Banco Populr Esp S.A Listing Particulars 29/06/2012 50,000,000 9.50 %

  Banco Populr Esp S.A - Listing Particulars 29/06/2012 50,000,000 9.50 %

RNS Number : 7231G
Banco Popular Espanol S.A.
02 July 2012




Listing Particulars

                         BANCO POPULAR ESPAÑOL, S.A.

                  (incorporated with limited liability under

the laws of Spain)
EUR 50,000,000 9.50 per cent.
Subordinated Mandatorily Convertible Notes due 29 December 2014

The EUR 50,000,000 9.50 per  cent. Subordinated Mandatorily Convertible  Notes 
due 29 December  2014 (the  "Notes") of  Banco Popular  Español, S.A.  ("Banco 
Popular" or the "Issuer") will be issued on 29June2012 (the "Issue  Date"). 
The Notes are mandatorily convertible into  fully paid ordinary shares in  the 
Issuer (the "Shares").  See "Terms and  Conditions of the  Notes -  Scheduled 
Mandatory Conversion, Redemption and Purchase".

Provided that certain conditions are met  for interest to be paid (see  "Terms 
and Conditions of the Notes -  Interest - Limitations on interest  payments"), 
the Notes will bear interest from (and  including) the Issue Date at the  rate 
of 9.50 per cent. per annum payable quarterly in arrear on 29 March, 29  June, 
29 September and  29 December in  each year, commencing  on 29 September  2012 
(each, an "Interest Payment Date"). See  "Terms and Conditions of the Notes  - 
Interest". Payments  in  respect  of  Notes  will  be  made  subject  to  any 
withholding or deduction for or  on account of taxes  as is required by  law. 
The Issuer will not be  required to pay any  additional or further amounts  to 
Noteholders in respect of any such withholding or deduction, save as specified
in the Terms and Conditions  of the Notes. See  "Terms and Conditions of  the 
Notes - Taxation".

Unless previously redeemed, converted or  purchased and cancelled, a third  of 
the Notes  will mandatorily  and  automatically be  converted  on each  of  29 
December 2013, 29 June 2014 and 29 December 2014 (each a "Scheduled Conversion
Date") into such  number of Shares  as results from  dividing the  outstanding 
principal amount of each  Note by the Conversion  Price (as defined in  "Terms 
and Conditions of the Notes" below) in effect on the Scheduled Conversion Date
(rounded down to the nearest whole number of Shares). The Notes will also  be 
mandatorily converted into Shares upon the occurrence of an Insolvency  Event, 
Contingency Event, Viability  Event or a  Capital Treatment Event  and may  be 
converted into  Shares  at the  option  of  Noteholders, each  as  more  fully 
described in Terms  and Conditions of  the Notes -  Mandatory Conversion  Upon 
Insolvency Event,  Contingency Event,  Viability  Event or  Capital  Treatment 
Event and Terms and Conditions of the Notes -Optional Conversion. Noteholders
shall not be entitled to receive fractions of a Share but shall be entitled to
receive a cash  payment in  lieu thereof.  In addition  to the  issue of  the 
Shares, the  holder of  each Note  subject to  mandatory conversion  shall  be 
entitled to  receive any  accrued but  unpaid interest  due on  the  Scheduled 
Conversion Date but  shall not  be entitled  to receive  any accrued  interest 
where conversion occurs by reason  of an Insolvency Event, Contingency  Event, 
Viability Event or Capital Treatment Event.

See "Risk  Factors"  for  a  discussion of  certain  factors  that  should  be 
considered in connection with an investment in the Notes.

These Listing Particulars comprise listing particulars in compliance with  the 
listing rules (the "Listing Rules") of  the UK Listing Authority (the  "UKLA") 
made under  Section 73A  of  the Financial  Services  and Markets  Act  2000. 
Applications have been made for the Notes to be admitted to the official  list 
of the  UKLA (the  "Official  List") and  to be  admitted  to trading  on  the 
Professional Securities Market (the "Market") of the London Stock Exchange plc
(the "London Stock Exchange" or "LSE"). The Market is not a regulated  market 
for the purposes of  Directive 2004/39/EC of the  European Parliament and  the 
Council on markets in financial instruments ("MiFID"). The Issuer intends  to 
apply for the ordinary Shares issued on conversion of the Notes to be admitted
to the  Bilbao, Barcelona,  Madrid,  Lisbon and  Valencia stock  exchanges  as 
further described under "General Information - Listing of the Shares".

The Notes and the Shares have not been, and will not be, registered under  the 
U.S. Securities  Act of  1933 (the  "Securities Act").  The Notes  have  been 
offered outside the United  States in accordance with  Regulation S under  the 
Securities Act  ("Regulation S"),  and the  Notes and  the Shares  may not  be 
offered, sold or  delivered within  the United  States except  pursuant to  an 
exemption  from,  or  in  a  transaction  not  subject  to,  the  registration 
requirements of the Securities Act.

The Notes will be  issued in bearer form  in the denomination of  EUR100,000. 
The Notes  will be  initially  represented by  a  temporary global  note  (the 
"Temporary Global Note"),  without interest coupons,  which will be  deposited 
with a common depositary on  behalf of Euroclear Bank S.A./N.V.  ("Euroclear") 
and  Clearstream   Banking,   société   anonyme,   Luxembourg   ("Clearstream, 
Luxembourg") on or about  the Issue Date. The  Temporary Global Note will  be 
exchangeable for interests in a  permanent global note (the "Permanent  Global 
Note"), without interest coupons, on or after the date which is 40 days  after 
the Issue Date, upon certification  as to non-U.S. beneficial ownership.  The 
Permanent Global Note will be exchangeable in certain limited circumstances in
whole, but not in part,  for Notes in definitive  form in the denomination  of 
EUR100,000,  each  and  with  interest  coupons  attached.  See  "Summary  of 
Provisions Relating to the Notes in Global Form".

   MANAGER
BANCO POPULAR

29 June 2012

CONTENTS
 Page 

                                  IMPORTANT
NOTICES..................................................................................................................................................
                                      1

                         INFORMATION INCORPORATED BY
REFERENCE................................................................................................
                                      3

OVERVIEW........................................................................................................................................................................
                                      5

                                     RISK
FACTORS..............................................................................................................................................................
                                      11

                         TERMS AND CONDITIONS OF THE
NOTES...........................................................................................................
                                      35

            SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL
            FORM.............................................. 76

                               REASONS FOR THE
OFFER........................................................................................................................................
                                      78

                              DESCRIPTION OF THE
ISSUER..................................................................................................................................
                                      79

                              DESCRIPTION OF THE
SHARES................................................................................................................................
                                      96

                      DESCRIPTION OF THE SPANISH BANKING
SECTOR........................................................................................
                                     104

TAXATION...................................................................................................................................................................
                                     111

                               SUBSCRIPTION AND
SALE......................................................................................................................................
                                     125

                                   GENERAL
INFORMATION........................................................................................................................................
                                     127



                              IMPORTANT NOTICES

The Issuer  accepts  responsibility for  the  information contained  in  these 
Listing Particulars and  declares that,  having taken all  reasonable care  to 
ensure that  such is  the case,  the information  contained in  these  Listing 
Particulars to the best of its knowledge  is in accordance with the facts  and 
contains no omission likely to affect its import.

The Issuer has confirmed to Banco Popular  Español, S.A. in its capacity as  a 
Manager (the "Manager") that these Listing Particulars contain all information
regarding the Issuer and the  Notes which is (in the  context of the issue  of 
the Notes) material;  such information is  true and accurate  in all  material 
respects and  is  not  misleading  in  any  material  respect;  any  opinions, 
predictions or intentions expressed in  these Listing Particulars on the  part 
of the Issuer are honestly held or made and are not misleading in any material
respect; these Listing  Particulars do  not omit  to state  any material  fact 
necessary to make  such information, opinions,  predictions or intentions  (in 
such context) not misleading in any material respect; and all proper enquiries
have been made to ascertain and to verify the foregoing.

The Issuer has not authorised the making or provision of any representation or
information regarding the Issuer or the Notes other than as contained in these
Listing Particulars or as approved for  such purpose by the Issuer. Any  such 
representation or  information  should  not  be relied  upon  as  having  been 
authorised by the Issuer or the Manager.

Neither the Manager nor any of its affiliates have authorised the whole or any
part of these Listing Particulars and none of them makes any representation or
warranty or accepts any responsibility as  to the accuracy or completeness  of 
the information contained in these Listing Particulars. Neither the  delivery 
of these Listing Particulars  nor the offering, sale  or delivery of any  Note 
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 the  Issuer since  the date  of 
these Listing Particulars.

These Listing Particulars do not constitute  an offer of, or an invitation  to 
subscribe for or purchase, any Notes.

The distribution  of these  Listing  Particulars and  the offering,  sale  and 
delivery of Notes in certain jurisdictions may be restricted by law.  Persons 
into whose  possession these  Listing  Particulars come  are required  by  the 
Issuer and the  Manager to  inform themselves about  and to  observe any  such 
restrictions.

In particular,  the  Notes and  the  Shares have  not  been and  will  not  be 
registered under the 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 these  Listing Particulars,  unless otherwise  specified, references  to  a 
"Member State" are references to a Member State of the European Economic Area,
references to "U.S. $" are to  United States dollars, references to "GBP"  are 
to pounds sterling, and references to "€", "EUR" or "euro" are to the currency
introduced at the start of the  third stage of European economic 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.

Certain figures included  in these  Listing Particulars 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.

The Notes are a novel  form of security and may  not be a suitable  investment 
for all investors

The Notes are a  novel form of  security. As a result,  an investment in  the 
Notes and  the Shares  issuable  upon conversion  of  the Notes  will  involve 
certain risks  not  associated with  some  other securities.  Each  potential 
investor in the  Notes must determine  the suitability of  such investment  in 
light of  its  own  circumstances. In  particular,  each  potential  investor 
should:

(i) have 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;

(ii) have sufficient financial resources and liquidity to bear all of
the risks of  an investment  in the Notes,  including where  the currency  for 
principal or  interest payments  is different  from the  potential  investor's 
currency;

(iii) understand  thoroughly  the terms  of  the Notes,  such  as  the 
provisions governing an  Insolvency Event,  a Contingency  Event, a  Viability 
Event and a Capital Treatment  Eventand related definitions, and be  familiar 
with the  behaviour of  any  relevant financial  markets and  their  potential 
impact on  the likelihood  of  an Insolvency  Event,  a Contingency  Event,  a 
Viability Event or a Capital Treatment Eventoccurring; and

(iv) be able to evaluate (either alone or with the help of a financial
adviser) possible scenarios for economic, interest rate and other factors that
may affect  its investment,  the  conversion of  Notes  into Shares,  and  its 
ability to bear the applicable risks.

The Notes are novel and complex financial instruments, one of the first issues
of mandatorily convertible  securities and  the first  international issue  of 
notes  with   these  characteristics   by  a   Spanish  bank.   Sophisticated 
institutional  investors   generally  do   not  purchase   complex   financial 
instruments as  stand-alone  investments.  They  purchase  complex  financial 
instruments as  a way  to reduce  risk or  enhance yield  with an  understood, 
measured, appropriate  addition  of  risk  to  their  overall  portfolios.  A 
potential investor should not invest in the Notes unless it has the  knowledge 
and expertise (either alone or with  a financial adviser) to evaluate how  the 
Notes will perform  under changing  conditions, the resulting  effects on  the 
likelihood of  conversion and  the value  of the  Notes, and  the impact  this 
investment will have on the potential investor's overall investment portfolio.

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  these Listing  Particulars  or 
incorporated by reference herein.



                    INFORMATION INCORPORATED BY REFERENCE

The information set out in the table below shall be deemed to be  incorporated 
in, and to form part of,  these Listing Particulars provided however that  any 
statement contained in any document incorporated by reference in, and  forming 
part of,  these  Listing  Particulars  shall  be  deemed  to  be  modified  or 
superseded for the purpose of these  Listing Particulars to the extent that  a 
statement  contained  herein  modifies  or  supersedes  such  statement.  Any 
documents themselves incorporated by  reference in the documents  incorporated 
by reference in these Listing Particulars shall not form part of these Listing
Particulars.

Such documents will be made available,  free of charge, during usual  business 
hours at the specified offices of  the Principal Paying and Conversion  Agent, 
unless such documents have been modified  or superseded, and may be viewed  on 
the website  of the  Regulatory  News Service  operated  by the  London  Stock 
Exchange.

For ease of reference, the tables  below set out the relevant page  references 
for the consolidated annual accounts, the notes to the consolidated  financial 
statements and the Auditors' reports for the years ended 31 December 2010  and 
2011 for the  Issuer and  Banco Pastor  S.A., and  the unaudited  consolidated 
interim financial information for the three months ended 31 March 2012 for the
Issuer (including Banco Pastor  S.A. on a consolidated  basis), as set out  in 
the respective annual reports or  interim report. Any information not  listed 
in the cross‑reference tables  but included in  the documents incorporated  by 
reference is either not relevant for prospective investors in the Notes or the
relevant information is included elsewhere in these Listing Particulars.

Banco Popular Español, S.A.

Audited Consolidated annual account as of and for year ended 31 December 2011

Consolidated    Balance    sheet    as    of    31    December    2011     and 
2010....................................................... Page 196 to 198

Consolidated Income  statement  for  the  years ended  31  December  2011  and 
2010................................... Page 199

Consolidated Statement of changes in equity for the years ended 31 December
2011
and
2010...........................................................................................................................................
Page 201 to 202

Consolidated Cash flow  statement for  the years  ended 31  December 2011  and 
2010.............................. Page 203

Notes to the Consolidated Financial Statements for the year ended 31  December 
2011............. Page 204 to 353

Auditors'
Report..................................................................................................................................................
Page 194

Management
Report.................................................................................................................................
Page 17 to 189



Banco Popular Español, S.A.

Audited Consolidated annual account as of and for year ended 31 December 2010

Consolidated    Balance    sheets    as    of    31    December    2010    and 
2009..................................................... Page 162 to 164

Consolidated Income  statement  for  the  years ended  31  December  2010  and 
2009................................... Page 165

Consolidated Statement of changes in equity for the years ended 31 December
2010
and
2009...........................................................................................................................................
Page 167 to 168

Consolidated Cash flow  statement for  the years  ended 31  December 2010  and 
2009.............................. Page 169

Notes to the Consolidated Financial Statements for the year ended 31  December 
2010............. Page 170 to 301

Auditors'
Report..................................................................................................................................................
Page 160

Management
Report.................................................................................................................................
Page 11 to 155



Banco Pastor S.A.

Audited Consolidated annual account as of and for year ended 31 December 2011

Consolidated    Balance    sheet    as    of    31    December    2011     and 
2010............................................................... Page 5  to 
6

Consolidated Income  statement  for  the  years ended  31  December  2011  and 
2010....................................... Page 7

Consolidated Statement of changes in equity for the years ended 31 December
2011
and
2010.................................................................................................................................................
Page 9 to 10

Consolidated Cash flow  statement for  the years  ended 31  December 2011  and 
2010...................... Page 11 to 12

Notes to  the Consolidated  Financial Statements  the year  ended 31  December 
2011..................... Page 13 to 160

Auditors'
Report......................................................................................................................................................
Page 4

Management
Report...............................................................................................................................
Page 179 to 271



Banco Pastor S.A.

Audited Consolidated annual account as of and for year ended 31 December 2010

Consolidated    Balance    sheet    as    of    31    December    2010     and 
2009............................................................... Page 5  to 
6

Consolidated Income  statement  for  the  years ended  31  December  2010  and 
2009....................................... Page 7

Consolidated Statement of changes in equity for the years ended 31 December
2010
and
2009.................................................................................................................................................
Page 9 to 10

Consolidated Cash flow  statement for  the years  ended 31  December 2010  and 
2009...................... Page 11 to 12

Notes to the Consolidated Financial Statements for the year ended 31  December 
2010............... Page 13 to 164

Auditors'
Report......................................................................................................................................................
Page 4

Management
Report...............................................................................................................................
Page 185 to 272



Banco Popular Español, S.A.

Unaudited interim consolidated financial information for period ended 31 March
2012

Balance
sheet...........................................................................................................................................................
Page 6

Income
statement..................................................................................................................................................
Page 13

                                   OVERVIEW

This overview must be read as an introduction to these Listing Particulars and
any decision to  invest in the  Notes should  be based on  a consideration  of 
these Listing Particulars as a whole, including the documents incorporated  by 
reference.

Words and expressions defined in the "Terms and Conditions of the Notes" below
or elsewhere  in these  Listing Particulars  have the  same meanings  in  this 
overview.

The Issuer:                 Banco Popular Español, S.A.
Manager:                    Banco Popular Español, S.A. (in its capacity as a
                            Manager)
The Notes:                  EUR  50,000,000   9.50  per   cent.   Mandatorily 
                            Convertible Notes due 29 December 2014
The Shares:                 Ordinary shares of EUR 0.10 in nominal amount
Issue Price:                100 per  cent. of  the  principal amount  of  the 
                            Notes.
Issue Date:                 Expected to be on or about 29 June 2012.
Maturity Date:              Unless   previously   redeemed,   converted    or 
                            purchased  and  cancelled,  the  Notes  shall  be 
                            redeemed by the issue of fully paid new Shares to
                            the Noteholders  as  described  under  "Scheduled 
                            Conversion Dates" below.
Interest:                   Interest payments on the Notes are  discretionary 
                            and are subject to certain conditions being  met, 
                            as more particularly described in Condition  5(b) 
                            (Interest -  Limitations  on  interest  payment). 
                            Subject thereto,  the  Notes will  bear  interest 
                            from (and including) the  Issue Date at the  rate 
                            of 9.50 per cent. per annum payable quarterly  in 
                            arrear on 29 March, 29 June, 29 September and  29 
                            December in each year, commencing on 29 September
                            2012.
Conversion Events:          The Notes shall  mandatorily convert into  Shares 
                            at the Conversion Price following the  occurrence 
                            of a  Scheduled  Conversion Date,  an  Insolvency 
                            Event, a Contingency Event, a Viability Event  or 
                            a Capital Treatment  Event, as more  particularly 
                            described  in  Condition   10  (Conversion)   and 
                            Condition 11 (Procedure for Conversion).
Conversion Dates:           The conversion date  in respect of  a Note  shall 
                            be:

                            (i) in  the  case of  Scheduled  Mandatory 
                            Conversion, unless previously redeemed, converted
                            or purchased and  cancelled, the  Notes shall  be 
                            redeemed and settled  in three equal  instalments 
                            by the conversion of a  third of the original  in 
                            aggregate principal amount of the Notes into  new 
                            fully paid Shares at the Conversion Price on each
                            of  the  Payment  Business  Days  falling  on  or 
                            closest to 29 December 2013, 29 June 2014 and  29 
                            December 2014; and

