander Rio’s ESMS is aligned with the Equator principles and Santander Group corporate policies which defines the Bank’s general sustainability principles which includes managing E&S risks, which is aligned to some elements of Performance Standard 1.

MIGA also considered the emergency response plan of the subsidiary as part of the management system which was determined to be adequate. Human resources and labor practices are aligned with the requirement of MIGA’s Performance Standard 2 on Labor and Working Conditions.

Based on MIGA’s review and applicable performance requirements an environmental and social action plan (ESAP) was agreed with Santander Rio for implementation within an agreed timeframe. Santander Rio has satisfactorily implemented the agreed actions which are: (1) nominate an E&S officer to develop and implement the ESMS; Action complete. (2) Revise and update the ESMS to be commensurate with the level of E&S risks in its portfolio and incorporate MIGA’s applicable environmental and social requirements and strengthen the E&S capacity to implement the ESMS; Action complete. Applications for financing that are submitted to Santander Rio are screened against the MIGA Exclusion List and national social and environmental laws and regulations. Project finance (in the event of its occurrence) and corporate finance are required to apply relevant requirements of the Performance Standards. (3) Conduct staff training; Action complete. Santander Rio has conducted training workshops with relevant staff on the updated ESMS and its requirements. (4) Implement a procedure for external communications to track issues raised through its open channel and document responses; Action complete. Santander Rio has a public communications channel, “Creamos Valor”, available through the sustainability sector to receive E&S related issues or concerns.

Santander Rio will report periodically to MIGA on the update and implementation of the ESMS as well as ongoing compliance with applicable elements of the Performance Standards.


Environmental and Social Action Plan

Task Title & Description

Anticipated Completion Date

Nominate an E&S officer:


Establish an ESMS:


Conduct staff training:


Establish a communications procedure:      



Development impact

The aim of MIGA’s proposed guarantees is to help Santander reduce the risk of some of its assets, which would lead to a reduction in the group’s RWA on a consolidated basis. The RWA capacity that is freed up is expected to be used by Santander Rio to extend more credit in Argentina, primarily to SMEs and other priority sectors, thereby supporting growth and employment in the country.

MIGA’s proposed coverage to Santander is aligned with the World Bank Group’s strategy for Argentina, as it seeks to enhance access to finance for private sector firms which has been identified as one of the main obstacles to private sector development and firm productivity in the country.