                            (ii) in  the case  of Optional  Conversion, 
                            the  first  Interest  Payment  Date   immediately 
                            following the  date  of the  relevant  Conversion 
                            Notice.
Insolvency Event:           An "Insolvency Event" shall have occurred if:
                           • a resolution is passed, or  other 
                            action or measure taken or adopted by the Issuer,
                            for the liquidation, dissolution or winding-up of
                            the  Issuer,  whether   voluntary  or   otherwise 
                            (except, in any such case, a solvent liquidation,
                            dissolution or winding-up by  means of a  merger, 
                            de-merger or transfer  of assets and  liabilities 
                            solely for  the  purposes  of  a  reorganisation, 
                            reconstruction or amalgamation  of the Issuer  or 
                            the substitution  in place  of  the Issuer  of  a 
                            successor in business of the Issuer);
                           • the Issuer takes any step, action
                            or measure  that results  in  the approval  of  a 
                            reduction of the Issuer's share capital  pursuant 
                            to  the   terms   of  Article   418(3)   of   the 
                            Consolidated Text of the Law on Limited Liability
                            Companies, as approved by Royal Decree Law 1/2010
                            dated 2 July 2010 (Texto  Refundido de la Ley  de 
                            Sociedades de Capital);
                           • if  the  Issuer  is  declared  in 
                            insolvency (concurso) under Law 22/2003 of 9 July
                            on insolvency (Ley  Concursal) an  order is  made 
                            for  the  liquidation,  dissolution,  winding-up, 
                            re-organisation or restructuring of the Issuer by
                            reason of  insolvency, bankruptcy  or  otherwise, 
                            the Issuer is  nationalised or  intervened or  if 
                            the Board of Directors  (or other governing  body 
                            of the Issuer) is replaced by the Regulator;
Contingency Event:          A Contingency Event shall have occurred if:
                           • the  EBA Capital  Ratio is  below 
                            the EBA Capital Ratio Threshold as at the date of
                            the financial statements contained in a Quarterly
                            Financial Report;
                           • the CET1  Capital Ratio is  below 
                            the CET1 Capital Ratio  Threshold at the date  of 
                            the financial statements contained in a Quarterly
                            Financial Report; or
                           • the Tier 1 Capital Ratio is below
                            the Tier 1 Capital Ratio Threshold as at the date
                            of  the  financial  statements  contained  in   a 
                            Quarterly Financial  Report  and the  Issuer  has 
                            reported Significant Losses.
Viability Event:            A Viability  Event  means  that  either  (a)  the 
                            Regulator has  notified the  Issuer that  it  has 
                            determined that Conversion of the Notes, together
                            with the  conversion  or write  off  of  holders' 
                            claims in  respect  of  any  other  CET1  Capital 
                            Instruments,  Tier  1  Instruments  and  Tier   2 
                            Instruments that, pursuant to  their terms or  by 
                            operation of law, are capable of being  converted 
                            into equity on  the occurrence  of a  contingency 
                            event or viability event, or written off at  that 
                            time, is, because  customary measures to  improve 
                            the Issuer's capital  adequacy are  at the  time, 
                            inadequate   or    unfeasible,    an    essential 
                            requirement to prevent  the Issuer from  becoming 
                            insolvent, bankrupt or unable  to pay a  material 
                            part of  its  debts as  they  fall due,  or  from 
                            ceasing  to  carry  on   its  business;  or   (b) 
                            customary  measures  to   improve  the   Issuer's 
                            capital adequacy being at the time inadequate  or 
                            unfeasible,   the   Issuer   has   received    an 
                            irrevocable commitment  of extraordinary  support 
                            from  the   Public   Sector   (beyond   customary 
                            transactions and  arrangements  in  the  ordinary 
                            course) that has,  or imminently  will have,  the 
                            effect of improving the Issuer's capital adequacy
                            and without which,  in the  determination of  the 
                            Regulator,   the   Issuer   would   have   become 
                            insolvent, bankrupt,  unable  to pay  a  material 
                            part of its debts as  they fall due or unable  to 
                            carry on its business.
Capital Treatment Event:    A "Capital Treatment  Event" shall have  occurred 
                            if, as  a result  of any  change in  the  Capital 
                            Adequacy Regulations or the EBA  Recommendations, 
                            or any  change  in the  official  application  or 
                            interpretation thereof becoming  effective on  or 
                            after the Issue Date, the Notes either (i)  cease 
                            to qualify as  core tier 1  capital of the  Group 
                            pursuant to EBA Recommendations, or (ii) cease to
                            qualify as Tier 1 Capital or any other equivalent
                            regulatory capital category, as the case may  be, 
                            of the  Group pursuant  to the  Capital  Adequacy 
                            Regulations.
Optional Conversion:        Each Noteholder has  the right  to exchange  such 
                            Note into  fully-paid  Shares  beginning  on  the 
                            Interest Paying  Date falling  in December  2012, 
                            and on each Interest Payment Date thereafter.
Conversion Procedure: Following conversion  of  the Notes,  the  Issuer 
                            will procure that the  relevant number of  Shares 
                            are issued  and  registered by  Iberclear  in  an 
                            account  of  such  Noteholder  (or  its  nominee) 
                            within Iberclear. Registration of the Shares  by 
                            Iberclear and the payment in cash of any and  all 
                            accrued (and  due) but  unpaid interest  on  such 
                            Notes, shall be a good and complete discharge  of 
                            the Issuer's obligations in respect of the  Notes 
                            and a  Noteholder  shall have  recourse  only  to 
                            Iberclear or the  relevant nominee for  receiving 
                            all payments and exercising any rights in respect
                            of such Shares and the payment to it of interest,
                            if any.  In  order  to obtain  delivery  of  the 
                            relevant Shares and the  payment of interest,  if 
                            any, the relevant Noteholder must deliver a  duly 
                            completed Conversion  Notice in  accordance  with 
                            the  provisions   set   out  under   "Terms   and 
                            Conditions of  the Notes-The  Equity Option".  If 
                            the Noteholder is unable to take delivery of  the 
                            relevant Shares for legal or regulatory  reasons, 
                            then  the  issuer  will,  in  certain  cases,  be 
                            obliged to appoint a  Selling Agent who will  use 
                            reasonable endeavours to sell such Shares on  the 
                            Noteholder's behalf, all as more fully  described 
                            in Condition  11(e) (Procedure  for Conversion  - 
                            Failure to Deliver Conversion Notice).
Conversion price:           The number of Shares deliverable upon  conversion 
                            of a Note will be such number as is determined by
                            dividing the principal amount of such Note by the
                            Conversion  Price  in  effect  on  the   relevant 
                            Conversion Date.  The Conversion  Price will  be 
                            the greatest of: (a)  the Reference Market  Price 
                            of an Ordinary Share on the Exchange Business Day
                            preceding the  relevant  Conversion  Date  (which 
                            will be calculated  as the average  of the  daily 
                            volume weighted  average  prices of  an  Ordinary 
                            Share (derived from or published by the SBIE)  on 
                            each of the 15 consecutive Exchange Business Days
                            ending on and including the Exchange Business Day
                            preceding the relevant Conversion Date), (b)  the 
                            "Floor Price"  (which is  EUR 1.00)  and (c)  the 
                            Closing  Price  (being  the  sale  price  of   an 
                            Ordinary  Share  at  close  of  business  on  the 
                            relevant Exchange Business  Day (derived from  or 
                            published by  the  SBIE)) of  an  Ordinary  Share 
                            multiplied by  0.75.  The Conversion  Price  may 
                            also be no higher  than either (i) EUR15.00  (the 
                            "Ceiling Price")  or  (ii) the  Reference  Market 
                            Price of an  Ordinary Share  multiplied by  0.75, 
                            whichever is the higher.
Anti-Dilution:              The Floor  Price and  the Ceiling  Price will  be 
                            adjusted  in   the   event  that   there   is   a 
                            consolidation or subdivision  of the Shares,  the 
                            payment  of   any  extraordinary   dividends   or 
                            non-cash dividends,  rights  issues or  grant  of 
                            other subscription rights or certain other events
                            which  affect  the  Shares,   but  only  in   the 
                            situations and to the  extent provided in  "Terms 
                            and Conditions  of the  Notes-Adjustments to  the 
                            Conversion Price".
Optional Early Redemption:  The Notes may be redeemed  in the event that  the 
                            Issuer  has  or  will   become  obliged  to   pay 
                            additional amounts as provided or referred to  in 
                            Condition 8 (Taxation) as a result of any  change 
                            in, or amendment to,  the laws or regulations  of 
                            the Kingdom of Spain or any political subdivision
                            or any authority thereof or therein having  power 
                            to tax,  or  any  change in  the  application  or 
                            official   interpretation   of   such   laws   or 
                            regulations which becomes  effective on or  after 
                            29  June  2012  and  such  obligation  cannot  be 
                            avoided by the issuer taking reasonable  measures 
                            available to it.
Status and Subordination:   The Notes will constitute direct,  unconditional, 
                            unsecured and  subordinated  obligations  of  the 
                            Issuer and will rank  pari passu and without  any 
                            preference among  themselves. Save  as  provided 
                            below, the rights and  claims of the  Noteholders 
                            against the Issuer in respect of or arising under
                            (including any damages awarded for breach of  any 
                            obligation under) the Notes shall, subject to any
                            obligations which  are mandatorily  preferred  by 
                            law, rank:
                           • junior  to the  claims of  common 
                            creditors (including  depositors and  holders  of 
                            unsubordinated obligations of the Issuer) and  to 
                            the  claims  of   holders  of  all   subordinated 
                            obligations  of  the  Issuer  other  than   those 
                            expressed to rank pari passu with the Notes;
                           • junior to  the claims of  holders 
                            of  any  preferred  securities   (participaciones 
                            preferentes) issued  under  Law  13/1985  or  any 
                            securities or instruments equivalent to preferred
                            securities or  preferred shares  (whether  issued 
                            under Law 13/1985 or any other law or  regulation 
                            of Spain or of  any other jurisdiction), in  each 
                            case issued  by  the  Issuer, or  issued  by  any 
                            Subsidiary with the benefit of a guarantee of the
                            Issuer;
                           • pari  passu  with the  claims  of 
                            holders  of  all  other  unsecured,  subordinated 
                            obligations, notes, bonds,  instruments or  other 
                            securities in each  case convertible into  Shares 
                            and issued  by  the  Issuer,  or  issued  by  any 
                            Subsidiary with the benefit of a guarantee of the
                            Issuer;
                           • senior to  the claims of  holders 
                            of ordinary shares of the Issuer.
                           The claims  of  Noteholders in  relation  to  the 
                            Notes shall rank, as from the relevant Conversion
                            Date, in order  of priority pari  passu with  the 
                            rights of  holders of  Shares and  junior to  the 
                            claims of holders referred to in the first  three 
                            bullet points  above  (except,  in  the  case  of 
                            holders referred to  in the  third bullet  point, 
                            holders of securities that are expressed by their
                            terms to  rank  pari  passu with  the  rights  of 
                            holders of Shares in circumstances such as  those 
                            set out in Condition 10 (Conversion)).
                           If  any  of  the  circumstances  as  set  out  in 
                            Condition 10  (Conversion)  giving  rise  to  the 
                            mandatory conversion  of the  Notes has  occurred 
                            and Shares have not  been issued or delivered  to 
                            any   Noteholder   pursuant   to   Condition   10 
                            (Conversion), the  claim  of such  Noteholder  in 
                            respect  of  the   liquidation,  dissolution   or 
                            winding-up of the Issuer  shall be the sum  equal 
                            to that  which holders  of the  number of  Shares 
                            into which  the  Notes held  by  such  Noteholder 
                            should have been converted at the then Conversion
                            Price would have received out of the proceeds  of 
                            the liquidation, dissolution or winding-up of the
                            Issuer. In  such  circumstances, the  claims  of 
                            Noteholders in relation to the Notes shall  rank, 
                            as from the relevant Conversion Date, in order of
                            priority pari passu with the rights of holders of
                            Shares  and  junior  to  the  claims  of  holders 
                            referred to  in  the first  three  bullet  points 
                            above (except, in the case of holders referred to
                            in the third bullet point, holders of  securities 
                            that are expressed  by their terms  to rank  pari 
                            passu with  the rights  of holders  of Shares  in 
                            circumstances such as those set out in  Condition 
                            10 (Conversion)).
Taxation:                   The Issuer will  pay such  Additional Amounts  as 
                            may be necessary  in order that  the net  payment 
                            received by  each Noteholder  in respect  of  the 
                            Notes, after withholding for any taxes imposed by
                            tax authorities  in  the Kingdom  of  Spain  upon 
                            payments made by  or on behalf  of the Issuer  in 
                            respect of the Notes, will equal the amount which
                            would have been  received in the  absence of  any 
                            such  withholding  taxes,  subject  to  customary 
                            exceptions,  as  more  particularly  set  out  in 
                            Condition 8 (Taxation).
Governing Law:              The Notes, the  Deed of Covenant  and the  Agency 
                            Agreement, and  any  non-contractual  obligations 
                            arising out of or  in connection with them,  will 
                            be governed by English  law, save that  Condition 
                            9(a) (Syndicate of  Noteholders and  Modification 
                            of Agency Agreement  - Syndicate of  Noteholders) 
                            and  the   Regulations   of  the   Syndicate   of 
                            Noteholders will be governed by Spanish law.
Listing and Trading:        Applications have been made  to the UKLA for  the 
                            Notes to be admitted  to listing on the  Official 
                            List and  to the  London Stock  Exchange for  the 
                            Notes to be admitted to trading on the Market.
Principal    Paying     and The Bank of New York Mellon.
Conversion Agent:
Clearing Systems:           Euroclear and  Clearstream,  Luxembourg.  Shares 
                            arising upon  conversion  will be  delivered  via 
                            Iberclear.
Selling Restrictions:       See "Subscription and Sale".
Risk Factors:               See "Risk Factors".
Financial Information:      See "Description of the Issuer-Selected Financial
                            Information".
Rating:                     The Notes have not been rated.
Form  and  Denomination  of The Notes will  be issued in  bearer form in  the 
the Notes:                  denomination of  EUR100,000. The  Notes will  be 
                            initially represented  by  the  Temporary  Global 
                            Note, without  interest  coupons, which  will  be 
                            deposited with a common  depositary on behalf  of 
                            Euroclear and Clearstream Luxembourg on or  about 
                            the Issue Date. The  Temporary Global Note  will 
                            be exchangeable  for interests  in the  Permanent 
                            Global Note,  without  interest  coupons,  on  or 
                            after the date which is  40 days after the  Issue 
                            Date,   upon   certification   as   to   non-U.S. 
                            beneficial ownership. The Permanent Global  Note 
                            will   be   exchangeable   in   certain   limited 
                            circumstances in  whole,  but not  in  part,  for 
                            Notes in definitive form  in the denomination  of 
                            EUR100,000,  each  and   with  interest   coupons 
                            attached.



                                 RISK FACTORS

The Issuer  believes that  the following  factors may  affect its  ability  to 
fulfil  its  obligations  under   the  Notes.  All   of  these  factors   are 
contingencies which may or may not occur  and the Issuer is not in a  position 
to express a view on the likelihood of any such contingency occurring.

Factors which the Issuer believes may be material for the purpose of assessing
the market risks associated with the Notes are also described below.

The Issuer believes that the  factors described below represent the  principal 
risks inherent in investing in the Notes,  but the inability of the Issuer  to 
pay interest, principal or other amounts,  on or in connection with the  Notes 
may occur  for  other reasons  and  the Issuer  does  not represent  that  the 
statements below  regarding the  risks of  holding the  Notes are  exhaustive. 
Prospective investors should give careful consideration to the following  risk 
factors in  evaluating the  merits and  suitability of  an investment  in  the 
Notes. The  information  is not  intended  to be  an  exhaustive list  of  all 
potential risks  associated  with  an investment  in  the  Notes.  Prospective 
investors should also read the detailed information set out elsewhere in these
Listing Particulars and reach their own  views prior to making any  investment 
decision.

Words and expressions defined in the "Terms and Conditions of the Notes" below
or elsewhere  in these  Listing Particulars  have the  same meanings  in  this 
section.

Factors that may affect the Issuer's  ability to fulfil its obligations  under 
the Notes

Risks involved in the Group's activities.

The following is a  description of the  principal types of  risk to which  the 
banking activities of the Group are subject:

Credit Risk:  Credit risk  can be  defined as  possible losses  which may  be 
generated by a  potential default  in whole  or in  part of  obligations by  a 
counterparty  or  debtor  (including,  but  not  limited  to,  an   insolvency 
proceeding of a counterparty or debtor). These obligations arise in both  the 
financial activities of the  Group and its  dealing and investment  activities 
since they  arise by  means of  loans, fixed  interest or  equity  securities, 
derivative instruments or other types of products (for example, guarantees).

Market Risk: Market  risk refers to  the uncertainties to  which the  Group's 
financial position  and future  income  are exposed  as  a result  of  adverse 
movements in the prices of financial instruments with which the Group operates
in its activities in financial and securities markets.

Interest Rate Risk: Overall balance sheet interest risk can be defined as the
extent to which an institution may be affected by future movements which occur
in market interest rates. The principal reasons for this risk derive from the
different speed and intensity with which changes in market interest rates  are 
passed on to assets, liabilities and off-balance sheet positions based on  the 
times when they fall due and repricing.

Short term effects are shown in the profit and loss account and in the  medium 
term are  manifested  by  movements  in the  financial  value  of  assets  and 
liabilities which form part of the balance sheet.

Liquidity Risk: Liquidity  risk comprises  uncertainties in  relation to  the 
Group's ability,  under adverse  conditions, to  access funding  necessary  to 
cover its obligations to customers, meet  the maturity of its liabilities  and 
to satisfy  capital requirements.  It includes  both the  risk of  unexpected 
increases in the cost of financing and the risk of not being able to structure
the maturity dates  of the  Group's liabilities  reasonably in  line with  its 
assets, as well as the risk of not being able to meet its payment  obligations 
on time at a reasonable price due to liquidity pressures.

Exchange Rate Risk: The exchange rate  risk consists of the potential  losses 
which may occur as a result of adverse movements in exchange rates in  respect 
of the  different currencies  in which  the Group  operates. The  Issuer  has 
adopted a policy of maintaining a low  or very low profile in its exposure  to 
this type of risk factor.

Operational Risk: Operational risk includes:

(a) the business risk which may result from unforeseeable changes  in 
external factors  without  sufficient  time to  make  the  structural  changes 
necessary to adapt to them, and the risk that unforeseeable events occur which
could lead to losses for the Group;

(b)  transactional  risks   resulting  from   errors  in   execution, 
registration failure, deriving from the complexity of certain products, errors
in delivery and/or liquidation and/or human error;

(c) risks in operational controls which include losses resulting from
potential errors in  transaction documentation, in  obtaining the  appropriate 
authorisations, fraud,  lack of  personnel training,  failure to  comply  with 
limits or procedures laid down, failure of internal controls or unavailability
of personnel;

(d) losses resulting from material loss and damage as well as extreme
events, for example natural disasters;

(e) data  processing  risks,  such  as  programming  errors,  systems 
failure and application design errors; and

(f) legal risks, including the possibility that transactions may not
be legally enforceable in the existing legal and/or regulatory framework,  and 
also that change in law and regulations may negatively affect the situation of
the Group.

Notwithstanding anything in this risk factor,  this risk factor should not  be 
taken as implying that either the Issuer or the Group will be unable to comply
with its obligations  as a company  with securities admitted  to the  Official 
List.

The Group  is vulnerable  to the  current disruptions  and volatility  in  the 
global financial markets  and could  be subject to  further government  action 
intended to alleviate the effects of the current financial crisis.

The  global  economy  began  a   period  of  moderate  recovery  from   severe 
recessionary conditions in mid-2009, which began  to slow down in 2011.  This 
risks leading  to  another  recession. The  sustainability  of  the  moderate 
recovery is dependent on a number of  factors that are not within the  Group's 
control, such  as  a return  to  private  sector job  growth  and  investment, 
strengthening of housing sales and construction, continuation of the  economic 
recovery globally, and the  timing of the exit  from government credit  easing 
policies. The Group continues to face  risks resulting from the aftermath  of 
the severe recession generally and the moderate pace of the current recovery.
A slowing or failure of the economic recovery could bring a return to some  or 
all of the adverse effects of the earlier recessionary conditions.

Since the middle of 2007, there  has been disruption and turmoil in  financial 
markets around the world.  In particular, in Spain  there have been  dramatic 
declines in  the  housing market,  with  falling home  prices  and  increasing 
foreclosures, high  levels of  unemployment and  underemployment, and  reduced 
earnings, or in some cases losses, for businesses across many industries, with
reduced investments in growth.

This overall  environment resulted  in significant  stress for  the  financial 
services industry,  particularly  in Spain,  and  led to  distress  in  credit 
markets, reduced liquidity for many types of financial assets, including loans
and securities, and concerns regarding the financial strength and adequacy  of 
the capitalisation  of  financial  institutions  including  the  Group.  Some 
financial institutions  around  the world  and  in Spain  in  particular  have 
failed, some have needed significant additional capital, and others have  been 
forced to seek acquisition partners.

Reflecting concern about the stability of the financial markets generally  and 
the strength of counterparties, as well as concern about their own capital and
liquidity positions,  many  lenders  and institutional  investors  reduced  or 
ceased providing funding  to borrowers.  The resulting  economic pressure  on 
consumers and businesses and the lack  of confidence in the financial  markets 
exacerbated the state of  economic distress and hampered,  and to some  extent 
continues to hamper, efforts to bring about and sustain an economic recovery.

These economic conditions have  had a material adverse  effect on the  Group's 
business, financial condition  and results of  operations. The management  of 
the Issuer expects these  conditions to continue to  have an ongoing  negative 
impact on it and the rest of the Group. A slowing or failure of any  economic 
recovery would  likely  aggravate  the  adverse  effects  of  these  difficult 
economic and market  conditions on the  Group and on  others in the  financial 
services industry.

In an  attempt to  prevent the  failure of  the financial  system, Spain,  the 
United  States  and   other  European  governments   have  intervened  on   an 
unprecedented scale. In  Spain, measures adopted  by the government  included 
increased consumer  deposit guarantees,  a program  to guarantee  the debt  of 
certain financial institutions  (the "Government Guarantee  Programme") and  a 
fund to purchase assets from financial institutions. Banco Popular issued €17
million bonds guaranteed by the Spanish government pursuant to the  Government 
Guarantee Programme which, as of the  date of these Listing Particulars,  have 
matured and no amount remains outstanding.

In 2009 the Spanish government created the Orderly Banking Restructuring  Fund 
("FROB") to  manage the  restructuring processes  of credit  institutions  and 
reinforce the equity  of institutions undergoing  integration. In the  United 
States, the  federal  government  took  equity  stakes  in  several  financial 
institutions, implemented a  program to guarantee  the short-term and  certain 
medium-term  debt  of  financial  institutions,  increased  consumer   deposit 
guarantees, and  brokered the  acquisitions  of certain  struggling  financial 
institutions, among other  measures. In  the United  Kingdom, the  government 
effectively nationalized some of  the country's largest  banks and provided  a 
program to  guarantee short-term  and certain  medium-term debt  of  financial 
institutions, among other measures.

On 9 June  2012, the Spanish  government announced that  Spain is expected  to 
receive funding from the European Financial Stability Facility or the European
Stability Mechanism with the  purpose of recapitalising  parts of its  banking 
sector. Neither the final amount, nor  the conditions, have been confirmed  at 
the date of these Listing Particulars, although media reports have  speculated 
that the extraordinary financing will cover the estimated capital requirements
of the Spanish banking sector with  an additional safety margin, estimated  to 
amount to approximately  €100 billion  in total.  This funding  may result  in 
additional debt being incurred by Spain's  government and an increase in  debt 
servicing costs which,  in turn, could  contribute to an  increase in  Spain's 
budget deficit. It is not yet known what the impact of the additional  funding 
will have in Spain, its banking sector or the Issuer.

The aforementioned announcement could create  concerns over the stability  and 
solvency of  the  Spanish  banking  sector and  the  ability  of  the  Spanish 
government to service its debt. In turn, this could have an adverse impact on
the Issuer's ability to  generate business, its ability  to obtain funding  or 
cause a decline in the price of the Issuer's shares or may otherwise adversely
impact its business, financial condition or results of operations.

Despite  the  extent  of  the  aforementioned  intervention,  global  investor 
confidence  remains  cautious.  The  world's  largest  developed   economies, 
including the United States and United Kingdom, grew during 2011, although  in 
most cases  still at  a slow  pace.  In addition,  recent downgrades  of  the 
sovereign debt of Greece, Portugal and Spain have caused further volatility in
the capital markets. Continued or worsening disruption and volatility in  the 
global financial markets could have a  material adverse effect on the  Group's 
ability to access capital and liquidity  on financial terms acceptable to  the 
Group, if at all. If capital markets financing ceases to become available, or
becomes excessively expensive, the Group may  be forced to raise the rates  it 
pays on deposits  to attract  more customers.  Any such  increase in  capital 
markets funding costs  or deposit  rates would  entail a  repricing of  loans, 
which would result  in a reduction  of volume,  and may also  have an  adverse 
effect  on  the  Group's  interest  margins.  A  further  economic  downturn, 
especially in  Spain and  other European  countries, could  also result  in  a 
further reduction in business  activity, a consequent loss  of income for  the 
Group and  further  losses  on  the Group's  assets  resulting  in  a  further 
reduction of its capital resources.

In addition, a premature removal of  the aforementioned support measures as  a 
result of perceived improvement in the financial markets and concerns over the
sustainability of  public  deficits  could  result  in  a  prolonged  economic 
downturn and further instability in the financial markets, which could have  a 
material adverse  effect on  the Issuer's  business, financial  condition  and 
results of operations.

Changes in the  regulatory framework,  including increased  regulation of  the 
financial services  industry in  the jurisdictions  where the  Group  operates 
could adversely affect its business.

Substantially all of the Group's operations entail considerable regulatory and
legal risk.  Most  entities  within  the  Group  are  subject  to  government 
regulation and inquiry  as financial companies  in the markets  in which  they 
operate, and regulations may be extensive and may change rapidly.

Extensive legislation affecting the  financial services industry has  recently 
been adopted  in  Spain, the  United  States,  the European  Union  and  other 
jurisdictions, and regulations are  in the process  of being implemented.  In 
response to  the  recent financial  crisis,  the European  Union  commenced  a 
process of reforms  to contend  with the deficiencies  detected in  prudential 
regulation. These reforms coincide with what was agreed within the  framework 
of the G-20 and the Basel II amendment presently underway. Along these lines,
European Parliament and  Council Directive 2009/111/EC,  of 16 September  2009 
was also approved, amending  directives 2006/48/EC, 2006/49/EC and  2007/64/EC 
with respect  to banks  affiliated  to a  central  body, certain  elements  of 
capital, major risk, the supervisory system and crisis management. In  Spain, 
Act 6/2011,  of  11 April,  was  passed, with  the  object of  commencing  the 
transposition of the  aforementioned Directive 2009/111/EC,  as well as  Royal 
Decree-Law 2/2011,  of 18  February, for  the reinforcement  of the  financial 
system. In line with the  new international capital standards established  by 
the so-called  Basel  III accords,  this  Royal Decree  toughens  the  capital 
requirements of  credit  institutions. In  turn,  the Bank  of  Spain  issued 
Circular 9/2010 of 22 December, 2010,  which amends certain rules in order  to 
establish more  restrictive  conditions  regarding  capital  requirements  for 
credit risk, credit risk  mitigation techniques, securitisation and  treatment 
of counterparty and trading book risk. The circular was issued following  the 
passage of  two EU  Directives on  risk management  (Directive 2009/27/CE  and 
Directive 2009/83/CE).

Royal Decree-Law 2/2011 required that  consolidated groups of credit  entities 
reach a core  capital ratio throughout  the 2011  fiscal year of  8% of  their 
risk-weighted exposures, unless their wholesale funding ratio exceeded 20% and
at least 20%  of their  capital or  voting rights  are not  placed with  third 
parties,  in  which  case  the  above  requirement  stands  at  10%  of  their 
risk-weighted exposures. As at June 30, 2011, Banco Popular had core  capital 
of €8,919 million (9.84%).

On  8  December  2011,   the  European  Banking   Authority  ("EBA")  in   the 
EBA/REC/2011/1 Recommendation  established  exceptional measures  for  certain 
credit institutions such as Banco Popular in order to strengthen their capital
structure, including the  obligation to  build a temporary  capital buffer  to 
reach a 9% Core Tier 1 ratio by 30 June 2012.

On 8 December 2011 Banco Popular reported on the notice received from the Bank
of Spain in  relation to  the EBA  announcement of  new capital  requirements, 
updated with information up to September 2011, which totalled €2,581  million, 
€900 million of  which referred  to sovereign debt  adjustments. The  updated 
requirements impose an increase  of €219 million  compared to the  information 
published with data from June 2011, due to the updated price of sovereign debt
caused by changing market conditions between  June and September and a  change 
in the  calculation  method  use  by the  EBA,  which  in  September  included 
adjustments to the fair market value of European debt hedging instruments. On
20 January 2012, Banco Popular presented a detailed plan to the Bank of  Spain 
describing  the  measures  to  be  implemented  to  meet  the   capitalisation 
requirements.

In addition, on 3 February  2012, Spain's government enacted Royal  Decree-Law 
2/2012, which aims at  strengthening the Spanish  banking system by  requiring 
all Spanish banks to increase  provisions and capital requirements in  respect 
of certain  real  estate-related assets  on  their  balance sheets  as  of  31 
December 2011.

On 7 June 2012, Banco Popular reported on the requirements contained in  Royal 
Decree-Law 2/2012  for increasing  the coverage  of real  estate balances  and 
loans for  real estate  development and  construction on  its balance  sheet. 
Banco Popular reported  that the impact  of the new  requirements amounted  to 
provisions of  approximately  €2,900  million and  €1,100  million  for  Banco 
Pastor, approximately €2,400 million covered as  at the date of these  Listing 
Particulars.

Further, on 11 May 2012, Spain's government enacted Royal Decree-Law  18/2012, 
which imposed additional  coverage requirements  due to  the deterioration  of 
financial  transactions   linked  to   real  estate   activities  where   such 
transactions are classified as "normal".

Royal Decree-Law 18/2012 anticipates and raises, by a considerable amount, the
provisions  for  non  problematic  loans  for  real  estate  construction  and 
development, from 7% to 29% for  loans on real estate under development;  from 
7% to 14% for loans to developers and completed residential property, and from
7% to 52% for all other loans to the real estate construction and  development 
sector under normal circumstances.

Under Royal Decree-Law 18/2012, Banco Popular must implement these  provisions 
within a  period of  two fiscal  years. The  provisional calculation  of  the 
provisions that Banco Popular will need to  have in place under the new  Royal 
Decree is €3,300 million, net of taxes (to cover both Banco Popular and  Banco 
Pastor).

On 11 June 2012, the  Issuer submitted to the Bank  of Spain a plan  detailing 
the measures  it intends  to take  in order  to comply  with the  requirements 
introduced  under  Royal  Decree-Law  18/2012  (the  "Proposed  Plan"),  which 
included (inter alia) a  share capital increase announced  in October 2011  in 
connection with the acquisition of Banco Pastor, and real estate related asset
divestment programme and related execution  calendar (see "Description of  the 
Issuer - Recent  Developments"). The  Bank of Spain  is scheduled  to make  a 
determination on  the  Proposed Plan  within  a  period of  15  business  days 
following its submission.  In this  respect, the Bank  of Spain  may ask  the 
Issuer to make amendments and/or  include additional measures in the  Proposed 
Plan as  it  may deem  necessary  in order  to  ensure compliance  with  Royal 
Decree-Law 18/2012, including  submitting a request  for financial support  to 
the FROB in accordance Royal Decree-Law 9/2009 and/or requiring the Issuer  to 
raise additional capital.

Further, there  can be  no assurance  that the  Proposed Plan,  including  any 
additional requirements imposed by the Bank of Spain will be met. Even if the
Proposed Plan is met, there can be no assurance that it will be successful  in 
ensuring the Issuer's compliance  with Royal Decree-Law  18/2012 or any  other 
applicable regulation.  Should  the  Proposed Plan  fail  to  make  available 
sufficient capital to comply with  the applicable regulations, the Issuer  may 
be required to  raise additional capital  and may do  so, inter alia,  through 
share  capital  increases  and/or  the  issuance  of  additional   mandatorily 
convertible bonds.

For more information in relation to Royal Decree-Law 2/2011, Royal  Decree-Law 
2/2012 and Royal Decree-Law 18/2012,  see "Description of the Spanish  Banking 
Sector - Capital Requirements".

Compliance with  these  legislations may  require  the Issuer  to  dispose  of 
certain of  its  assets,  raise  additional  capital  and/or  make  additional 
provisions, amongst other possible measures.

Between January 2013 and January 2019 the progressive introduction of the  new 
capital parameters for  financial institutions established  by Basel III  will 
take place.  It  is  unknown at  this  point  how these  parameters  will  be 
implemented in Spain  in general  terms and,  in particular,  with respect  to 
banks of the Banco Popular's size. Furthermore, greater capital  requirements 
imposed by the  Spanish regulator  (in line  with those  established by  Royal 
Decree-Law 2/2011 for  reinforcement of  the financial  system) may  translate 
into additional  capital  needs and  could  adversely affect  Banco  Popular's 
business. It cannot be assured that the implementation of these parameters or
of any  other  new  regulations  will not  adversely  affect  Banco  Popular's 
capacity to  pay  dividends  or  will  not  require  Banco  Popular  to  issue 
securities that are classified  as regulatory capital or  to sell assets at  a 
loss or to reduce its business activity, which could have an adverse effect on
the business, financial condition or results of operations of Banco Popular.

The European  Union has  created a  European Systemic  Risk Board  to  monitor 
financial  stability  and  implemented   rules  that  will  increase   capital 
requirements  for  certain  trading   instruments  or  exposures  and   impose 
compensation limits on  certain employees located  in affected countries.  In 
addition, the European Union Commission is  considering a wide array of  other 
initiatives, including separating wholesale and retail banking activities, new
legislation  that  will  affect  derivatives  trading,  impose  surcharges  on 
"globally" systemically important firms and possibly impose new levies on bank
balance sheets.

In  the  United  States,  the  Dodd-Frank  Wall  Street  Reform  and  Consumer 
Protection Act  was adopted  in 2010  and will  effect significant  structural 
reforms to the  financial services industry.  This legislation provides  for, 
among other  things: the  establishment  of a  Bureau of  Consumer  Financial 
Protection which will have  broad authority to  regulate the credit,  savings, 
payment and  other consumer  financial products  and services  that the  Group 
offers; the  creation  of  a  structure  to  regulate  systemically  important 
financial companies;  more comprehensive  regulation of  the  over-the-counter 
derivatives market; prohibitions on the Group engaging in certain  proprietary 
trading  activities  and  restricting  its  ownership  of,  investment  in  or 
sponsorship of,  hedge funds  and private  equity funds;  restrictions on  the 
interchange fees  that the  Group  earns on  debit  card transactions;  and  a 
requirement that bank regulators  phase out the  treatment of trust  preferred 
capital debt securities as Tier 1 capital for regulatory capital purposes.

The  Basel  Committee  on  Banking  Supervision  announced  in  December  2010 
revisions to  its Capital  Accord,  which will  require higher  capital  ratio 
requirements for banks, narrow the definition of capital, and introduce  short 
term liquidity and  term funding  standards, among other  things. Also  being 
considered is the  imposition of  a bank  surcharge on  institutions that  are 
determined  to  be  "globally   significant  financial  institutions."   These 
requirements could increase the Group's funding and operational costs.

These and  any additional  legislative  or regulatory  actions in  Spain,  the 
European Union, the United States or other countries, and any required changes
to the  Group's  business  operations  resulting  from  such  legislation  and 
regulations, could result in  significant loss of  revenue, limit the  Group's 
ability to pursue business  opportunities in which  the Group might  otherwise 
consider engaging, affect the  value of assets that  the Group holds,  require 
the Group to increase its prices and therefore reduce demand for its products,
impose additional  costs  on  the  Group or  otherwise  adversely  affect  its 
businesses. Stricter requirements imposed  on Spanish financial  institutions 
relative to those imposed in other countries could also affect the competitive
position of the Issuer relative to other institutions in Europe. Accordingly,
the  Group  cannot  provide  assurance  that  any  such  new  legislation   or 
regulations would not have a material adverse effect on its business,  results 
of operations or financial condition in the future.

In addition, increasing regulatory capital requirements may create a need  for 
the Issuer  to  raise additional  capital.  For example,  the  Proposed  Plan 
involves a share  capital increase,  which was  announced in  October 2011  in 
connection with  the acquisition  of  Banco Pastor  (see "Description  of  the 
Issuer - Recent Developments"). The Issuer is constantly evaluating potential
sources of  funding, including  share capital  increases and  the issuance  of 
additional mandatorily convertible  notes. The  aforementioned share  capital 
increase and other capital raisings by the Issuer could result in dilution  of 
the Noteholder's  interests.  For  more  information,  see  "Risk  Factors  - 
Noteholders have limited anti-dilution protection".

The Group may  also face  increased compliance  costs and  limitations on  its 
ability to  pursue certain  business opportunities.  Changes in  regulations, 
which are  beyond the  Group's control,  may  have a  material effect  on  the 
Group's business and operations. As some of the banking laws and  regulations 
have been  recently  adopted, the  manner  in  which those  laws  and  related 
regulations are applied to the  operations of financial institutions is  still 
evolving. Moreover,  no  assurance  can  be  given  generally  that  laws  or 
regulations will be adopted, enforced or interpreted in a manner that will not
have a material adverse effect on the Group's business.

In addition, many of the Group's operations are dependent upon licenses issued
by financial authorities,  which are typically  subject to ongoing  compliance 
with stipulated  conditions.  If  any  such  licenses  were  to  be  revoked, 
suspended or otherwise amended (including through the imposition of additional
or more onerous conditions), whether as a result of a change in law, a failure
to comply  with  stipulated  conditions  or otherwise,  or  if  other  related 
sanctions were imposed, the Issuer's business, financial condition and results
of operations could be adversely affected.

The Issuer's business is substantially dependent on the Spanish economy.

As the Issuer's activity is mainly  concentrated in Spain, its performance  is 
influenced by the cyclical nature of financial activity in that country, which
is in turn impacted by both domestic and international economic and  political 
events.

The Spanish economy has been affected by the slowdown in global growth and  is 
particular sensitive  to  economic conditions  in  the rest  of  the  European 
Economic Area, the primary market for Spanish goods and services exports. The
pace of recovery in private domestic  demand in the short- and medium-term  is 
expected to continue  to be  hindered by  weak economic  fundamentals and  the 
effects of  on-going  adjustments  in  the private  sector,  such  as  private 
deleveraging.

There are diverse factors influencing the Spanish economy that could adversely
affect  the  Issuer's  business  including,  in  particular,  the   structural 
adjustment taking place in  the real estate sector,  which is associated  with 
reduced access to  credit for  property purchases  and contracted  residential 
investment; and  the  restructuring of  the  financial sector.  In  addition, 
increases in interest rates in the Euro could also hinder the recovery of  the 
Spanish economy.

There can be no assurance that any adverse changes that may affect the Spanish
economy, including but not limited to, movements in employment and the housing
market, and growth  in the  Spanish economy  in general,  will not  negatively 
affect the business and profitability of the Issuer.

The financial problems faced by  the Group's customers could adversely  affect 
the Group.

Market turmoil and economic recession,  especially in Spain, could  materially 
and adversely affect the liquidity, businesses and/or financial conditions  of 
the Group's borrowers, which could in turn increase the Group's non-performing
loan ratios, impair the Group's loan and other financial assets and result  in 
decreased demand for borrowings  in general. In the  context of the  recovery 
from  the  recent  market  turmoil  and  economic  recession,  and  with  high 
unemployment  coupled  with  low  consumer  spending,  the  value  of   assets 
collateralising the  Group's secured  loans, including  homes and  other  real 
estate,  could  still  decline  significantly,  which  could  result  in   the 
impairment of the value of the Group's loan assets. In addition, the  Group's 
customers  may  further  significantly   decrease  their  risk  tolerance   to 
non-deposit investments such as  stocks, bonds and  mutual funds, which  would 
adversely affect the Group's fee and commission income. Any of the conditions
described above could have a material adverse effect on the Group's  business, 
financial condition and results of operations.

Increased exposure  to  the  real  estate market  has  made  the  Issuer  more 
vulnerable to market fluctuations in the price of real estate.

As a material portion  of the Issuer's  loan portfolio is  linked to the  real 
estate market,  it is  exposed to  market fluctuations  in the  price of  real 
estate.

From 2002-2007, population increase, economic  growth and the strength of  the 
labour market in Spain,  together with the decrease  in interest rates  within 
the EU, led to an increase in demand for mortgage loans. This contributed  to 
increased real estate prices in Spain, which, in turn, has led to  speculation 
that there could be a significant downturn in the Spanish real estate market.
During late 2007, the housing market began  to adjust in Spain as a result  of 
excess supply and higher interest rates. Since 2008, as economic growth  came 
to a  halt  in  Spain,  housing oversupply  has  persisted,  unemployment  has 
continued to  increase, housing  demand  has continued  to decrease  and  home 
prices have declined  while mortgage delinquencies  have increased.  Further, 
recent government measures, such as the  increase in the value added tax  rate 
of real  estate  transactions may  lead  to  further declines  in  demand  for 
property. These  trends, especially  higher interest  rates and  unemployment 
rates coupled with declining real estate prices, could have a material adverse
impact on the Issuer's mortgage payment delinquency rates, which in turn could
have a  material  adverse effect  on  its business,  financial  condition  and 
results of operations.

In addition, the decline  in property prices decreases  the value of the  real 
estate securing the Issuer's mortgage  loans and adversely affects the  credit 
quality of  property  developers to  whom  the  Issuer has  lent.  A  further 
decrease in  real  estate prices  may  occur  including to  levels  below  the 
outstanding principal balance on these loans, which may require the Issuer  to 
reclassify the relevant loans, establish additional provisions for loan losses
and increase reserve  requirements. Decreasing real  estate prices  therefore 
increase the risk of loss and decrease  the value of the Issuer's real  estate 
loan portfolio, which could  have a material adverse  effect on its  business, 
results of operations and financial condition.

Household and corporate indebtedness could endanger the Issuer's asset quality
and future revenues.

The indebtedness  of Spanish  households  and firms  has increased  in  recent 
years, which represents increased  risk for the  Spanish banking system.  The 
increase of loans referenced to variable  interest rates make debt service  on 
such loans more vulnerable to changes in interest rates than in the past. The
increase in households' and firms'  indebtedness also limits their ability  to 
incur additional debt, decreasing  the number of new  products the Issuer  may 
otherwise be  able to  sell them,  which may  have an  adverse affect  on  the 
Issuer's business, financial position and results of operations.

The Issuer faces increasing competition in its business lines.

The markets in which  the Issuer operates  are highly competitive.  Financial 
sector reforms in Spain and in  the European Union have increased  competition 
among both local and foreign  financial institutions, and the Issuer  believes 
that this trend will continue. There is also a trend towards consolidation in
the banking industry, which has created  larger and stronger banks with  which 
the Issuer must compete. This  trend is expected to  continue as the Bank  of 
Spain  continues  to  impose  measures  aimed  at  restructuring  the  Spanish 
financial  sector,  including  requirements   that  smaller,  regional   banks 
consolidate  into  larger,   more  solvent  and   competitive  entities,   and 
overcapacity be reduced.

Some of the Issuer's competitors, including well-established domestic banks in
each of  the  regional  Spanish markets  in  which  it operates,  as  well  as 
international banks  with  operations  in  the regions  in  which  the  Issuer 
operates, may have  better banking relationships  with corporate clients  that 
comprise one of its target customer bases and may have greater resources.

In addition,  the Issuer  faces  increased pressure  to meet  rising  customer 
demands to  provide new  banking products.  There is  no guarantee  that  the 
Issuer's management and employees  will succeed in  adopting new work  methods 
and approaches to customer service that will  keep up with the pace of  change 
in the current banking environment, which may adversely affect its ability  to 
successfully compete in its primary markets.

Further, the number of banking transactions conducted over the internet in the
markets in which the Issuer operates has grown in recent years and is expected
to grow further. The Issuer  may be unable to  compete with other banks  that 
offer more  extensive online  services to  their customers  than it  currently 
offers to  its customers.  The Issuer  also faces  competition from  non-bank 
financial institutions and other entities,  such as leasing companies,  mutual 
funds, pension  funds  and  insurance  companies  and,  to  a  lesser  extent, 
department stores (for some consumer finance products).

The  current  economic   environment  in  Spain   has  generated   significant 
competition on the basis of interest  rates among lending institutions in  the 
demand for all  types of  deposits. This competition  has prompted  financial 
institutions to offer  increasingly higher interest  rates on deposits,  which 
generates  higher  interest  expenses  without  a  corresponding  increase  in 
interest income. Increasing competitive pressures  could cause the Issuer  to 
lose customer  deposits  to its  competitors  or  force the  Issuer  to  offer 
interest rates on deposits that are higher than the rates received on its loan
products. As a  result, the  Issuer could suffer  losses which  could have  a 
material adverse effect on its  business, results of operations and  financial 
condition.

These and other factors related to  competition could have a material  adverse 
effect on the Issuer's  ability to compete effectively  in these markets,  and 
could adversely  affect  its  business, financial  condition  and  results  of 
operations.

Liquidity constraints could lead  to increased financing  costs or changes  in 
the lending practices of the Issuer.

Ready access to funds is essential to any banking business, including that  of 
the Issuer. The Issuer's  ability to raise funds  may be impaired by  factors 
that are not specific  to its operations, such  as general market  conditions, 
disruption of the financial markets or  negative views about the prospects  of 
the industries to which the Issuer provides a large proportion of loans, which
could in  turn  generate a  negative  view  of the  Issuer's  liquidity  among 
creditors and  result in  a less  favourable credit  rating, higher  borrowing 
costs and  poorer  access  to funds.  The  Issuer  may be  unable  to  secure 
additional funding in the international capital markets if conditions in these
markets, or its credit ratings, were to deteriorate.

Further, customer  deposits  are  a  significant source  of  funding  for  the 
Issuer. There  can  be no  assurance  that in  the  event that  the  Issuer's 
depositors withdraw  their funds  at a  rate  faster than  the rate  at  which 
borrowers repay their loans, it will be able to maintain its current levels of
funding without incurring higher funding costs or having to liquidate  certain 
of the Group's assets. A shortage of funds from retail deposits could have  a 
material adverse  effect  on the  Group's  business, financial  condition  and 
results of operations.

In addition, as sources of  liquidity introduced as extraordinary measures  in 
response to the  financial crisis are  withdrawn (such as  financing from  the 
European Central Bank, the Spanish treasury, the Instituto Oficial de  Crédito 
and various Spanish  public administrations),  expansionary economic  policies 
are removed from the market and  the market adjusts accordingly, there can  be 
no assurance that the Issuer will be able to continue funding its business  or 
maintain its current levels of funding without incurring higher funding  costs 
or having to liquidate certain of its assets.

There can be no  assurance that, in the  event that depositors withdraw  their 
funds at a rate faster than the  rate at which borrowers repay their loans  or 
in the  event of  a sudden  or unexpected  shortage of  funds in  the  banking 
systems or money markets in which the Issuer operates, the Issuer will be able
to meet its liquidity needs or to do so without incurring higher funding costs
or having to  liquidate certain  of its assets  which could  reduce its  asset 
management income and have a material adverse effect on its interest  margins, 
as well  as a  material adverse  effect on  the Issuer's  business,  financial 
condition and results of operations.

The imminent publication  of new stress  test results and  evaluations of  the 
asset quality and risk management systems  of the main Spanish banking  groups 
mandated by Spain's government and the Bank of Spain may adversely affect  the 
Issuer and the price of its shares.

Spain's government and  the Bank of  Spain are coordinating  a new  initiative 
aimed at improving transparency and  restoring confidence in the valuation  of 
banking assets within the  Spanish banking sector.  This new initiative  will 
involve two  independent  analyses of  the  14 main  Spanish  banking  groups, 
representing approximately 90 per cent. of the Spanish financial sector.

Firstly, independent consulting companies Oliver Wyman and Roland Berger  have 
been mandated  to conduct  stress  tests to  evaluate  the resilience  of  the 
Spanish banks and the potential impact on their credit portfolios in the event
of a  severe  deterioration  of  economic conditions.  The  results  of  this 
analysis, which is designed to provide an indication of the aggregate  capital 
needs of the Spanish banking sector under extreme adverse economic  conditions 
and identify the most vulnerable institutions, were released on 21 June 2012.
According to such results, the aggregate capital needs of the Spanish  banking 
sector under  a  severe adverse  economic  scenario would  range  between  €51 
billion to €62  billion (based on  a core  capital ratio of  6%), compared  to 
aggregate capital needs  ranging between €16  billion to €26  billion under  a 
baseline macroeconomic scenario (based on a core capital ratio of 9%).

For the second analysis, the four  largest auditing firms in Spain,  Deloitte, 
PwC, Ernst  & Young  and KPMG,  were mandated  to conduct  an  individualised, 
in-depth  analysis  of  the   internal  risk-management  procedures  for   the 
classification, provisioning for and measurement  of risk exposure within  the 
credit portfolio of each  of the Spanish banking  groups. The results of  the 
second analysis are expected to be submitted  to the Bank of Spain by 31  July 
2012, which will then review such  results and, where necessary, increase  the 
capital and  provisioning requirements  of those  banks for  which  additional 
needs are identified.

There can  be  no  assurance  regarding  the impact  of  the  results  of  the 
aforementioned analyses commissioned  by Spain's  government and  the Bank  of 
Spain as applied to  the Issuer or other  participants in the Spanish  banking 
sector. Such stress tests or evaluations could reveal additional capital  and 
provisioning needs or expose vulnerabilities in the risk management systems of
the Issuer. In particular, if the results  of the stress tests as applied  to 
the Issuer  are not  viewed  as satisfactory,  the  cost and  availability  of 
funding to the Issuer could be  adversely affected, the price of the  Issuer's 
shares could decline, the Issuer may  be required to raise additional  capital 
and the  Issuer  could  otherwise  be adversely  affected.  There  can  be  no 
assurance that  the Bank  of  Spain will  not  introduce stricter  capital  or 
risk-management requirements on the Issuer in response to the results of these
analyses In  addition, if  the  aforementioned analyses  yield  unsatisfactory 
results across a significant  proportion of the  Spanish banking groups  under 
review, this could lead to uncertainty in the markets regarding the health and
stability of the Spanish banking sector generally, which could in turn have an
adverse impact on our business and our ability to obtain finance.

Risks concerning borrower credit quality  and general economic conditions  are 
inherent in the Group's business.

Risks arising from changes in credit  quality and the recoverability of  loans 
and amounts  due from  counterparties are  inherent  in a  wide range  of  the 
Group's businesses.  Adverse changes  in the  credit quality  of the  Group's 
borrowers and counterparties or a  general deterioration in Spanish or  global 
economic conditions, or arising from systemic risks in the financial  systems, 
could reduce the recoverability and value of the Group's assets and require an
increase in the Group's level of allowances for credit losses.  Deterioration 
in the economies in which the  Group operates could reduce the profit  margins 
for the Group's banking and financial services businesses.

The Group is exposed to risks faced by other financial institutions.

The Group routinely  transacts with counterparties  in the financial  services 
industry, including brokers and  dealers, commercial banks, investment  banks, 
mutual and hedge  funds, and  other institutional clients.  Defaults by,  and 
even  rumours  or   questions  about  the   solvency  of,  certain   financial 
institutions and  the  financial  services  industry  generally  have  led  to 
market-wide liquidity problems and could lead  to losses or defaults by  other 
institutions. These liquidity concerns have had, and may continue to have,  a 
chilling effect  on  inter-institutional financial  transactions  in  general. 
Many of  the  routine  transactions  the  Group  enters  into  expose  it  to 
significant credit  risk  in  the event  of  default  by one  of  the  Group's 
significant counterparties. Despite the risk control measures the Group  have 
in place,  a default  by a  significant financial  counterparty, or  liquidity 
problems in the financial services industry in general, could have a  material 
adverse effect on  the Group's  business, financial condition  and results  of 
operations.

Portions of the Group's loan portfolio are subject to risks relating to  force 
majeure and any  such event  could materially adversely  affect its  operating 
results.

The Group's financial and operating  performance may be adversely affected  by 
force majeure events,  such as  natural disasters,  particularly in  locations 
where a significant portion of its  loan portfolio is composed of real  estate 
loans. Natural disasters such as earthquakes and floods may cause  widespread 
damage which could impair  the asset quality of  its loan portfolio and  could 
have an adverse impact on the economy of the affected region.

The Group may generate lower revenues from brokerage and other commission- and
fee-based businesses.

Market downturns are likely to lead to declines in the volume of  transactions 
that the Group executes for its  customers and, therefore, to declines in  the 
Group's non-interest revenues. In addition,  because the fees that the  Group 
charges for managing its  clients' portfolios are in  many cases based on  the 
value or performance of those portfolios,  a market downturn that reduces  the 
value  of  the  Group's  clients'  portfolios  or  increases  the  amount   of 
withdrawals would  reduce  the revenues  the  Group receives  from  its  asset 
management and private banking and custody businesses.

Even in the  absence of  a market  downturn, below-market  performance by  the 
Group's mutual funds may result in increased withdrawals and reduced  inflows, 
which would reduce the  revenue the Group receives  from its asset  management 
business.

Market risks associated with fluctuations in bond and equity prices and  other 
market factors  are  inherent  in the  Group's  business.  Protracted  market 
declines can reduce liquidity in the markets, making it harder to sell  assets 
and leading to material losses.

The performance of  financial markets may  cause changes in  the value of  the 
Group's investment and trading portfolios.  In some of the Group's  business, 
protracted adverse  market movements,  particularly asset  price decline,  can 
reduce the level of activity in the market or reduce market liquidity.  These 
developments can  lead  to material  losses  if  the Group  cannot  close  out 
deteriorating positions in a timely way. This may especially be the case  for 
assets of the Group for which there are less liquid markets. Assets that  are 
not traded  on  stock exchanges  or  other  public trading  markets,  such  as 
derivative contracts between banks, may have values that the Group  calculates 
using models other than publicly quoted prices. Monitoring the  deterioration 
of prices of assets like these is difficult and could lead to losses that  the 
Group does not anticipate.

The volatility of world equity markets due to the recent economic  uncertainty 
has had  a particularly  strong  impact on  the financial  sector.  Continued 
volatility may affect the value of the Group's investments in entities in this
sector and, depending on  their fair value  and future recovery  expectations, 
could become  a permanent  impairment  which would  be subject  to  write-offs 
against the Group's results.

Despite the  Group's risk  management policies,  procedures and  methods,  the 
Group may nonetheless be exposed to unidentified or unanticipated risks.

The Group's  risk  management  techniques  and strategies  may  not  be  fully 
effective in  mitigating the  Group's  risk exposure  in all  economic  market 
environments or against  all types  of risk,  including risks  that the  Group 
fails to identify or  anticipate. Some of the  Group's qualitative tools  and 
metrics for  managing  risk  are  based  upon  the  Group's  use  of  observed 
historical market behaviour. The Group applies statistical and other tools to
these observations to arrive at quantifications of its risk exposures.  These 
qualitative tools  and metrics  may  fail to  predict future  risk  exposures. 
These risk exposures could, for example, arise from factors the Group did not
anticipate or correctly evaluate in its statistical models. This would  limit 
the Group's ability  to manage its  risks. The Group's  losses thus could  be 
significantly greater than the historical measures indicate. In addition, the
Group's quantified  modelling  does not  take  all risks  into  account.  The 
Group's  more  qualitative  approach  to  managing  those  risks  could  prove 
insufficient, exposing it  to material unanticipated  losses. If existing  or 
potential customers believe  the Group's risk  management is inadequate,  they 
could take their business elsewhere.  This could harm the Group's  reputation 
as well as its revenues and profits.

Volatility in interest rates  may negatively affect  the Group's net  interest 
income and increase the Group's non-performing loan portfolio.

Changes in market interest  rates could affect the  interest rates charged  on 
interest-earning  assets  differently   than  the  interest   rates  paid   on 
interest-bearing liabilities. This difference could result in an increase  in 
interest expense relative  to interest income  leading to a  reduction in  the 
Group's net interest income. Income from treasury operations is  particularly 
vulnerable to interest rate volatility.  Interest rates are highly  sensitive 
to many factors beyond the Group's control, including increased regulation  of 
the financial sector, monetary  policies, domestic and international  economic 
and political conditions and other factors.

Rising interest rates may  also lead to  an increase in  the Issuer's bad  and 
doubtful debts portfolio if  borrowers cannot refinance  in a higher  interest 
rate environment, resulting an increase in defaults on its loans to  customers 
if borrowers are unable to  meet their increased interest expense  obligations 
and reduce demand for loans and the Issuer's ability to generate loans.

Changes in interest rates may therefore have a material adverse effect on  the 
Group's interest margins as well as the Issuer's business, financial condition
and results of operations.

Operational risks are inherent in the Group's business.

The Group's businesses  depend on  the ability to  process a  large number  of 
transactions efficiently and  accurately. Losses can  result from  inadequate 
personnel, inadequate or  failed internal  control processes  and systems,  or 
from external events  that interrupt  normal business  operations. The  Group 
also faces the risk that the design of its controls and procedures prove to be
inadequate or are circumvented.

In  addition,  any  persons  that  circumvent  the  security  measures   could 
wrongfully use the Group's  confidential information or  that of its  clients, 
which could expose it to a risk of loss, regulatory consequences or litigation
and could negatively impact its reputation and brand name.

The banking business involves the routine handling of large amounts of  money, 
creating the  risk  of theft,  fraud  or  deception carried  out  by  clients, 
third-party agents, employees and  managers. The employees  of the Group  may 
also commit errors that  could subject it to  financial claims for  negligence 
and otherwise, as  well as  regulatory actions. Despite  the risk  management 
measures put in  place by the  Issuer, there  can be no  assurance that  funds 
under its control could lead to inappropriate or illegal manners, which  could 
expose the Issuer to liability to customers, governmental sanctions,  negative 
publicity, loss of customers and other negative consequences.

Substantial losses  incurred by  the Issuer's  customers as  a result  of  any 
security  breaches,  errors,  omissions,  malfunctions,  system  failures   or 
disaster could subject it to claims from clients for recovery of such losses.
These claims, together with the  resulting damage to the Issuer's  reputation, 
could have a material adverse effect on its business, financial condition  and 
results of operations.

The Group relies  on recruiting, retaining  and developing appropriate  senior 
management and skilled personnel.

The Group's continued success depends in part on the continued service of  key 
members of its management  team. The ability to  continue to attract,  train, 
motivate and retain  highly qualified professionals  is a key  element of  the 
Group's  strategy.  The  successful  implementation  of  the  Group's  growth 
strategy depends on the availability of  skilled management, both at its  head 
office and at each of its business units. If the Group or one of its business
units or other functions fails to staff its operations appropriately or  loses 
one or  more of  its key  senior executives  and fails  to replace  them in  a 
satisfactory and timely manner, the Group's business, financial condition  and 
results of  operations,  including  control  and  operational  risks,  may  be 
adversely affected. Likewise, if the Group fails to attract and appropriately
train, motivate and retain qualified  professionals, its business may also  be 
affected.

The Group is exposed to risk of loss from legal and regulatory proceedings.

The Group faces various issues that may  give rise to risk of loss from  legal 
and regulatory proceedings. These  issues include appropriately dealing  with 
potential conflicts of  interest, legal and  regulatory requirements,  ethical 
issues,  and  conduct  by  companies  in  which  the  Group  holds   strategic 
investments or  joint venture  partners, which  could increase  the number  of 
litigation claims and  the amount  of damages  asserted against  the Group  or 
subject the Group to regulatory enforcement actions, fines and penalties.

Credit, market and liquidity risks may have an adverse effect on the  Issuer's 
credit ratings and the  cost of funds. Any  reduction in the Issuer's  credit 
rating could increase its  cost of funding and  adversely affect its  interest 
margins.

Credit ratings affect the cost and other  terms upon which the Issuer is  able 
to obtain funding. Rating  agencies regularly evaluate  the Issuer and  their 
ratings of its long-term debt are based on a number of factors, including  its 
financial strength  as well  as conditions  affecting the  financial  services 
industry generally.

Any downgrade  in the  Issuer's ratings  could increase  its borrowing  costs, 
limit its access to  capital markets and adversely  affect the ability of  the 
Issuer's  business  to  sell  or  market  its  products,  engage  in  business 
transactions-particularly longer-term and derivatives transactions-and  retain 
its customers. This, in turn, could reduce the Issuer's liquidity and have an
adverse effect on its financial position and results of operations.

The Issuer's  long-term  debt is  currently  rated Ba1  by  Moody's  Investors 
Service España, S.A., BBB by Fitch  Ratings España, S.A.U., BB+ by Standard  & 
Poor's Credit Market  Services Europe Limited  and A (high)  by DBRS  Ratings 
Limited. Each of these  rating agencies maintains the  Group's outlook as  it 
follows:

Moody's Investors Service España, S.A.: Review for possible downgrade

Fitch Ratings España, S.A.U.: Stable

Standard & Poor's Credit Market Services Europe Limited: Negative

DBRS Ratings Limited: Review with negative implications.

In light  of the  difficulties  in the  financial  services industry  and  the 
financial markets, there  can be no  assurance that the  rating agencies  will 
maintain their  current ratings  or  outlooks. With  regard to  those  rating 
agencies who have a negative outlook on the Group, there can be no  assurances 
that such agencies will revise such  outlooks upward. The Group's failure  to 
maintain favourable  ratings  and outlooks  could  increase the  cost  of  its 
funding and adversely affect the Group's interest margins.

In addition, certain  countries in  Europe, including  Spain, have  relatively 
large sovereign debts or fiscal deficits, or both. Several EU countries  have 
recently experienced significant increases in their cost of funding which,  in 
the case of certain countries has  led them to seek financial assistance  from 
the European Commission and the  International Monetary Fund. Spain has  also 
recently experienced  increases  in  its  cost  of  funding  due  to  concerns 
regarding rising sovereign debt levels. Any downgrade in the credit rating of
the Kingdom of Spain or increasing concerns about its ability to make payments
on its sovereign  debt could  lead to an  increase in  the Issuer's  borrowing 
costs, limit its access  to capital markets and  adversely affect the sale  or 
marketing of its products, its participation in business transactions and  its 
ability to retain customers,  which could adversely  affect its liquidity  and 
have a  material  adverse effect  on  its business,  financial  condition  and 
results of operations.

The Issuer's insurance coverage may not adequately cover its losses.

Due to the nature of the Issuer's operations and the nature of the risks  that 
it faces, there can be no  assurance that the insurance coverage it  maintains 
is adequate. If the Issuer were to suffer a significant loss for which it  is 
not insured, its business, financial condition and results of operations could
be materially adversely affected.

Risks in relation to the integration of Banco Pastor

On 10 October 2011, the Issuer announced that it was in negotiations with  the 
relevant shareholders to acquire  share capital of  Banco Pastor S.A.  ("Banco 
Pastor") to become an integration partner. It was agreed that the integration
operation would consist of  an offer to all  the shareholders of Banco  Pastor 
through an exchange of 1.115 new shares of the Issuer for every share of Banco
Pastor, and  30.9  shares  of  the  Issuer  for  every  mandatory  convertible 
subordinated bond of Banco Pastor (the "Share Acquisition").

On 15 February 2012 the Issuer disclosed that, as Agent Bank, it had  notified 
the CNMV that  the Share  Exchange Offer  had been  accepted for  over 90%  of 
voting shares in Banco  Pastor. Having satisfied  this condition, the  Issuer 
executed a  squeeze-out  of  the remaining  shareholders  and  bondholders  of 
mandatory convertible subordinated bonds in Banco Pastor who had not  accepted 
the Share Acquisition. As a result of the execution of the Share  Acquisition 
and the squeeze-out on 8 March 2012, the Issuer holds all of the share capital
in Banco Pastor.

In general terms, the risks which currently affect Banco Pastor, and any other
factors that could arise as a  result of the operational integration of  Banco 
Pastor into the Group (the "Merger"), will be part of the risks affecting  the 
Group and Banco Pastor as a whole (the "Enlarged Group").

Without prejudice to the foregoing, specific  risks in relation to the  Merger 
include:

Emergence  of  liabilities  that  were  hidden  or  unknown  at  the  time  of 
acquisition.

Further to completion  of the  Merger, the business,  financial condition  and 
results of operations of the Enlarged Group will differ substantially from the
business, financial condition and  results of operations of  the Group at  the 
date of, and as described in, these Listing Particulars.

Despite the legal and business due diligence review conducted of Banco Pastor,
the Issuer may uncover  information after acquiring Banco  Pastor that is  not 
known to the  Issuer at present  and which  may give rise  to significant  new 
contingencies or to contingencies in excess of the projections currently  made 
by the  Issuer.  Any  losses incurred  by  the  Issuer as  a  result  of  the 
occurrence of any such contingencies relating to Banco Pastor and hidden  from 
the Issuer in  the context of  the Acquisition could  have a material  adverse 
effect on the business, financial conditions and results of operations of  the 
Enlarged Group.

Risks deriving from the integration of Banco Pastor into the Group.

The operational integration of Banco Pastor  into the Group could prove to  be 
difficult and  complex, and  the  benefits and  synergies obtained  from  that 
integration may  not be  in line  with expectations.  The Issuer  could,  for 
example, face difficulties as a consequence,  inter alia, of the existence  of 
conflicts  of  interest   between,  among  others,   the  respective   control 
structures,  procedures,  standards,  business   cultures  and  policies,   or 
compensation structures of the Group and Banco Pastor, the need to  implement, 
integrate and harmonise diverse business operating procedures and systems  and 
financial, accounting, reporting systems  and other systems  of the Group  and 
Banco Pastor.

Also, the need  for a large  part of the  attention of the  management of  the 
Issuer to be  focused on  questions arising  from the  integration with  Banco 
Pastor could have an adverse effect on its business. If the Issuer is  unable 
to manage the expanded organisation efficiently,  this could result in a  loss 
of market share and of key clients, in addition to any other difficulties that
could arise if full integration of Banco Pastor's assets and resources is  not 
achieved, which  could  have  a  material  adverse  effect  on  the  business, 
financial position and results of operations of the Enlarged Group.

The Enlarged Group may not be able to retain key employees or manage its staff
efficiently.

The success of the Enlarged Group will depend in part on its ability to retain
key personnel of the Issuer and Banco Pastor, and on successful management  of 
the Enlarged Group. Factors that could  influence key personnel to leave  the 
Enlarged Group include difficulty integrating both the operations of the Group
and those of  Banco Pastor,  uncertainty in  relation to  such integration  or 
unwillingness to  work in  the context  of the  Enlarged Group.  Furthermore, 
competitive pressures may make it  difficult to replace skilled employees  who 
choose to leave  the Enlarged Group.  In addition, the  Issuer may  encounter 
difficulties in  efficiently managing  a larger  workforce. There  can be  no 
assurances that the Issuer will be  able to manage these risks  successfully. 
If the Issuer is unable to manage these risks successfully, this could have  a 
material adverse  effect  on  business,  financial  position  and  results  of 
operations of the Enlarged Group.

Risk factors associated with the Notes

The Notes are subject to the provisions  of the laws of England and Wales  and 
the Kingdom of Spain, either of which  may change and have a material  adverse 
effect on the terms and market value of the Notes.

(i) England and Wales

The terms  and  conditions  of  the Notes  are,  save  for  the  subordination 
provisions and the provisions relating to the appointment of the  Commissioner 
and the  Syndicate of  Noteholders (which  will be  subject to  Spanish  law), 
drafted on the basis of English law in effect as at the date of these  Listing 
Particulars. No  assurance can  be given  as to  the impact  of any  possible 
judicial decision or change  to English law  or administrative practice  after 
the date of these Listing Particulars.

(ii) Kingdom of Spain

Changes in the laws  of the Kingdom  of Spain after the  date hereof may  also 
affect the rights and effective remedies of Noteholders as well as the  market 
value of the Notes. Such changes in law may include changes in statutory, tax
and regulatory regimes during the life of the Notes, which may have an adverse
effect on  investment  in the  Notes  and the  introduction  of a  variety  of 
statutory resolution and loss-absorption tools, which may affect the rights of
holders of obligations issued by the Issuer, including the Notes and may cause
a Viability Event to occur which will require the Issuer to convert the  Notes 
into Shares (see -  The circumstances of  the conversion are  unpredictable). 
Such tools may  include the ability  to write off  sums otherwise payable  on 
such securities or override shareholder rights at a time when the Issuer is no
longer considered viable by  its regulator or upon  the occurrence of  another 
trigger.

Such changes may  also include  the amendment  of Spanish  laws governing  the 
capital requirements of banks, including Law 13/1985, of 25 May (Ley  13/1985, 
de 25 de mayo, de Coeficientes  de Inversión, Recursos Propios y  Obligaciones 
de  Información  de  los  Intermediarios  Financieros)  or  any   implementing 
ordinance, in  particular (i)  Royal  Decree 216/2008,  of 15  February  (Real 
Decreto 216/2008,  de 15  de febrero,  de recursos  propios de  las  entidades 
financieras) and Circular 3/2008, of 22  May (Circular 3/2008, de 22 de  mayo, 
del Banco de España, a entidades de crédito, sobre determinación y control  de 
los recursos propios mínimos)  or (ii) as required  in order to implement  the 
proposals by the Basel Committee on Banking Supervision, "Basel III: A  global 
regulatory framework for more resilient bank and banking systems",'  published 
in December 2010 as  amended and supplemented in  January 2011 or the  Capital 
Requirements Directive (CRD 4). Any such changes could impact the calculation
of the Common Equity Tier  1 Capital Ratio, the  CET1 Capital Amount, the  RWA 
Amount, the Tier 1 Capital Ratio  or the Tier 1 Capital Amount.  Furthermore, 
because the occurrence of  a Contingency Event  after the Capital  Regulations 
Date depends, in part, on the calculation of the CET1 Capital Ratio after  the 
Capital Regulations Date,  any change  in Spanish  law that  could affect  the 
calculation of the CET1 Capital Ratio  could also affect the determination  of 
whether a Contingency Event has  actually occurred. This uncertainty  relates 
one of the  principal terms of  the Notes and  any uncertainty regarding  this 
term can be  expected to have  an adverse effect  on the market  value of  the 
Notes.

On 6 June 2012, the European  Commission published a proposal for a  directive 
of the European Parliament and of the Council establishing a framework for the
recovery and  resolution of  failing  banks in  the  European Union.  If  this 
proposal were to be  adopted in its current  form, each European Union  member 
state, including  the  Kingdom  of  Spain, would  be  required  to  appoint  a 
resolution  authority  and  create  a  resolution  framework.  The  resolution 
authority would have a range of powers available to it, including: (i) a  sale 
mechanism whereby it could sell all or part of the failing bank; (ii) a bridge
bank mechanism  under  which  good  assets and  critical  functions  could  be 
transferred to a new bridge bank; (iii) an "asset separation" tool under which
the bank's bad assets could be  transferred into an asset management  vehicle; 
and (iv) a  "bail-in" or  debt write  down mechanism  which could  be used  to 
recapitalise the bank, with  unsecured creditors having all  or part of  their 
claims converted into equity and existing equity holders either being  diluted 
or extinguished. Each of these and other powers under the proposals would,  if 
imposed, have a material adverse effect on the value of the Shares and, in the
case of  (iv), may  lead to  the  loss of  all interests  in the  Shares.  The 
proposals are intended to be implemented  in each European Union member  state 
from 31 December 2014.

Furthermore, any change in the laws or regulations of the Kingdom of Spain  or 
any political subdivision or any authority thereof or therein having power  to 
tax, or any change in the application or official interpretation of such  laws 
or regulations (including  a holding  by a court  of competent  jurisdiction), 
which change or  amendment becomes effective  on or after  29 June 2012,  that 
would cause the  Issuer to have  to pay additional  amounts under Condition  8 
(Taxation) of the terms and conditions of the Notes would allow the Issuer the
option, subject to certain conditions  and subject to the Noteholders'  option 
to receive payments net of withholding to redeem the Notes in whole but not in
part. In any such case, the Notes  would cease to be outstanding, which  could 
materially and adversely affect investors and frustrate investment  strategies 
and goals.

In addition, subject to  the Issuer having exercised  the option described  in 
the preceding paragraph, the Notes will be mandatorily convertible into Shares
if, as a result of any change  in the Capital Adequacy Regulations or the  EBA 
Recommendations, or any change in  the official application or  interpretation 
thereof becoming effective on  or after the Issue  Date, the Notes either  (i) 
cease to  qualify  as  core tier  1  capital  of the  Group  pursuant  to  EBA 
Recommendations, or  (ii) case  to qualify  as  Tier 1  Capital or  any  other 
equivalent regulatory  capital category,  as the  case may  be, of  the  Group 
pursuant to the Capital Adequacy Regulations.

Such legislative and regulatory uncertainty could affect an investor's ability
to value the Notes  accurately and therefore affect  the trading price of  the 
Notes given the extent and  impact on the Notes of  one or more regulatory  or 
legislative changes, including the ones described above.

The circumstances triggering conversion are unpredictable.

The occurrence of an Insolvency Event, a Contingency Event, a Viability  Event 
or a Capital  Treatment Event  is inherently  unpredictable and  depends on  a 
number of factors,  many of which  are outside of  the Issuer's control.  For 
example, the occurrence  of one  or more of  the risks  described under  "Risk 
Factors -  Factors  that  may  affect  the  Issuer's  ability  to  fulfil  its 
obligations under  the  Notes",  or the  deterioration  of  the  circumstances 
described  therein,  will  substantially   increase  the  likelihood  of   the 
occurrence of an Insolvency Event, a Contingency Event or a Viability  Event. 
Furthermore, the occurrence of  a Contingency Event depends,  in part, on  the 
calculation of the CET1 Capital  Ratio, the EBA Capital  Ratio and the Tier  1 
Capital Ratio, which can be affected, among other things, by the growth of the
Issuer's business and its future  earnings; expected dividend payments by  the 
Issuer; regulatory changes (including  possible changes in regulatory  capital 
definitions and calculations) and the Issuer's ability to mitigate RWAs.

For more information on the capital ratios of the Issuer, see "Description  of 
the Issuer - Capital Adequacy". For  more information on the Issuer's  plans 
to raise additional capital, see "Description  of the Issuer - Business  Plan 
2012/2013".

The occurrence of a  Viability Event is subject  to, inter alia, a  subjective 
determination by the Regulator that conversion of the Notes or the  acceptance 
of support from  the Public  Sector is essential  to prevent  the Issuer  from 
becoming insolvent, bankrupt, unable  to pay a material  part of its debts  as 
they  fall  due  or  otherwise  unable  to  carry  on  its  business  as  more 
particularly  described  in  Condition  10(b)(iii)  (Conversion  -   Mandatory 
Conversion Upon Viability Event). As a  result, the Regulator may require  or 
may cause the conversion  of the Notes into  Shares in circumstances that  are 
beyond the control of the Issuer.

Because of the inherent uncertainty regarding the determination of whether  an 
Insolvency Event,  a  Contingency  Event,  a  Viability  Event  or  a  Capital 
Treatment Event exists, it will be difficult  to predict when, if at all,  the 
Notes will be  mandatorily converted into  Shares (other than  on a  Scheduled 
Conversion Date). Accordingly, trading behaviour  in respect of the Notes  is 
not necessarily expected  to follow  trading behaviour  associated with  other 
types of  convertible or  exchangeable securities.  Any indication  that  the 
Issuer is  trending towards  an Insolvency  Event, a  Contingency Event  or  a 
Viability Event,  or  that  change  in Capital  Adequacy  Regulations  or  EBA 
Recommendations may give rise to a Capital Treatment Event, can be expected to
have an adverse effect on  the market price of the  Notes and on the price  of 
the Shares.

Mandatory share  conversion  and risk  of  fluctuation  in the  value  of  the 
Issuer's shares.

The Notes will  not be  redeemed for  cash on their  maturity date  or on  any 
Scheduled Conversion Date; rather  Noteholders will only  receive a number  of 
newly issued  ordinary  shares of  the  Issuer (the  "Shares")  calculated  by 
applying the prevailing Conversion Price  in accordance with the  Conditions. 
Noteholders will therefore bear  the risk of fluctuation  in the value of  the 
Issuer's Shares.

At the time the Notes are acquired by investors, the price of the Shares,  the 
number of Shares to be received upon  conversion of the Notes and (other  than 
with respect to a Scheduled Mandatory Conversion) the date on which the  Notes 
will be converted into Shares will not be ascertainable.

Moreover upon the occurrence  of an Insolvency Event,  a Contingency Event,  a 
Viability Event or a  Capital Treatment Event, the  Notes will be  mandatorily 
converted into  Shares.  Because a  Contingency  Event will  occur  when  the 
Issuer's EBA Capital Ratio,  CET1 Capital Ratio or  Tier 1 Capital Ratio  will 
have deteriorated significantly and a Viability Event or Insolvency Event will
occur when,  respectively,  the Issuer's  chances  of continuing  as  a  going 
concern will have deteriorated significantly or when the Issuer will no longer
be a going concern, the Contingency Event, Viability Event or Insolvency Event
will likely be accompanied by a prior deterioration in the market price of the
Shares, which may be  expected to continue after  declaration of the  relevant 
Insolvency Event, Contingency Event or Viability Event.

Therefore, if  there  were an  Insolvency  Event,  a Contingency  Event  or  a 
Viability Event,  the  Reference Price  may  be  below the  Floor  Price,  and 
investors would receive Shares at a time  when the market price of the  Shares 
is diminished. In addition,  there may be a  delay in a Noteholder  receiving 
its Shares following  an Insolvency  Event, a Contingency  Event or  Viability 
Event, during which time the market price of the Shares may further  decline. 
As a result,  the value of  the Shares  received upon an  Insolvency Event,  a 
Contingency Event or  Viability Event  could be substantially  lower than  the 
price paid for the Notes at the time of their purchase.

As a result, an investor in the Notes faces almost the same risk of loss as an
investor in the Shares since  the investor will receive  Shares in case of  an 
Insolvency Event,  a  Contingency  Event,  a  Viability  Event  or  a  Capital 
Treatment Event, and, unless previously  redeemed, converted or purchased  and 
cancelled, on each  Scheduled Conversion  Date. See  also "The  Price of  the 
Shares may decrease" below.

The Notes may be redeemed prior to conversion.

The Notes may also be redeemed, subject to the Noteholder's option to  receive 
payments net of withholding, in the event  that the Issuer has or will  become 
obliged to pay additional  amounts as provided or  referred to in Condition  8 
(Taxation) as  a  result of  any  change in,  or  amendment to,  the  laws  or 
regulations of  the Kingdom  of  Spain or  any  political subdivision  or  any 
authority thereof  or  therein having  power  to tax,  or  any change  in  the 
application or  official  interpretation of  such  laws or  regulations  which 
becomes effective on or after 29 June 2012.

It is  not possible  to predict  whether or  not changes  to the  tax laws  or 
regulations of the Kingdom of Spain will  occur, and if so whether or not  the 
Issuer will elect to exercise its option to redeem the Notes. There can be no
assurances that, in the  event of any such  early redemption, Holders will  be 
able to reinvest the  proceeds at a rate  that is equal to  the return on  the 
Notes. In addition, the  redemption feature of the  Notes is likely to  limit 
their market value. During any period when the Issuer has the right to  elect 
to redeem all or part  of the Notes, the market  value of the Notes  generally 
will not rise substantially above the price at which they can be redeemed.

Payments of  Interest  on the  Notes  are  discretionary and  subject  to  the 
fulfilment of certain conditions.

Interest payments on the Notes may  be cancelled, without prior notice to  the 
Noteholders, by the Issuer to the extent that:

(i) Distributable  Profits  are not  available  for the  purpose  of 
making the  payment  (as more  particularly  described in  Condition  5(b)(ii) 
(Interest - Limitations on interest payment));

(ii) under applicable Capital Adequacy Regulations, including Spanish
banking regulations, the Issuer  would be prevented at  such time from  making 
payments on its ordinary shares, on the Notes or on Parity Securities (as more
particularly described  in  Condition  5(b)(ii)  (Interest  -  Limitations  on 
interest payment); or

(iii) the Board of Directors of the Issuer, in its absolute discretion,
has determined that in light of  the then-current solvency of the Issuer,  the 
Group or the  Sub-Group, a payment  of interest  shall not take  place on  the 
relevant Interest Payment Date; or

(iv) the Regulator has, in accordance with applicable law,  instructed 
the Issuer, in light of the  then-current financial condition and solvency  of 
the Issuer, to cancel any payment of interest (as more particularly  described 
in Condition 5(b)(iv) (Interest - Limitations on interest payment)).

There can therefore be no assurances that Noteholder will receive payments  of 
interest in  respect of  the  Notes. Unpaid  interest  is not  cumulative  or 
payable at  any time  thereafter, and  Noteholders shall  accordingly have  no 
right, whether in a  liquidation, dissolution or  winding-up or otherwise,  to 
claim the payment  of any  foregone interest or  to convert  their Notes  into 
Shares in lieu of any such payment.

If, as a result of any of the  conditions set out in (i), (ii), (iii) or  (iv) 
above being applicable,  only part  of the  interest under  the Notes  becomes 
payable, the Issuer may proceed, in its sole discretion, to pay any such  part 
of the interest under the Notes.

Notwithstanding the applicability  of any one  or more of  the conditions  set 
out in (i), (ii), (iii) or (iv)  above resulting in interest under the  Notes 
not being paid or being paid only in part, there will be no restriction on the
Issuer paying dividends on  its ordinary shares or  making pecuniary or  other 
distributions to the  holders of  its ordinary  shares or  making payments  on 
securities ranking pari passu with the Notes.

There are no events of default.

Noteholders have no ability to require the Issuer to redeem their Notes.  The 
terms of the Notes do  not provide for any events  of default. The Issuer  is 
entitled to cancel any and all  of the interest payments in the  circumstances 
contemplated in Condition 5 (Interest). If Shares are not issued and delivered
following a Conversion Event  as required by Condition  10 (Conversion), on  a 
liquidation, dissolution or winding-up of the Issuer the claim of a Noteholder
shall be limited  to the  sum equal  to that which  holders of  the number  of 
Shares into which the Notes held by such Noteholder should have been converted
would receive,  as  more particularly  described  in Condition  4(c)  (Status, 
Subordination and Liquidation Distribution - Liquidation distribution).

Noteholders only have  a limited ability  to cash in  their investment in  the 
Notes.

The Issuer has the  option to redeem the  Notes in certain circumstances  (see 
"The Notes may be  redeemed prior to Conversion"  above). The ability of  the 
Issuer to  redeem  the Notes  is  subject  to the  Issuer  satisfying  certain 
conditions (as more particularly described in Condition 6 (Scheduled Mandatory
Conversion, Redemption  and  Purchase)).  There  can  be  no  assurance  that 
Noteholders will be able to reinvest the amount received upon redemption at  a 
rate that will  provide the same  rate of  return as their  investment in  the 
Notes.

Therefore, Noteholders have no ability to cash in their investment, except:

(a) if the Issuer exercises its rights to redeem or purchase the Notes
in accordance with Condition 6 (Scheduled Mandatory Conversion, Redemption and
Purchase); or

(b) by  selling  their  Notes  or,  following  the  occurrence  of  a 
Conversion Event  and the  issue and  delivery of  Shares in  accordance  with 
Conditions 10 (Conversion) and 11 (Procedure for Conversion), their Shares.

If the  Issuer  exercised  its  right  to redeem  or  purchase  the  Notes  in 
accordance with Condition  6 (Scheduled Mandatory  Conversion, Redemption  and 
Purchase) and failed to make payment in redemption of the Notes when due, such
failure would not constitute an event of default but would entitle Noteholders
to bring  a  claim  for breach  of  contract  against the  Issuer,  which,  if 
successful, would result in damages.

Noteholders have limited anti-dilution protection.

The number  of  Shares deliverable  upon  conversion of  a  Note will  be  the 
principal amount thereof  divided by  the Conversion  Price in  effect on  the 
relevant Conversion Date. The Conversion Price  will be the greatest of:  (a) 
the Reference Market Price of an  Ordinary Share on the Exchange Business  Day 
preceding the  relevant  Conversion Date  (which  will be  calculated  as  the 
average of  the daily  volume  weighted average  price  of an  Ordinary  Share 
(derived from or published by the SBIE) on each of the 15 consecutive Exchange
Business Days  ending on  the  Exchange Business  Day preceding  the  relevant 
Conversion Date), (b) the Floor Price (which is EUR 1.00 at the date of  these 
Listing Particulars) and  (c) the Closing  Price (being the  sale price of  an 
Ordinary Share at  close of  business on  the relevant  Exchange Business  Day 
(derived from or published  by the SBIE)) of  an Ordinary Share multiplied  by 
0.75. The Conversion  Price may also  be no higher  than either (i)  EUR15.00 
(the "Ceiling Price") or (ii) the Reference Market Price of an Ordinary  Share 
multiplied by 0.75, whichever  is the higher.  See Condition 10  (Conversion) 
for the complete provisions regarding the Conversion Price.

The Floor Price and the Ceiling Price will be adjusted in the event that there
is  a  consolidation  or  subdivision  of  the  Shares,  the  payment  of  any 
extraordinary dividends  or  non-cash  dividends which  exceed  the  Threshold 
Amount  specified  in  the  Conditions,  rights  issues  or  grant  of   other 
subscription rights or certain other events which affect the Shares, but  only 
in the situations and to the extent  provided in "Terms and Conditions of  the 
Notes-Adjustments to  the Conversion  Price". There  is no  requirement  that 
there should be  an adjustment  for every corporate  or other  event that  may 
affect the value of the Shares or that, if a Noteholder were to have held  the 
Shares at  the  time  of  such adjustment,  such  Noteholder  would  not  have 
benefited to a greater extent.

Furthermore, the Conditions  do not  provide for  certain Issuer  undertakings 
which are  sometimes included  in securities  that convert  into the  ordinary 
shares of an  issuer to  protect investors  in situations  where the  relevant 
conversion price  adjustment  provisions  do not  operate  to  neutralise  the 
dilutive effect of certain corporate events  or actions on the economic  value 
of the  conversion price.  For  example, the  Conditions contain  neither  an 
undertaking restricting the modification of rights attaching to the Shares nor
an undertaking  restricting  issues of  new  share capital  with  preferential 
rights relative to the Notes.

Accordingly, corporate events or actions in respect of which no adjustment  to 
the Floor Price or the Ceiling Price is made may adversely affect the value of
the Notes.

In order to comply with increasing regulatory capital requirements imposed  by 
applicable regulations, the Issuer may  need to raise additional capital.  For 
example, the Proposed  Plan involves a  share capital increase  by the  Issuer 
which was  announced in  October 2011  in connection  with Banco  Pastor  (see 
"Description of the Issuer -  Recent Developments"). The Issuer is  constantly 
evaluating potential  sources  of  funding, including  further  share  capital 
increases and issuances of  additional mandatorily convertible notes.  Further 
capital raisings by the  Issuer could result in  dilution of the interests  of 
the Noteholders,  subject only  to  the aforementioned  limited  anti-dilution 
protections. For  more  information,  see  "Risk  Factors  -  Changes  in  the 
regulatory framework, including increased regulation of the financial services
industry in the jurisdictions where the Group operates could adversely  affect 
its business".

The obligations of  the Issuer under  the Notes are  subordinated and will  be 
further subordinated upon conversion into shares.

The Notes will  constitute direct, unsecured  and subordinated obligations  of 
the Issuer  and  will  rank  pari  passu  and  without  any  preference  among 
themselves. Save as provided below, the rights and claims of the  Noteholders 
against the  Issuer in  respect of  or arising  under (including  any  damages 
awarded for breach of  any obligation under) the  Notes shall, subject to  any 
obligations which are mandatorily preferred by law, rank:

• junior to the claims of common creditors (including depositors
and holders of unsubordinated obligations of the Issuer) and to the claims  of 
holders of all other subordinated obligations  of the Issuer other than  those 
referred to in the third bullet point below;

• junior to the  claims of holders  of any preferred  securities 
(participaciones preferentes) issued  under Law 13/1985  or any securities  or 
instruments equivalent to  preferred securities or  preferred shares  (whether 
issued under Law 13/1985  or any other  law or regulation of  Spain or of  any 
other jurisdiction),  in each  case issued  by the  Issuer, or  issued by  any 
Subsidiary with the benefit of a guarantee of the Issuer;

• pari passu with the claims of holders of all other  unsecured, 
subordinated obligations,  notes, bonds,  instruments or  other securities  in 
each case convertible into Shares and issued by the Issuer on terms similar to
the Notes, or issued by any Subsidiary on terms similar to the Notes with  the 
benefit of a guarantee of the Issuer;

• senior to  the claims  of holders  of ordinary  shares of  the 
Issuer.

Claims of  Noteholders  in relation  to  the Notes  shall  rank, as  from  the 
relevant Conversion Date, in order of  priority pari passu with the claims  of 
holders of Shares and junior to the claims of holders referred to in the first
three bullet points above (except, in the  case of holders referred to in  the 
third bullet point, holders of securities that are expressed by their terms to
rank pari passu with the rights of holders of Shares in circumstances such  as 
those set out in Condition 10 (Conversion)).

If any of  the circumstances giving  rise to the  mandatory conversion of  the 
Notes has  occurred and  Shares  have not  been  delivered to  any  Noteholder 
pursuant to Condition 10 (Conversion), the claim of such Noteholder in respect
of the liquidation, dissolution or winding-up  of the Issuer shall be the  sum 
equal to that which holders of the number of Shares into which the Notes  held 
by such Noteholder  should have been  converted at the  then Conversion  Price 
would have received  out of the  proceeds of the  liquidation, dissolution  or 
winding-up of the Issuer. In such circumstances, the claims of Noteholders in
relation to the  Notes shall rank,  as from the  relevant Conversion Date,  in 
order of priority pari passu with the  claims of holders of Shares and  junior 
to the claims of holders  referred to in the  first three bullet points  above 
(except, in the case of holders referred to in the third bullet point, holders
of securities that are expressed  by their terms to  rank pari passu with  the 
rights of  holders  of  Shares in  circumstances  such  as those  set  out  in 
Condition 10 (Conversion)).

Therefore, if the Issuer were wound up, liquidated or dissolved, the  Issuer's 
liquidator would first  apply assets of  the Issuer to  satisfy all claims  of 
holders of  unsubordinated  obligations  of the  Issuer  and  other  creditors 
ranking ahead of holders of the Notes. If the Issuer does not have sufficient
assets to settle claims of prior ranking creditors in full, the claims of  the 
Noteholders under the Notes will not be settled. The Notes will share equally
in payment with subordinated obligations of the Issuer ranking pari passu with
the Notes if the Issuer does not  have sufficient funds to make full  payments 
on all of them. In  such a situation, Noteholders could  lose all or part  of 
their investment.

In addition, when the  Notes are converted into  Shares following a  Scheduled 
Mandatory Conversion or if  the Notes are converted  into Shares following  an 
Insolvency Event,  a  Contingency  Event,  a  Viability  Event  or  a  Capital 
Treatment Event, each Noteholder will be effectively further subordinated  due 
to their conversion from being the holder of a subordinated debt instrument to
being the holder of Shares and there is an enhanced risk that Noteholders will
lose all or some of their investment.

If a Conversion Notice is  not delivered by a  Noteholder, the Issuer may,  in 
its sole and absolute discretion, cause the sale of any Shares underlying  the 
Notes.

In order  to  obtain  delivery of  the  relevant  Shares and  the  payment  of 
interest, if  any,  the relevant  Noteholder  must deliver  a  duly  completed 
Conversion Notice in accordance with the  provisions set out under "Terms  and 
Conditions of the Notes-The  Equity Option". If  a duly completed  Conversion 
Notice is  not so  delivered, then  (save  as provided  below) on  the  Notice 
Cut-Off Date, the Issuer  may, in its sole  and absolute discretion, elect  to 
appoint a  person (the  "Selling Agent")  to take  delivery of  all Shares  in 
respect of which no duly completed Conversion Notice has been duly delivered.
The Selling Agent shall hold such Shares  until the date falling on the  third 
anniversary of their delivery  to the Selling  Agent. Thereafter the  Selling 
Agent may sell the Shares, but it shall have no obligation to do so.

If any Noteholder is unable to take  delivery of Shares due to any  applicable 
laws or regulations, or any judicial  or administrative order or decision,  in 
the jurisdiction of residence of such Noteholder, or due to any provisions  of 
the constitutive  documents  such  Noteholder, then,  subject  to  receipt  of 
satisfactory evidence of the same, the  Issuer shall appoint a Selling  Agent, 
at such Noteholder's cost  and expense, to register  the relevant Shares in  a 
third-party account of the Issuer  with Iberclear on such Noteholder's  behalf 
and use its reasonable endeavours to sell the relevant Shares.

Because, in the event of an Insolvency Event, a Contingency Event or Viability
Event, investors  are  likely  to receive  Shares  at  a time  when  both  the 
conversion ratio and the market price  of the Shares are diminished, the  cash 
value of the Shares received upon  the sale could be substantially lower  than 
the price paid for the Notes at the time of their purchase. In addition,  the 
proceeds of the Shares received upon sale  may be further reduced as a  result 
of the number of Shares  offered for sale at the  same time than would be  the 
case in sales by individual Noteholders.

There are limited remedies available under the Notes.

There are no Events of Default under the Notes. In the event that the  Issuer 
fails to make any payments or deliver any Shares when the same may be due, the
remedies of holders  are limited to  bringing a claim  for breach of  contract 
and, in the case of enforcing payment of sums due, to instituting  proceedings 
for, and/or  proving in,  the winding-up,  dissolution or  liquidation of  the 
Issuer.

Registration of the Share by  Iberclear in the name  of the Noteholder or  its 
Nominee shall be good  and complete discharge of  the Issuer's obligations  in 
respect of the Notes.

Following conversion of the Notes, the  Issuer will procure that the  relevant 
number of Shares are issued and registered by Iberclear in an account of  such 
Noteholder (or its nominee) within  Iberclear. Registration of the Shares  by 
Iberclear and the payment in cash of any and all accrued (and due) but  unpaid 
interest on such Notes, shall be a good and complete discharge of the Issuer's
obligations in respect of the Notes and a Noteholder shall have recourse  only 
to Iberclear or the relevant nominee for receiving all payments and exercising
any rights in respect  of such Shares  and the payment to  it of interest,  if 
any. In no event will Noteholders be entitled to receive American  depositary 
shares ("ADSs") upon conversion  and a Noteholder may  not be able to  deposit 
the Shares it  receives upon conversion  into the ADS  deposit facility.  The 
Issuer shall  have no  liability for  the performance  of the  obligations  of 
Iberclear or any nominee.

Prior to the issue and registration of the Shares following the occurrence  of 
a Conversion  Event, Noteholders  will  not be  entitled  to any  rights  with 
respect to the Shares, but will be subject to all changes made with respect to
the Shares.

Any pecuniary rights with respect to the Shares, in particular the entitlement
to dividends shall  only arise and  the exercise of  voting rights and  rights 
related thereto with respect to any Shares is only possible after the date  on 
which, following conversion, as  a matter of Spanish  law the relevant  Shares 
are issued  and  the  person  entitled  to  the  Shares  is  registered  as  a 
shareholder in Iberclear (or its participant entities) in accordance with  the 
provisions of, and  subject to the  limitations provided in,  the articles  of 
association of the Issuer. Therefore, any failure by the Issuer to issue,  or 
effect the registration of,  the Shares after the  occurrence of a  Conversion 
Event shall result in  the Noteholders not receiving  any benefits related  to 
the holding of the Shares and, on a liquidation, dissolution or winding-up  of 
the Issuer, the claim  of any such  Noteholders shall be to  the sum equal  to 
that which holders of the number of  Shares into which the Notes held by  such 
Noteholder should  have been  converted  at the  then Conversion  Price  would 
receive,  as   more  particularly   described  in   Condition  4(c)   (Status, 
Subordination and Liquidation Distribution - Liquidation distribution).

Noteholders may be obliged to  make a Take-over Bid  in case of a  Contingency 
Event or Viability Event if they take delivery of Shares.

Upon the occurrence of a Conversion Event, a Holder receiving Shares may  have 
to make a take-over bid addressed  to the shareholders of the Issuer  pursuant 
to Law 24/1988, of 28  July, on the Securities Market  (Ley 24/1988, de 28  de 
julio, del Mercado de  Valores) and Royal Decree  1066/2007, of 27 July  (Real 
Decreto 1066/2007, de 27 de julio, sobre el régimen de las ofertas públicas de
adquisición de valores),  which have implemented  Directive 2004/25/EC of  the 
European Parliament and  of the  Council of 21  April 2004,  if its  aggregate 
holding in the  Issuer exceed  30 per  cent. of the  voting rights  or if  its 
aggregate holding in the Issuer is less than 30 per cent of the voting rights,
but within the  24 months following  the date  on which it  has acquired  that 
lower percentage, it nominates a number of directors that, together with those
it had already nominated in the past, as the case may be, represent more  than 
half of the members of the company's management body in the Issuer as a result
of the mandatory conversion of the Notes into Shares.

Noteholders may be subject to disclosure obligations and/or may need  approval 
by the Issuer's Regulator.

As the Notes  are mandatorily convertible  into Shares, an  investment in  the 
Notes may  result in  Holders, upon  conversion of  their Notes  into  Shares, 
having to comply with certain approval and/or disclosure requirements pursuant
to Spanish laws and regulations as described under "Description of the Shares-
Legal  Restrictions  on   Acquisitions  of  Shares   in  Spanish  Banks"   and 
"Description of the Shares-Reporting Requirements". Non-compliance with  such 
approval and/or disclosure requirements may lead to the incurrence by  Holders 
of substantial fines and/or  suspension of voting  rights associated with  the 
Shares. Each potential investor should consult  its legal advisers as to  the 
terms of the Notes (in particular as to conversion).

Shares to be delivered upon conversion of the Notes will be delivered  through 
Iberclear.

The Notes  will  be delivered  and  traded in  Euroclear  and/or  Clearstream, 
Luxembourg. Shares  to be  delivered upon  conversion of  the Notes  will  be 
delivered in uncertificated form through the dematerialised securities trading
system operated  by Iberclear.  Accordingly, in  the event  of conversion  of 
Notes into Shares to be delivered in uncertificated form, Noteholders will  be 
required to  specify  in their  Conversion  Notice details  of  the  Iberclear 
account and the name or names in which the newly-issued Shares shall be issued
and registered. Noteholders who  do not timely present  a duly completed  and 
valid Conversion Notice including such identifying information may not receive
shares on the conversion of the Notes.

There is  no  restriction on  the  amount or  type  of further  securities  or 
indebtedness which the Issuer may incur.

There is  no  restriction on  the  amount or  type  of further  securities  or 
indebtedness which the  Issuer may issue  or incur which  ranks senior to,  or 
pari passu with, the Notes offered hereby. The incurrence of any such further
indebtedness may reduce the amount recoverable by Noteholders on a  winding-up 
of the Issuer under the Notes and may limit the ability of the Issuer to  meet 
their respective obligations under the Notes.  In addition, the Notes do  not 
contain any  restriction  on  the  Issuer issuing  securities  that  may  have 
preferential rights to the Shares  or securities with similar or  preferential 
terms to the Notes.

In certain instances  Noteholders may be  bound by certain  amendments to  the 
Notes to which they did not consent.

The Conditions  of the  Notes contain  provisions for  calling meetings  of  a 
syndicate  of  Noteholders  to  consider  matters  affecting  their  interests 
generally. These provisions permit defined majorities to bind all Noteholders
to amendments to the terms and conditions of the Notes, including  Noteholders 
who did not attend and vote at the relevant meeting and Noteholders who  voted 
in a manner contrary to the majority.

Risk Factors associated with the market generally

The Global Notes will be  held by or on  behalf of Euroclear and  Clearstream, 
Luxembourg and investors will have to  rely on their procedures for  transfer, 
payment, voting and communication with the Issuer.

The Notes will  be represented  by one  or more  Global Notes,  which will  be 
deposited with a common depositary for Euroclear and Clearstream, Luxembourg.
Except in  certain limited  circumstances described  in the  Permanent  Global 
Note, investors will  not be entitled  to receive Notes  in definitive  form. 
Euroclear and Clearstream, Luxembourg will maintain records of the  beneficial 
interests in the Permanent  Global Note. While the  Notes are represented  by 
one or more  Global Notes, investors  will be able  to trade their  beneficial 
interests only through Euroclear or Clearstream, Luxembourg.

The Issuer will discharge  its payment obligations under  the Notes by  making 
payments to the  common depositary for  Euroclear and Clearstream,  Luxembourg 
for distribution to their account holders. A holder of a beneficial  interest 
in a Global  Note must rely  on the procedures  of Euroclear and  Clearstream, 
Luxembourg  to  receive  payments  under   the  Notes.  The  Issuer  has   no 
responsibility or liability for the records  relating to, or payments made  in 
respect of, beneficial interests in the Global Notes.

Noteholders of beneficial interests in the Global Notes will not have a direct
right to vote  in respect  of the Notes.  Instead, such  Noteholders will  be 
permitted to act  only to the  extent that  they are enabled  by Euroclear  or 
Clearstream, Luxembourg to appoint appropriate proxies.

The Notes are not covered by  any government compensation or insurance  scheme 
and do not have the benefit of any government guarantee.

An investment  in  the  Notes will  not  be  covered by  any  compensation  or 
insurance scheme of any government agency of the Kingdom of Spain or any other
jurisdiction and  the  Notes  do  not  have  the  benefit  of  any  government 
guarantee. The Notes are the obligations  of the Issuer only and  Noteholders 
must solely look to the Issuer for the performance of the Issuer's obligations
under the Notes. In the event of  the insolvency of the Issuer, a  Noteholder 
may lose all or some of its investment in the Notes.

Payments on the  Notes and  Shares may be  subject to  U.S. withholding  under 
FATCA.

The Issuer  and other  financial institutions  through which  payments on  the 
Notes or Shares are made may be required to withhold at a rate of up to 30 per
cent. on all, or a portion of, payments made after 31 December 2016 in respect
of the Shares  as well  any Notes which  are issued  (or materially  modified) 
after 31 December  2012 or that  are treated  as equity for  U.S. federal  tax 
purposes whenever issued, pursuant to Sections  1471 through 1474 of the  U.S. 
Internal Revenue Code (commonly referred to as "FATCA").

The Issuer is  a foreign  financial institution  ("FFI") for  the purposes  of 
FATCA. If the Issuer  becomes obliged to provide  certain information on  its 
account holders pursuant to a FATCA  agreement with the U.S. Internal  Revenue 
Service ("IRS") (i.e. the  Issuer is a  "Participating FFI") then  withholding 
may be  triggered  if:  (i)  the  Issuer  has  a  positive  "passthru  payment 
percentage" (as determined  under FATCA), and  (ii) (a) an  investor does  not 
provide information sufficient for the relevant Participating FFI to determine
whether the  investor is  a U.S.  person  or should  otherwise be  treated  as 
holding a "United  States Account"  of the Issuer,  (b) an  investor does  not 
consent, where necessary, to have its information disclosed to the IRS or  (c) 
any FFI that is an investor, or  through which payment on the Notes or  Shares 
is made, is not a Participating FFI.

If an  amount  in respect  of  FATCA were  to  be deducted  or  withheld  from 
interest, principal, dividends  or other payments  on or with  respect to  the 
Notes or Shares, the Issuer would have no obligation to pay additional amounts
or otherwise indemnify a holder for  any such withholding or deduction by  the 
Issuer, a Paying  Agent or any  other party as  a result of  the deduction  or 
withholding of  such  amount.  As  a  result,  investors  may,  if  FATCA  is 
implemented as  currently  proposed  by  the IRS,  receive  less  interest  or 
principal than expected.

An investor that is withheld  upon generally will be  able to obtain a  refund 
only to the  extent an  applicable income tax  treaty with  the United  States 
entitles the investor to a reduced rate of tax on the payment that was subject
to withholding under FATCA, provided the required information is furnished  in 
a timely manner to the IRS.

Significant aspects of the  application of FATCA are  not currently clear  and 
the above description is based on proposed regulations and interim  guidance. 
Investors should consult their own advisors about the application of FATCA, in
particular if they may be classified as financial institutions under the FATCA
rules.

The  EU  Savings  Directive  imposes  certain  informational  and  withholding 
requirements, which are subject to change.

Under EC Council Directive 2003/48/EC on  the taxation of savings income  (for 
the purposes of the following  paragraph, the "Directive"), each Member  State 
is required to provide to the tax authorities of another Member State  details 
of payments of interest or  other similar income paid  by a person within  its 
jurisdiction to, or collected by such a person for, an individual resident  or 
certain limited  types of  entity  established in  that other  Member  State. 
However, for  a  transitional  period, Austria,  Belgium  and  Luxembourg  may 
instead apply a withholding system in relation to such payments, deducting tax
at rates rising  over time  to 35  per cent.  The transitional  period is  to 
terminate at the  end of  the first full  fiscal year  following agreement  by 
certain non  EU countries  to the  exchange of  information relating  to  such 
payments.

A number of non EU countries, and certain dependent or associated  territories 
of certain Member States, have  adopted similar measures (either provision  of 
information or transitional  withholding) in  relation to payments  made by  a 
person within  its jurisdiction  to, or  collected by  such a  person for,  an 
individual resident or certain limited types of entity established in a Member
State. In  addition,  the  Member  States  have  entered  into  provision  of 
information or  transitional withholding  arrangements with  certain of  those 
dependent or associated territories in relation  to payments made by a  person 
in a  Member State  to,  or collected  by such  a  person for,  an  individual 
resident or  certain limited  types  of entity  established  in one  of  those 
territories.

On  13  November  2008  the  European  Commission  published  a  proposal  for 
amendments to  the Directive,  which included  a number  of suggested  changes 
which, if implemented, would broaden  the scope of the requirements  described 
above. The European Parliament approved  an amended version of this  proposal 
on 24 April 2009. If any of the proposed changes are made in relation to  the 
Directive, they may amend or broaden  the scope of the requirements  described 
above. Investors who  are in any  doubt as to  their position should  consult 
their professional advisers.

If a payment were  to be made  or collected through a  Member State which  has 
opted for a withholding system and an amount of, or in respect of tax were  to 
be withheld from that payment, neither the Issuer nor any Paying Agent nor any
other person would be  obliged to pay additional  amounts with respect to  any 
Notes as a result of the imposition of such withholding tax. If a withholding
tax is imposed on payment made by a Paying Agent, the Issuer will be  required 
to maintain a Paying and Conversion Agent  in a Member State that will not  be 
obliged to withhold or deduct tax pursuant to the Directive.

No public market exists for the  Notes, and there are uncertainties  regarding 
the existence of any trading market for the Notes.

The Notes are new securities which may not be widely distributed and for which
there is currently no active trading market.

If the Notes  are traded after  their initial  issuance, they may  trade at  a 
discount to their issue price,  depending upon prevailing interest rates,  the 
market for  similar  securities,  general economic  conditions,  the  Issuer's 
results of  operations, fluctuations  in the  Issuer's Capital  Ratio and  the 
market price of  the Shares.  Therefore, investors may  not be  able to  sell 
their Notes easily or at prices that will provide them with a yield comparable
to similar  investments  that have  a  developed secondary  market.  This  is 
particularly the case for Notes as  they are especially sensitive to  interest 
rate, currency and market risks, are designed for specific objectives and  may 
meet the  investment  requirements  and  mandates  of  limited  categories  of 
investors. These types of Notes generally would have a more limited secondary
market and more price volatility than conventional debt securities.

Although applications  have  been made  for  the Notes  to  be listed  on  the 
Official List of the London Stock Exchange and to trading on the  Professional 
Securities Market, there can  be no assurance that  such applications will  be 
accepted or  that  an  active  trading market  in  the  Notes  will  develop. 
Accordingly, there can be no assurance  as to the development or liquidity  of 
any trading market  for the Notes.  Illiquidity may have  a severely  adverse 
effect on the market value of the Notes.

None of the Issuer,  any other Group  company or the  Dealer Managers has  any 
duty to make a market in any Notes.

The market value of the Notes may be influenced by unpredictable factors.

Many factors, most of  which are beyond the  Issuer's control, will  influence 
the value of the Notes and the price, if any, at which securities dealers  may 
be willing to purchase or sell the Notes in the secondary market, including:

(i) the trading price of the Shares;

(ii) the creditworthiness of the Issuer;

(iii) supply and demand for the Notes; and

(iv) economic, financial, political  or regulatory events or  judicial 
decisions that affect the Issuer or the financial markets generally.

Accordingly, if a holder sells its Notes  in the secondary market, it may  not 
be able to  obtain a price  equal to the  principal amount of  the Notes or  a 
price equal to the price that it paid for the Notes.

Since Noteholders receive  Shares upon  a Scheduled  Mandatory Conversion,  an 
Insolvency Event,  a  Contingency  Event,  a  Viability  Event  or  a  Capital 
Treatment Event, they are particularly exposed to changes in the market  price 
of the Shares.

Many investors in convertible or  exchangeable securities seek to hedge  their 
exposure in the underlying equity securities at the time of acquisition of the
convertible or exchangeable  securities, often  through short  selling of  the 
underlying equity  securities or  through similar  transactions.  Prospective 
investors in the Notes  may look to  sell Shares in  anticipation of taking  a 
position in, or  during the  term of, the  Notes. This  could cause  downward 
pressure on the price of the Shares. Since the Notes will mandatorily convert
into a variable  number of Shares  upon a Scheduled  Mandatory Conversion,  an 
Insolvency Event,  a  Contingency  Event,  a  Viability  Event  or  a  Capital 
Treatment Event, the price of the Shares may be more volatile from the date of
issue of the Notes.

The price of the Shares may decrease.

The trading price of the  Shares of the Issuer may  decrease as a result of  a 
diverse range of factors, including the Issuer's results of operation, changes
in research analyst recommendations or changes in the financial markets.

The number of Shares  to be received by  the Noteholders upon conversion  will 
vary in  accordance  with  the average  price  of  a Share  (derived  from  or 
published by the SBIE) on  each of the 15  consecutive dealing days ending  on 
the Exchange Business  immediately preceding the  relevant Conversion Date  or 
the Closing Price of an Ordinary Share multiplied by 0.75 used as reference to
determine the Conversion Price. Investors may suffer losses on their original
investment:

(i) If the Conversion Price is greater than the trading price of the
Shares at the time of delivery of  the Shares, since the Issuer has a  limited 
period to carry out the necessary capital increase and apply for the admission
of the Shares to trading;

(ii) If the average price  of a Share on  each of the 15  consecutive 
Exchange Business  Days  ending  on  the  Exchange  Business  Day  immediately 
preceding the relevant Conversion  Date, or the Closing  Price of an  Ordinary 
Share multiplied by 0.75, used as reference to determine the Conversion Price,
is lower than EUR 1.00, since in  that case the Conversion Price would be  set 
at EUR 1.00,  this being the  minimum Conversion Price,  provided that at  the 
time of delivery of the Shares, the  trading price of the Shares is below  EUR 
1.00.

Noteholders are subject to interest rate risks.

Because the Notes bear a  fixed rate of interest,  an investment in the  Notes 
involves the  risk  that  subsequent  changes in  market  interest  rates  may 
adversely affect the value of the Notes.

Exchange rate fluctuations may affect the value of the Notes and the Shares.

The Issuer  will pay  principal and  interest  on the  Notes in  Euros.  This 
presents certain  risks  relating to  currency  conversions if  an  investor's 
financial activities are  denominated principally  in a  currency or  currency 
unit (the "Investor's  Currency") other  than Euros. These  include the  risk 
that exchange  rates  may  significantly  change  (including  changes  due  to 
devaluation of Euros or revaluation of  the Investor's Currency) and the  risk 
that authorities with jurisdiction over the Investor's Currency may impose  or 
modify exchange  controls. An  appreciation in  the value  of the  Investor's 
Currency   relative   to   Euros    would   decrease   (1)   the    Investor's 
Currency-equivalent yield on the Notes, (2) the Investor's Currency-equivalent
value of the principal  payable on the Notes  and (3) the Investor's  Currency 
equivalent market value of the Notes.

Government and monetary  authorities may impose  exchange controls that  could 
adversely affect  an applicable  exchange rate.  As a  result, investors  may 
receive  less  interest  or  principal  than  expected,  or  no  interest   or 
principal. Any of the  foregoing events could adversely  affect the price  of 
the Notes and the Shares.

                      TERMS AND CONDITIONS OF THE NOTES



The following are the terms and conditions of the Notes substantially as  they 
will appear attached to each Note  in definitive form. For ease of  reference 
these terms  and  conditions are  divided  into sections  dealing  with:  the 
definitions used  in these  terms and  conditions (Conditions  1-2); the  debt 
security (Conditions 3-9); the  equity option (Conditions 10-12);  adjustments 
to the  floor  price and  ceiling  price for  conversion  (Conditions  13-24); 
covenants relating to  the equity  option (Conditions  25); and  miscellaneous 
provisions (Conditions  26-33).  This  paragraph, and  any  other  paragraphs 
appearing in italics in these terms and conditions, do not form part of  these 
terms and conditions.

                         INTRODUCTION AND DEFINITIONS

1. Introduction

(a) The Notes: The expression the "Notes" refers to the €50,000,000
9.5 per cent.  Subordinated Mandatorily  Convertible Notes due  2014 of  Banco 
Popular Español, S.A. (the "Issuer").

The issue of the Notes was authorised by resolutions of the Board of Directors
of the Issuer passed on 11 June 2012 on the basis of the authorisation granted
by a resolution of the Ordinary  General Meeting of Shareholders passed on  11 
June 2012 and by the decisions of the Executive Committee of the Issuer  dated 
26 June  2012, on  the basis  of the  authorisation granted  by the  Board  of 
Directors of the Issuer passed on 11 June 2012.

The Issuer, as required by Spanish law, has executed an escritura pública (the
"Public Deed") before a Spanish notary public in relation to the issue of  the 
Notes and  has registered  the Public  Deed with  the Mercantile  Registry  of 
Madrid. The Public  Deed contains,  among other information,  these Terms  and 
Conditions (translated into Spanish).

(b) Agency Agreement: The Notes are  also the subject of an  agency 
agreement dated 29 June  2012 (as amended or  supplemented from time to  time, 
the "Agency Agreement")  between the Issuer,  The Bank of  New York Mellon  as 
principal paying and  conversion agent (the  "Principal Paying and  Conversion 
Agent",  which  expression  includes   any  successor  principal  paying   and 
conversion agent appointed from time to time in connection with the Notes, and
together with any other paying and conversion agents that accede to the Agency
Agreement from time to time, the "Paying and Conversion Agents").

(c) Summaries: Certain provisions of these Conditions are summaries
of the Agency Agreement and subject  to its detailed provisions. The  holders 
of the  Notes (the  "Noteholders") and  the holders  of the  related  interest 
coupons (the "Couponholders"  and the "Coupons",  respectively) are deemed  to 
have notice  of, all  the provisions  of the  Agency Agreement  applicable  to 
them. Copies  of  the  Agency  Agreement  are  available  for  inspection  by 
Noteholders during normal business hours at the Specified Offices for the time
being of  each of  the Paying  and Conversion  Agents, the  initial  Specified 
Offices of which are set out below.

2. Interpretation

(a) Definitions: In these Conditions the following expressions have
the following meanings:

"Accrued Conversion Interest"  means, in  the case  of the  Conversion of  the 
Notes  pursuant  to   Condition  10(a)  (Conversion   -  Scheduled   Mandatory 
Conversion) only, interest accrued on the Notes, if any, from (and  including) 
the Interest Payment Date immediately preceding the date of publication of the
Scheduled Mandatory Conversion Notice  (or, if none, from  the Issue Date)  to 
(but excluding) the relevant Conversion Date;

"Accrued Distributions Payable" means an amount equal to the aggregate of  all 
amounts of interest or other distributions scheduled to be paid in respect  of 
Parity Securities during  the then-current  Financial Year  falling after  the 
Interest Payment Date referred to in Condition 5(b)(B) (Interest - Limitations
on interest payment);

"Accrued Interest  Payable" means  an amount  equal to  the aggregate  of  all 
amounts of  interest scheduled  to be  paid in  respect of  the Notes  on  all 
Interest Payment dates  during the then-current  Financial Year falling  after 
the Interest  Payment  Date  referred  to in  Condition  5(b)(A)  (Interest  - 
Limitations on interest payment);

"Additional Tier 1 Capital" means, at any time, any or all items  constituting 
additional tier 1 capital within the meaning of the Capital Regulations;

"Aggregate Consideration" has  the meaning  given in  Condition 23  (Aggregate 
Consideration and Consideration per Share);

"Auditor" means the  accounting firm appointed  by the Board  of Directors  or 
shareholders of the Issuer from time to time, as the case may be, to  provide, 
inter alia,  audit  and  review  opinions on  the  Issuer's  and  the  Group's 
financial statements;

"Authorised Signatory" means  an officer,  director, senior  manager or  other 
person authorised  in writing  by  or on  behalf of  the  Issuer to  make  any 
statement contemplated  to be  made  by such  person  herein on  the  Issuer's 
behalf;

"Basel III Document" means the Basel Committee on Banking Supervision document
"Basel III: A global regulatory framework for more resilient banks and banking
systems" published in December 2010;

"Bonus Issue"  means  any  issue of  Shares  credited  as fully  paid  to  the 
Shareholders by way of  capitalisation of profits  or reserves (including  any 
share premium account or capital redemption reserve) which does not constitute
a Dividend;

"Business Day" means a day,  other than a Saturday  or Sunday, on which  banks 
are open for business in Madrid;

"Capital Adequacy Regulations"  means the National  Regulations together  with 
the Capital Regulations, taken together  with the prevailing capital  adequacy 
regulations  promulgated  by  the  European  Commission  and/or  the  European 
Parliament and/or the  Council of  the European  Union and  applicable to  the 
Issuer, from time to time;

"Capital Regulations" means any European Commission and/or European Parliament
and/or  Council  of  the  European  Union  regulations  that  incorporate  and 
implement all or a  substantial part of the  regulatory guidelines set out  in 
the Basel III Document;

"Capital Regulations  Date"  means the  first  date  on which  the  Issuer  is 
required to comply with the Capital Regulations;

"Capital Treatment  Event"  has  the  meaning  given  in  Condition  10(b)(iv) 
(Conversion - Mandatory Conversion Upon Capital Treatment Event);

"Capital Treatment Event Notice"  means the notice  substantially in the  form 
scheduled  to  the  Agency  Agreement  that  the  Issuer  shall  give  to  the 
Noteholders stating that a Capital Treatment Event has occurred;

"Cash Dividend" means any  Dividend which is  to be paid or  made in cash  (in 
whatever currency) provided that:

(i) any  Dividend determined  to  be a  Cash Dividend  pursuant  to 
sub-paragraph (iii) of the  definition of "Dividend"  shall constitute a  Cash 
Dividend;

(ii) a Dividend  falling within  sub-paragraphs (v) or  (vi) of  the 
definition of "Dividend" shall not constitute a Cash Dividend; and

(iii) a Dividend falling within sub-paragraph (ii) of the  definition 
of "Spin-Off" shall not constitute a Cash Dividend;

"CET1 Capital" means (a) prior to the Capital Regulations Date, all items that
constitute common  equity tier  1 capital  (capital predominante)  within  the 
meaning of that  term in the  National Regulations,  and (b) on  or after  the 
Capital Regulations  Date, all  items  that constitute  common equity  tier  1 
capital within the meaning  of that term in  the Capital Adequacy  Regulations 
applicable at the relevant time;

"CET1 Capital Amount" means, at any time, the aggregate amount of all items of
CET1 Capital of the  Group as calculated  by the Issuer  and expressed in  the 
Issuer's reporting currency at such time;

"CET1 Capital Instruments" means, at any time, any or all securities and other
instruments issued by the Issuer or a member of the Group, as the case may be,
that are, at such time, eligible to be treated as CET1 Capital;

"CET1 Capital Ratio" means, in respect  of any Quarterly Reporting Period  and 
pursuant to the Capital Adequacy Regulations,  the ratio as calculated by  the 
Issuer (expressed as a percentage) of  the CET1 Capital Amount divided by  the 
RWA Amount or such other  equivalent amount or amounts  as may be required  by 
the Capital Adequacy  Regulations, as at  the date of  the relevant  Quarterly 
Financial Report;

"CET1 Capital Ratio  Threshold" means, at  any time, 5.125  per cent. or  such 
other lower  percentage  as  may  be provided  for  under  prevailing  Capital 
Adequacy Regulations from time to time;

"CET1  Capital  Ratio   Contingency  Event   Notice"  means   the  notice   in 
substantially the form scheduled  to the Agency Agreement  from the Issuer  to 
the Noteholders in accordance with Condition  31 (Notices) stating that (i)  a 
CET1 Capital  Ratio Contingency  Event has  occurred; and  (ii) a  Contingency 
Event Conversion will take place;

"Commissioner" means the commissioner (comisario)  as that term is defined  in 
the Consolidated Text of the Law  on Limited Liability Companies, as  approved 
by Royal Decree Law  1/2010 dated 2  July 2010 (Texto Refundido  de la Ley  de 
Sociedades de Capital);

"Consideration per Share"  has the  meaning given in  Condition 23  (Aggregate 
Consideration and Consideration per Share);

"Contingency Event" means  either an  EBA Capital Ratio  Contingency Event,  a 
CET1 Capital Ratio Contingency Event or a Loss Absorption Contingency Event;

"Contingency Event Notice" means either an EBA Capital Ratio Contingency Event
Notice, a CET1  Capital Ratio Contingency  Event Notice or  a Loss  Absorption 
Contingency Event Notice;

"Conversion Date"  has the  meaning given  in Condition  11(g) (Procedure  for 
Conversion - Conversion Date);

"Conversion Expenses" has the meaning given in Condition 11(d) (Procedure  for 
Conversion - Conversion Expenses);

"Conversion Event"  means  a Scheduled  Mandatory  Conversion (as  defined  in 
Condition 10(a) (Conversion -  Scheduled Mandatory Conversion), an  Insolvency 
Event (as defined  in Condition  10(b)(i) (Conversion  - Mandatory  Conversion 
Upon  Insolvency  Event)),  a  Contingency  Event  (as  defined  in  10(b)(ii) 
(Conversion - Mandatory Conversion Upon Contingency Event), a Viability  Event 
(as defined in  10(b)(iii) (Conversion -  Mandatory Conversion Upon  Viability 
Event) or  a  Capital  Treatment  Event (as  defined  in  Condition  10(b)(iv) 
(Conversion - Mandatory Conversion Upon Capital Treatment Event));

"Conversion Event Notice"  means a Scheduled  Mandatory Conversion Notice,  an 
Insolvency Event Notice, a Contingency Event Notice, a Viability Event  Notice 
or a Capital Treatment Event  Notice, in each case in  the form (for the  time 
being current)  obtainable  from  the  Specified  Office  of  any  Paying  and 
Conversion Agent;

"Conversion Notice" has the meaning given in Condition 11(c)(i) (Procedure for
Conversion - Conversion Notice and Endorsement of Note);

"Conversion Price"  has the  meaning given  in Condition  10(g) (Conversion  - 
Conversion Price);

"Conversion Right" means, in respect of any Note, the right of the  Noteholder 
to convert the Note into Shares in accordance with these Conditions;

"Core Tier 1 Amount" means the aggregate amount of core tier 1 capital of  the 
Group as determined by the  Issuer pursuant to EBA Recommendations  applicable 
at the relevant time, expressed in the Issuer's reporting currency;

"Day Count Fraction" means, in  respect of any period,  the number of days  in 
the relevant period, from (and including) the first day in such period to (but
excluding) the last day in such period,  divided by the number of days in  the 
Regular Period in which the relevant period falls;

"Determined by an Expert" means determined  in good faith by an Expert  acting 
as an expert;

"Distributable Profits" means, in respect of any Financial Year, the sum of:

(i) the lesser of the net profit (calculated in accordance with the
Regulator's calculation standards), of  (A) the Issuer and  (B) the Group,  in 
each case, as reflected in the reserved financial statements of the Issuer and
the Group, respectively, approved by the Board of Directors of the Issuer  and 
submitted to the Regulator in compliance with regulations applicable from time
to time to financial  institutions relating to their  obligation to file  such 
financial statements (the "Reserved Financial Statements"), and

(ii) Accrued Interest Payable, and

(iii) Accrued Distributions Payable.

Circular 4/2004,  of 22  December  2004, on  Public and  Restricted  Financial 
Reporting Standards and Model Financial Statements shall be applicable to  any 
such Reserved Financial Statements. In the event that on any Interest  Payment 
Date, the  Reserved  Financial Statements  of  the Issuer  and/or  the  Group, 
respectively, have  not been  submitted to  the Regulator,  the  Distributable 
Profits shall be the sum of:

(A) the lesser of the net  profit (calculated in accordance with  the 
Regulator's calculation standards), of  (1) the Issuer and  (2) the Group,  in 
each case determined by reference to the latest Reserved Financial  Statements 
of the Issuer and the Group, respectively, and

(B) Accrued Interest Payable, and

(C) Accrued Distributions Payable.

In all cases, the net profit shown in the Reserved Financial Statements of the
Issuer and the Group, respectively, shall be annual audited figures and if the
net profit figure contained in such Reserved Financial Statements is different
from that contained in the published annual financial statements of the Group,
prepared in accordance with  Circular 4/2004, of 22  December 2004, on  Public 
and Restricted Financial Reporting  Standards and Model Financial  Statements, 
the amount of,  and reason for,  such difference shall  be highlighted by  the 
Issuer in the relevant annual report prepared by it containing such  published 
annual financial statements of the Group;

"Dividend"  means  any  dividend  or  distribution  of  any  kind   whatsoever 
attributable to Shareholders  whether of  cash or other  property and  however 
described provided that:

(i) a Spin-Off shall constitute a Dividend;

(ii) a distribution or payment to Shareholders upon or in connection
with a reduction of capital shall constitute a Dividend;

(iii) where a Dividend in cash is announced which is to be, or may at
the election of a  Shareholder or Shareholders be,  satisfied by the issue  or 
delivery of Shares or other property  or assets, or where a capitalisation  of 
profits or reserves is announced which is to  be, or may at the election of  a 
Shareholder or Shareholders  be, satisfied by  the payment of  cash, then  the 
Dividend or capitalisation in question shall be treated as a Cash Dividend  of 
the greater of:

(A) such cash amount; and

(B) the Reference Market  Price of such Shares  or, as the case  may 
be, the Fair Market Value of such other property or assets (as at the date  of 
the first public announcement of such Dividend or capitalisation (as the  case 
may be) or, if  later, the date on  which the number of  Shares (or amount  of 
property or assets, as the case may be) which may be issued or transferred and
delivered is determined);

(iv) subject as  provided in  (iii) above,  a Bonus  Issue shall  not 
constitute a Dividend;

(v) a purchase  or redemption or  buy back of  share capital of  the 
Issuer by  the Issuer  or any  of  its Subsidiaries  shall only  constitute  a 
Dividend if the weighted average price per Share (before expenses) on any  one 
day in respect of such purchases  or redemptions or buy backs (translated,  if 
not in euros, into euros at the  Prevailing Rate on such day) exceeds by  more 
than 5 per cent. the average of the Officially Published VWAP of the Shares on
the Relevant Exchange on the five Exchange Business Days immediately preceding
such day, in which case such purchase, redemption or buy back shall be  deemed 
to constitute a Dividend to the  extent that the aggregate price paid  (before 
expenses) in respect of such Shares purchased, redeemed or bought back by  the 
Issuer or,  as the  case may  be, any  of its  Subsidiaries (translated  where 
appropriate into euros as provided above)  exceeds the product of (a) 105  per 
cent. of the average VWAP of the  Shares determined as provided above and  (b) 
the number of Shares so purchased, redeemed or bought back provided,  however, 
that where an announcement (excluding, for the avoidance of doubt, any general
authority for such purchases, redemptions or  buy backs approved by a  general 
meeting  of  Shareholders  or   any  notice  convening   such  a  meeting   of 
Shareholders) has been made of the  intention to purchase, redeem or buy  back 
Shares at some future  date at a  specified price or where  a tender offer  is 
made, the relevant  five Exchange  Business Days  shall be  the five  Exchange 
Business Days immediately preceding the date of such announcement; and

(vi) if the Issuer or any of its Subsidiaries shall purchase,  redeem 
or buy back any  depositary receipts (or any  other receipts or  certificates) 
representing Shares, the provisions of (v)  above shall be applied in  respect 
thereof in  such manner  and with  such  modifications (if  any) as  shall  be 
Determined by an Expert;

"EBA" means  the  European  Banking Authority  and  any  successor  regulatory 
authority or authorities;

"EBA Capital Ratio" means  in respect of any  Quarterly Reporting Period,  the 
ratio (expressed as a percentage) of the Core Tier 1 Amount divided by the RWA
Amount, as at the date of the relevant Quarterly Financial Report;

"EBA Capital Ratio Contingency Event Notice" means the notice substantially in
the form scheduled to the Agency Agreement from the Issuer to the  Noteholders 
in accordance with  Condition 31  (Notices) stating  that (i)  an EBA  Capital 
Ratio Contingency Event has occurred; and (ii) a Contingency Event  Conversion 
will take place;

"EBA Capital Ratio  Threshold" means,  at any  time, 7  per cent.  or, at  the 
relevant time,  such other  lower  percentage as  may  be provided  for  under 
prevailing EBA Recommendations;

"EBA Recommendations" means EBA/REC/2011/1 (EBA Recommendation on the creation
and supervisory  oversight  of temporary  capital  buffers to  restore  market 
confidence) or such other recommendations  of the EBA that supplement,  modify 
or replace it from time to time;

"Effective Date"  has,  for  the  purposes of  any  Condition  in  which  such 
expression is used, the meaning given in the relevant Condition;

"Euro", "euro" or "euros" refers to  the lawful currency of the member  states 
of the European Union  that adopt the single  currency in accordance with  the 
Treaty of  Lisbon  amending  the  Treaty on  European  Union  and  the  Treaty 
establishing the European Community;

"Exchange Business Day" means any  day that is a  trading day on the  Relevant 
Exchange other than a day on which the Relevant Exchange is scheduled to close
prior to its regular weekday closing time;

"Expert" means, in relation to  any matter to be  Determined by an Expert,  an 
independent investment bank and/or a firm  of accountants which is, in  either 
case, of international repute, appointed to act as an expert for the  purposes 
of such matter in accordance with these Conditions;

"Extraordinary Dividend" has the meaning given in Condition 13(b) (Dividends -
Extraordinary Dividend);

"Fair Market Value" means,

(i) with respect to a Cash Dividend or other cash amount the amount
of such cash; and

(ii) with respect to any other property on any date, the fair market
value of that property as of that date as Determined by an Expert,

provided, however, that in any such case:

(A) where Securities, Spin-Off Securities, options, warrants or other
rights are publicly traded  in a market  which is Determined  by an Expert  to 
have adequate liquidity, the  Fair Market Value  of such Securities,  Spin-Off 
Securities, options, warrants or other rights shall equal the arithmetic  mean 
of the daily closing prices of such Securities, Spin-Off Securities,  options, 
warrants or  other  rights during  the  period of  five  trading days  on  the 
relevant market commencing on such date (or, if later, the first such  trading 
day such Securities,  Spin-Off Securities, options,  warrants or other  rights 
are publicly  traded) or  such  shorter period  as such  Securities,  Spin-Off 
Securities, options, warrants or other rights are publicly traded;

(B) where  Securities,  Spin-Off Securities,  options,  warrants  or 
other rights are not publicly traded on a stock exchange or securities  market 
of  adequate  liquidity  (as  aforesaid),  the  Fair  Market  Value  of   such 
Securities, Spin-Off Securities,  options, warrants or  other rights shall  be 
Determined by an Expert, on the basis of a commonly accepted market  valuation 
method and  taking  account  of  such factors  as  it  considers  appropriate, 
including the  market price  per Share,  the dividend  yield of  a Share,  the 
volatility of such market  price, prevailing interest rates  and the terms  of 
such Securities,  Spin-Off  Securities,  options, warrants  or  other  rights, 
including as to the expiry date and exercise price (if any) thereof;

(C) any Cash  Dividend declared  or paid  in a  currency other  than 
euros shall be translated into euros at the rate of exchange used to determine
the amount payable to Shareholders  who were paid or are  to be paid the  Cash 
Dividend in euros;

(D) any other amount or value in a currency other than euros shall be
translated into euros at the Prevailing Rate on that date; and

(E) the  amount  or value  shall  be  determined on  a  gross  basis 
disregarding any withholding or  deduction required to be  made on account  of 
tax and disregarding any associated tax credit;

"Financial Year" means,  in respect of  the Issuer, any  accounting period  in 
respect of which audited annual financial  statements of the Issuer have  been 
published or are expected to be published;

"Floor Price" means €1.00;

"Group" means  the  Issuer together  with  its consolidated  Subsidiaries,  in 
accordance with Article 8(3) of Law 13/1985, Royal Decree 216/2008 and Bank of
Spain Circular 3/2008;

"Iberclear" means  the Spanish  clearing and  settlement system  (Sociedad  de 
Gestión de los Sistemas  de Registro, Compensación  y Liquidación de  Valores, 
S.A.);

"Insolvency  Event  Notice"  has  the  meaning  given  in  Condition  10(b)(i) 
(Conversion - Mandatory Conversion Upon Insolvency Event);

"Interest Payment Date" has  the meaning given in  Condition 5(a) (Interest  - 
Interest payment);

"Issue Date" means 29 June 2012;

"Loss Absorption Contingency Event Notice"  means the notice substantially  in 
the form scheduled to the Agency Agreement from the Issuer to the  Noteholders 
in accordance with Condition 31 (Notices)  stating that (i) a Loss  Absorption 
contingency Event Notice has occurred; and (ii) a Contingency Event Conversion
will take place;

"National Regulations"  means  the  prevailing Spanish  national  banking  and 
capital adequacy laws directly  applicable to the Issuer,  from time to  time, 
taken together with the prevailing capital adequacy regulations promulgated by
the Regulator and applicable to the Issuer from time to time;

"Non-Cash Dividend" means any Dividend which is not a Cash Dividend and  shall 
include a Spin-Off;

"Officially Published" means:

(i) in  relation to  the Notes,  published in  accordance with  the 
laws, rules or regulations governing publication of information to holders  of 
debt securities admitted to  listing, trading and/or  quotation by the  United 
Kingdom Listing Authority and/or the London Stock Exchange plc; and

(ii) in  relation to  the Shares,  for  so long  as the  Shares  are 
admitted to trading on the Stock  Exchanges, published in accordance with  the 
laws, rules or regulations governing publication of information to holders  of 
equity securities  admitted  to  listing,  trading  and/or  quotation  by  the 
Relevant Exchange;

"Parity Securities" means any obligations, notes, bonds, instruments or  other 
securities in each case  convertible into Shares and  ranking pari passu  with 
the Notes, any preferred securities (participaciones preferentes) issued under
Law  13/1985  or  any  securities  or  instruments  equivalent  to   preferred 
securities or preferred shares (whether issued under Law 13/1985 or any  other 
law or regulation of Spain or of any other jurisdiction), in each case  issued 
by the Issuer, or issued by any Subsidiary with the benefit of a guarantee  of 
the Issuer, but  excluding any  such securities the  interest or  distribution 
payment in respect of which is paid from the Issuer's reserves;

"Payment Business Day" means, in respect  of any place of presentation of  any 
Note or Coupon, any day on which  banks are open for presentation and  payment 
of bearer debt securities and for dealings in foreign currencies in such place
of presentation and, in the case of  payment by transfer to a Euro account  as 
referred to in Condition 7 (Payments), on which the TARGET2 System is open;

"Prevailing Rate" means,  in respect of  any currencies on  any day, the  spot 
rate of exchange between the relevant currencies prevailing as at or about  12 
noon (London time) on that date as appearing on or derived from the  Reference 
Page or, if such a rate cannot be determined at such time, the rate prevailing
as at or about 12 noon (London time) on the immediately preceding day on which
such rate can be  so determined or,  if such rate cannot  be so determined  by 
reference to the Reference Page, the rate Determined by an Expert;

"Previous Relevant Cash Dividends"  has the meaning  given in Condition  13(b) 
(Dividends - Extraordinary Dividend);

"Public Sector" means the European Central Bank, the European Commission,  the 
Federal or central government of Spain, any regional or local government  with 
Spain, government or the central bank of the Kingdom of Spain;

"Quarterly Financial Report" means the  financial accounts and disclosures  of 
the Issuer and the Group in  respect of a calendar quarterly reporting  period 
(the "Quarterly Reporting Period") contained  in a customary financial  report 
published by the Issuer;

"Rate of Interest" means 9.5 per cent. per annum;

"Record Date" means, in respect of any entitlement to receive any dividend  or 
other distribution declared, paid or made,  or any rights granted, the  record 
date or other due date for the establishment of the relevant entitlement;

"Reference  Page"  means  the  relevant  page  on  Bloomberg  or  such   other 
information service provider that displays the relevant information;

"Reference Market Price" means in respect of a Share on any Exchange  Business 
Day, the average of the  daily VWAP of a Share  on each of the 15  consecutive 
Exchange Business Days ending on and including such Exchange Business Day (the
"Reference Period"); provided that, if at any time during the Reference Period
the VWAP  shall have  been based  on a  price ex-Dividend  (or ex-  any  other 
entitlement) and during  some other  part of  that Reference  Period the  VWAP 
shall have been based on a price cum-Dividend (or cum- any other entitlement),
then:

(i) if the Shares to be issued or delivered (if applicable) do  not 
rank for the Dividend (or entitlement) in  question, the VWAP on the dates  on 
which the Shares shall have  been based on a  price cum-Dividend (or cum-  any 
other entitlement) shall, for the purposes of this definition, be deemed to be
the amount thereof reduced  by an amount  equal to the  fair market value  (as 
Determined by an Expert) of any  such Dividend or other entitlement per  Share 
as at  the date  of first  public announcement  relating to  such Dividend  or 
entitlement; or

(ii) if the Shares to be issued or delivered (if applicable) do rank
for the Dividend (or entitlement) in question, the VWAP on the dates on  which 
the Shares shall  have been based  on a  price ex-Dividend (or  ex- any  other 
entitlement) shall, for the purposes of  this definition, be deemed to be  the 
amount thereof  increased by  an amount  equal to  the fair  market value  (as 
Determined by an Expert) of any  such Dividend or other entitlement per  Share 
as at  the date  of first  public announcement  relating to  such Dividend  or 
entitlement,

and provided further that,  if on each  of the Exchange  Business Days in  the 
Reference Period the VWAP  shall have been based  on a price cum-Dividend  (or 
cum- any other entitlement)  in respect of a  Dividend (or other  entitlement) 
which has been declared or announced but the Shares to be issued or  delivered 
do not rank for that Dividend (or other entitlement), the VWAP on each of such
dates shall, for the purposes of this  definition, be deemed to be the  amount 
thereof reduced by an amount equal to the fair market value (as Determined  by 
an Expert) of any  such Dividend or  entitlement per Share as  at the date  of 
first public announcement relating to such Dividend or entitlement,

and provided further that, if the VWAP of  a Share is not available on one  or 
more of the Exchange Business Days  in the Reference Period (disregarding  for 
this purpose the proviso to the definition of VWAP), then the average of  such 
VWAPs which are available in the Reference Period shall be used (subject to  a 
minimum of two such prices) and if only one, or no, such VWAP is available  in 
the Reference Period,  the Reference Market  Price shall be  Determined by  an 
Expert;

"Regulator" means the national  regulatory body from time  to time having  the 
leading authority to  supervise and  regulate the  Issuer and  its Group  with 
respect to its consolidated  capital adequacy at the  relevant time being,  at 
the Issue Date, the Bank of Spain;

"Regulation S" means Regulation  S under the United  States Securities Act  of 
1933;

"Relevant Date"  means, in  relation to  any  payment in  respect of  a  Note, 
whichever is the later of (1) the date on which the payment in question  first 
becomes due and (2) if the full amount payable has not been received in a city
in which banks have access to the  TARGET2 System by the Principal Paying  and 
Conversion Agent on or  prior to such  due date, the date  on which (the  full 
amount having been so received)  notice to that effect  has been given to  the 
Noteholders;

"Relevant Exchange" means the Stock Exchanges or, if the Shares are no  longer 
admitted to listing, trading and/or quotation on or by the Stock Exchanges the
principal stock exchange or  securities market on or  by which the Shares  are 
then listed, admitted to trading and/or quoted;

"Rights" means, in respect of any Securities or assets, any options,  warrants 
or other rights (other than Share-Related Securities) which by their terms  of 
issue carry  a right  to subscribe  for, purchase  or otherwise  acquire  such 
Securities or assets;

"RWA Amount" means, as at any date, the aggregate amount of all  risk-weighted 
assets of the Group, calculated by the Issuer pursuant to:

(i) in the case of a determination of the EBA Capital Ratio, EBA
Recommendations; or

(ii) in the case of a determination of the CET1 Capital Ratio  and/or 
the Tier  1 Capital  Ratio prior  to the  Capital Regulations  Date,  National 
Regulations; or

(iii) in the case of a determination of the CET1 Capital Ratio and/or
the Tier 1  Capital Ratio on  or after the  Capital Regulations Date,  Capital 
Adequacy Regulations,

in each case expressed in the Issuer's reporting currency;

"Scheduled Mandatory  Conversion  Notice"  has  the meaning  given  to  it  in 
Condition 10(a) (Conversion - Scheduled Mandatory Conversion);

"Securities" means any securities including, without limitation, shares in the
capital of the Issuer, or options,  warrants or other rights to subscribe  for 
or purchase or acquire shares in the capital of the Issuer;

"Share" means an ordinary share, of €0.10  par value as at the Issue Date,  in 
the share capital of the Issuer;

"Share Currency" means euros  or such other currency  in which the Shares  are 
quoted or dealt in on the Relevant Exchange at such time;

"Shareholder" means the person  in whose name  a Share is  for the time  being 
registered in the register  of Share ownership maintained  by or on behalf  of 
the Issuer, including Iberclear;

"Share-Related Securities"  means  any  Securities (excluding  the  Notes  but 
including any further Notes issued pursuant to Condition 30 (Further  Issues)) 
which by their terms of issue:

(i) carry a right to  subscribe for, purchase or otherwise  acquire 
Shares or any Securities which by  their terms of issue might be  redesignated 
as Shares; or

(ii) might be  redesignated as Shares  or be redesignated  so as  to 
carry a right to subscribe for, purchase or otherwise acquire Shares;

"Share Settlement Date" has  the meaning given  in Condition 11(b)  (Procedure 
for Conversion - Issue of Shares);

"SIBE" means the Stock Market Interconnection System (Sistema de Interconexión
Bursátil - Mercado Continuo) of the Spanish Stock Exchanges;

"Significant Losses"  means, by  reference to  the date  on which  the Tier  1 
Capital Ratio  is below  the Tier  1 Capital  Ratio Threshold,  the  aggregate 
amount of the  losses reported  by the Issuer  in respect  of the  immediately 
preceding  four  consecutive  Quarterly  Reporting  Periods  have  caused  the 
Issuer's, or  the Group's,  or  the Sub-Group's  capital  and reserves  to  be 
reduced by one-third;

"Spanish Stock Exchanges"  means the  Madrid, Barcelona,  Bilbao and  Valencia 
stock exchanges interconnected through SIBE;

"Specified Office" has the meaning given in the Agency Agreement;

"Spin-Off" means:

(i) a distribution of Spin-Off  Securities or Rights in respect  of 
Spin-Off Securities by the Issuer to Shareholders as a class; or

(ii) any  issue, transfer  or  delivery of  any property  or  assets 
(including cash or shares or securities of or in or issued or allotted by  any 
entity) by  any entity  (other than  the Issuer)  to Shareholders  as a  class 
pursuant to any arrangements with the Issuer or any of its Subsidiaries;

"Spin-Off Securities" means equity share capital  of an entity other than  the 
Issuer or  options, warrants  or other  rights to  subscribe for  or  purchase 
equity share capital of an entity other than the Issuer;

"Stock Exchanges" means the Spanish Stock Exchanges and Euronext Lisbon;

"Subsidiary"  means  any  entity  in  which  the  Issuer  holds,  directly  or 
indirectly more than 50% of the share  capital, or over which the Issuer  has, 
directly or  indirectly, control  in accordance  with Article  8(3)(a) of  Law 
13/1985;

"Sub-Group" means a sub-grupo consolidable within the meaning of Law  13/1985, 
Royal Decree 216/2008 and Bank of Spain Circular 3/2008;

"Syndicate of Noteholders" means the  syndicate (sindicato) of Noteholders  as 
that term is defined in the Consolidated Text of the Law on Limited  Liability 
Companies, as approved  by Royal  Decree Law1/2010  dated 2  July 2010  (Texto 
Refundido de la Ley de Sociedades de Capital);

"TARGET2 System" means the Trans-European Automated Real-time Gross settlement
Express Transfer payment system  which utilises a  single shared platform  and 
which was launched on 19 November 2007;

"Tax Redemption  Date" has  the  meaning given  in Condition  6(b)  (Scheduled 
Mandatory Conversion, Redemption and Purchase - Redemption for tax reasons);

"Threshold Amount"  has the  meaning  given in  Condition 13(b)  (Dividends  - 
Extraordinary Dividend);

"Tier 1 Capital" means  (a) prior to the  Capital Regulations Date, all  items 
treated as  tier  1 capital  (recursos  propios básicos)  in  accordance  with 
National Regulations,  and  (b) on  or  after the  Capital  Regulations  Date, 
Additional Tier 1 Capital together with CET1 Capital;

"Tier 1 Capital Amount" means, at any time, the aggregate amount of all  items 
of Tier 1 Capital of  the Group as calculated by  the Issuer and expressed  in 
the Issuer's reporting currency at such time;

"Tier 1 Capital Ratio" means, in respect of a Quarterly Reporting Period,  the 
ratio as calculated by the  Issuer (expressed as a  percentage) of the Tier  1 
Capital Amount divided by the  RWA Amount or such  other amount or amounts  as 
may be required by  the Capital Adequacy  Regulations, as at  the date of  the 
relevant Quarterly Financial Report;

"Tier 1 Capital Ratio Threshold" means, at any time, 6.0 per cent. or, at  the 
relevant time, any lower minimum tier 1 threshold ratio as may be provided for
under prevailing Capital Adequacy Regulations;

"Tier 1  Instruments"  means any  and  all shares,  securities,  participation 
securities or  other obligations  issued (a)  by the  Issuer (whether  or  not 
acting through a branch) but excluding Tier 1 Shares or (b) by a Subsidiary of
the Issuer and having the benefit of a guarantee, credit support agreement  or 
similar undertaking of the Issuer, each  of which shares, securities or  other 
obligations under (a) and (b) qualify, or are issued in respect of a  security 
that qualifies, as  Tier 1  Capital of the  Issuer and/or  the Group  (without 
regard to quantitative  limits on  such capital) on  a consolidated  or on  an 
unconsolidated basis;

"Tier 1 Shares" means all classes of paid-in capital in relation to shares and
participation certificates, if any, of the Issuer or any other Subsidiary that
qualify as  Tier  1  Capital  of  the  Issuer  on  a  consolidated  or  on  an 
unconsolidated basis;

"Tier 2 Capital" means any or all items constituting at the relevant time tier
2 capital under Capital Adequacy Regulations or National Regulations;

"Tier 2 Instruments" means any and all securities or other obligations  issued 
(a) by  the Issuer  (whether or  not  acting through  a branch)  or (b)  by  a 
Subsidiary and having the benefit of a guarantee, credit support agreement  or 
similar  undertaking  of  the  Issuer,  each  of  which  securities  or  other 
obligations under (a) and (b) qualify, or are issued in respect of a  security 
that is eligible to qualify, as Tier 2 Capital of the Group on a  consolidated 
or on an unconsolidated basis;

"Viability Event Notice" means the notice substantially in the form  scheduled 
to the Agency Agreement that the Issuer shall give to the Noteholders  stating 
that a Viability Event has occurred; and

"VWAP" means, in respect of  a Share on any  Exchange Business Day, the  order 
book volume weighted  average closing sale  price in the  Share Currency of  a 
Share (rounded to the  nearest second decimal place)  published by or  derived 
from the SIBE or such other source as shall be Determined by an Expert on such
Exchange Business Day, provided that if on any such Exchange Business Day such
price is not available  or cannot otherwise be  determined as provided  above, 
the VWAP,  in  respect  of such  Exchange  Business  Day shall  be  the  VWAP, 
determined as provided above, on  the immediately preceding Exchange  Business 
Day on which the same can be so determined or Determined by an Expert.

(b) Construction of certain references: In these Conditions, unless
otherwise specified or unless the context otherwise requires:

(i) the expression the "Notes" shall be construed so as to  include 
any further notes issued pursuant to Condition 30 (Further Issues) and forming
a single series with the Notes;

(ii) references to Notes being  "outstanding" shall be construed  in 
accordance with the Agency Agreement;

(iii) references to any issue or offer or grant to Shareholders "as a
class" or "by way of rights" shall be  construed so as to include an issue  or 
offer  or  grant  to  all   or  substantially  all  Shareholders  other   than 
Shareholders  to  whom,  by  reason  of  the  laws  of  any  jurisdiction   or 
requirements of any recognised  regulatory body or any  stock exchange in  any 
jurisdiction or in connection with  fractional entitlements, it is  determined 
not to make such issue or offer or grant;

(iv) "equity  share capital"  means, in  relation to  a company,  its 
issued share capital  excluding any  part of  that capital  which, neither  as 
respects dividends nor as respects  capital, carries any right to  participate 
beyond a specified amount in a distribution;

(v) references to the "issue"  of Shares shall include the  transfer 
and/or delivery of Shares  by the Issuer or  any of its Subsidiaries,  whether 
newly issued and allotted or previously existing;

(vi) Shares held by the Issuer  or any of its Subsidiaries shall  not 
be considered as or treated as "in issue"; and

(vii) headings and  sub-headings are  for ease of  reference only  and 
shall not affect the construction of these Conditions.

                              THE DEBT SECURITY

3. Form, Denomination and Title

The Notes are  in bearer form  in the denominations  of €100,000 with  Coupons 
attached at the time of issue. Title  to the Notes and the Coupons will  pass 
by delivery. The  holder of  any Note or  Coupon shall  (except as  otherwise 
required by law) be treated as its absolute owner for all purposes (whether or
not it is  overdue and regardless  of any  notice of ownership,  trust or  any 
other interest therein, any writing thereon or any notice of any previous loss
or theft thereof) and no person shall be liable for so treating such  holder. 
No person shall have any right to  enforce any term or condition of the  Notes 
under the Contracts (Rights of Third Parties) Act 1999.

4. Status, Subordination and Liquidation Distribution

(a) Status: The Notes  constitute direct, unconditional,  unsecured 
and subordinated obligations of the Issuer  which will at all times rank  pari 
passu among  themselves.  The  rights  and  claims  of  the  Noteholders  are 
subordinated in the manner described in Condition 4(b) (Status,  Subordination 
and Liquidation Distribution - Subordination).

(b) Subordination: Except  as provided in  Condition 4(c)  (Status, 
Subordination and Liquidation  Distribution -  Liquidation distribution),  the 
rights and  claims of  the Noteholders  against the  Issuer in  respect of  or 
arising under  the Notes  (including any  damages awarded  for breach  of  any 
obligation) shall, subject to any obligations which are mandatorily  preferred 
by law, rank:

(i) junior to the claims of common creditors (including  depositors 
and holders of unsubordinated obligations of the Issuer) and to the claims  of 
holders of all subordinated obligations of  the Issuer other than as  referred 
to in Condition 4(b)(iii);

(ii) junior to  the claims  of holders of  any preferred  securities 
(participaciones preferentes) issued  under Law 13/1985  or any securities  or 
instruments equivalent to  preferred securities or  preferred shares  (whether 
issued under Law 13/1985  or any other  law or regulation of  Spain or of  any 
other jurisdiction),  in each  case issued  by the  Issuer, or  issued by  any 
Subsidiary with the benefit of a guarantee of the Issuer;

(iii) pari passu with the claims  of holders of all other  unsecured, 
subordinated obligations,  notes, bonds,  instruments or  other securities  in 
each case convertible into Shares and issued by the Issuer on terms similar to
the Notes, or issued by any Subsidiary on terms similar to the Notes with  the 
benefit of a guarantee of the Issuer;

(iv) senior  to the  claims  of holders  of  ordinary shares  of  the 
Issuer.

The claims of Noteholders in relation to the Notes shall rank, as from the
relevant Conversion Date, in order of priority pari passu with the rights of
holders of Shares and junior to the claims of holders referred to in Condition
4(b)(i) to (iii) (except, in the case of holders referred to in Condition
4(b)(iii), holders of securities that are expressed by their terms to rank
pari passu with the rights of holders of Shares in circumstances such as those
set out in Condition 10 (Conversion)).

(c) Liquidation distribution: if any  of the circumstances set  out 
in Condition 10 (Conversion)  giving rise to the  mandatory conversion of  the 
Notes has  occurred  and Shares  have  not been  issued  or delivered  to  any 
Noteholder pursuant to Condition 10 (Conversion), the claim of such Noteholder
in respect of the liquidation, dissolution  or winding-up of the Issuer  shall 
be the sum equal to that which holders of the number of Shares into which  the 
Notes held  by  such  Noteholder  should  have  been  converted  at  the  then 
Conversion Price would have received out  of the proceeds of the  liquidation, 
dissolution or winding-up of the Issuer. In such circumstances, the claims of
Noteholders in  relation  to  the  Notes shall  rank,  as  from  the  relevant 
Conversion Date, in order of priority pari passu with the rights of holders of
Shares and junior to the claims of holders referred to in Condition 4(b)(i) to
(iii) (except, in  the case  of holders  referred to  in Condition  4(b)(iii), 
holders of securities  that are expressed  by their terms  to rank pari  passu 
with the rights of holders of Shares in circumstances such as those set out in
Condition 10 (Conversion)).

(d) Waiver of statutory priorities:  By virtue of the  subscription 
or acquisition of the Notes, the Noteholders waive any order of priority  that 
may be granted to them by any applicable legislation from time to time and, in
particular, which may arise from Articles 92 and 158 of Law 22/2003, of 9 July
on insolvency (Ley Concursal).

5. Interest

(a)  Interest  payment:  Subject  as  set  out  in  Condition  5(b) 
(Interest - Limitations on interest  payment), below, the Notes bear  interest 
from 29 June 2012 (the "Issue Date") at  the rate of 9.5 per cent. per  annum, 
(the "Rate of  Interest") on  the outstanding  principal amount  of each  Note 
payable in arrear on 29 March, 29  June, 29 September and 29 December in  each 
year (each, an "Interest Payment Date"),  subject as provided in Condition  7 
(Payments). Subject as  set out  in Condition  7(e) (Payments  - Payments  on 
business days), the first Interest Payment Date shall be 29 September 2012.

Each Note will cease to bear interest from the due date for redemption unless,
upon due presentation, payment of interest is improperly withheld or  refused, 
in which case it  will (subject to Condition  5(b) (Interest - Limitations  on 
interest payment), continue  to bear interest  at such rate  (both before  and 
after judgment) until whichever  is the earlier  of (a) the  day on which  all 
sums due in respect of such Note up  to that day are received by or on  behalf 
of the relevant  Noteholder and  (b) the  day which  is seven  days after  the 
Principal Paying and Conversion Agent has notified the Noteholders that it has
received all sums due in respect of  the Notes up to such seventh day  (except 
to the extent that there is any subsequent default in payment).

If interest is required to be paid in respect of a Note on any date other than
an Interest  Payment Date,  it shall  be calculated  by applying  the Rate  of 
Interest to the  outstanding principal  amount of such  Note, multiplying  the 
product by the relevant Day Count  Fraction and rounding the resulting  figure 
to the nearest cent (half a cent being rounded upwards), where:

"Day Count Fraction" means, in  respect of any period,  the number of days  in 
the relevant period, from (and including) the first day in such period to (but
excluding) the last  day in such  period, divided  by the product  of (1)  the 
number of days in the  Regular Period in which  the relevant period falls  and 
(2) four; and

"Regular Period" means each period  from (and including) any Interest  Payment 
Date (or, in the case of the  first Interest Payment Date, the Issue Date)  to 
(but excluding) the next Interest Payment Date.

(b) Limitations on  interest payment:  Interest in  respect of  the 
Notes shall not be payable to the extent that:

(i) the aggregate amount of:

(A) interest  scheduled to  be paid  in respect  of the  Notes on  an 
Interest Payment Date, together with the aggregate amount of interest paid  on 
each prior Interest Payment Date during the then-current Financial Year; and

(B) interest or other distributions scheduled to be paid in  respect 
of Parity Securities on or prior  to the same Interest Payment Date,  together 
with the aggregate amount of interest  or other distributions paid in  respect 
of Parity Securities during the then-current Financial Year,

by the Issuer or by any  Subsidiary would exceed the Distributable Profits  of 
the immediately preceding Financial Year; or

(ii) even if  Distributable Profits  are sufficient,  to the  extent 
that under applicable Capital Adequacy Regulations, including Spanish  banking 
regulations affecting financial institutions which fail to meet their required
capital ratios (including Law  13/1985, Royal Decree  216/2008, Bank of  Spain 
Circular 3/2008 as amended by Bank  of Spain Circular 4/2011, or 30  November, 
and Royal Decree Law 2/2011), the Issuer would be prevented at such time  from 
making payments on its ordinary shares, on the Notes or on Parity  Securities; 
or

(iii)  the  Board  of  Directors  of  the  Issuer,  in  its  absolute 
discretion, has determined that, in light of the then current solvency of  the 
Issuer, the Group or the Sub-Group, a payment of interest shall not take place
on the relevant Interest Payment Date; or

(iv) the Regulator has, in accordance with applicable law, instructed
the Issuer, in light of the  then-current financial condition and solvency  of 
the Issuer,  the  Group or  the  Sub-Group to  cancel  a payment  of  interest 
scheduled to take place on the relevant Interest Payment Date.

The Issuer shall give notice to  the Noteholders in accordance with  Condition 
31 (Notices),  prior to  the relevant  Interest Payment  Date (or  as soon  as 
reasonably practicable thereafter),  of the  occurrence of any  of the  events 
described in  this Condition  5(b)  and of  the  non-payment of  the  interest 
scheduled to be paid on such Interest Payment Date.

(c) Partial interest payment: If, notwithstanding the occurrence of
one or  more  events of  the  type described  in  Condition 5(b)  (Interest  - 
Limitations on  interest  payment),  the  Board of  Directors  of  the  Issuer 
determines, in its  absolute discretion,  that some only  but not  all of  the 
interest payment scheduled to  be paid on the  relevant Interest Payment  Date 
may be paid,  then the Issuer  shall, prior to  the relevant Interest  Payment 
Date (or as soon as reasonably practicable thereafter), give notice thereof to
the Noteholders in accordance with Condition 31 (Notices).

If, in the circumstances of this Condition 5(c), a partial payment of interest
in respect of the Notes is made on an Interest Payment Date, such payment will
be made pro  rata in relation  to the outstanding  principal amount of  Notes. 
Therefore, the  amount of  interest to  be  received by  a Noteholder  on  the 
relevant Interest Payment Date will depend on the total outstanding  principal 
amount of Notes  and on the  amount of interest  scheduled to be  paid on  the 
Notes on such Interest Payment Date.

(d) Interest non-cumulative: Payments of interest in respect of the
Notes will be non-cumulative. Accordingly, if an interest payment is not  paid 
(or not paid in full) on an Interest Payment Date in respect of the Notes as a
result of the limitations set out in Condition 5(b) (Interest - Limitations on
interest payment)  above, then  the  right of  the  Noteholders to  receive  a 
payment of interest in respect of the relevant Interest Period (or to  receive 
that portion of the interest amount that  has not been paid) will be lost  and 
the Issuer will have no obligation to pay any accrued but unpaid interest  for 
such Interest Period or to pay  any interest thereon, whether or not  interest 
in respect of the Notes is paid in respect of any future Interest Period.

(e) No  right  to Dividends:  The  Notes  will not  confer  on  the 
Noteholders any right to receive Dividends or otherwise to participate in  the 
profits of the Issuer.

6. Scheduled Mandatory Conversion, Redemption and Purchase

(a) Scheduled  mandatory  conversion:  Unless  previously  redeemed, 
converted, or purchased and cancelled, the Notes shall be redeemed and settled
by the issue and delivery of fully  paid new Shares to the Noteholders in  the 
manner described in Condition 11 (Procedure for Conversion) in the amounts and
on the dates specified  in Condition 10(a)  (Conversion - Scheduled  Mandatory 
Conversion). Subject  to  Condition  6(b)  (Scheduled  Mandatory  Conversion, 
Redemption and Purchase -  Redemption for tax reasons),  the Issuer shall  not 
redeem the Notes in cash.

(b) Redemption for  tax reasons: Subject  as provided in  Condition 
6(c) (Scheduled Mandatory Conversion,  Redemption and Purchase -  Noteholders' 
tax option) and to the prior written  consent of the Regulator, the Notes  may 
be redeemed at  the option of  the Issuer in  whole, but not  in part, at  any 
time, on  giving not  less  than 30  nor  more than  60  days' notice  to  the 
Noteholders (which notice  shall be irrevocable),  at their principal  amount, 
together with (subject to Condition  5(b) (Interest - Limitations on  interest 
payment)) interest  accrued  to  the  date  fixed  for  redemption  (the  "Tax 
Redemption Date"), if, immediately before giving such notice:

(i) the Issuer has or will become obliged to pay additional amounts
as provided or referred to in Condition 8 (Taxation) as a result of any change
in, or amendment to, the  laws or regulations of the  Kingdom of Spain or  any 
political subdivision or any authority thereof or therein having power to tax,
or any change in  the application or official  interpretation of such laws  or 
regulations (including a holding by a court of competent jurisdiction),  which 
change or amendment becomes effective on or after 29 June 2012; and

(ii)  such  obligation  cannot  be  avoided  by  the  Issuer  taking 
reasonable measures available to it;

provided, however, that no  such notice of redemption  shall be given  earlier 
than 90 days prior to the earliest  date on which the Issuer would be  obliged 
to pay such additional amounts if a payment in respect of the Notes were  then 
due.

Prior to  the  publication  of  any notice  of  redemption  pursuant  to  this 
Condition 6(b), the Issuer shall deliver to the Commissioner:

(A) a certificate signed by a director of the Issuer stating that the
Issuer is entitled to effect such redemption and setting forth a statement  of 
facts showing that the conditions precedent to  the right of the Issuer so  to 
redeem have occurred; and

(B) an opinion of independent legal advisers of recognised  standing 
to the  effect  that  the Issuer  has  or  will become  obliged  to  pay  such 
additional amounts as a result of such change or amendment.

Subject  as  provided  in  Condition  6(c)  (Scheduled  Mandatory  Conversion, 
Redemption and Purchase  - Noteholders' tax  option), upon the  expiry of  any 
such notice as  is referred to  in this  Condition 6(b), the  Issuer shall  be 
bound to redeem the Notes in accordance with this Condition 6(b).

The Issuer may not give a notice  of redemption of the Notes pursuant to  this 
Condition 6(b) if a Conversion Event Notice has already been given.

(c) Noteholders' tax option: If the Issuer shall give a  redemption 
notice pursuant to Condition 6(b) (Scheduled Mandatory Conversion,  Redemption 
and Purchase -  Redemption for  tax reasons),  each Noteholder  will have  the 
right to elect that its Note(s) shall not be redeemed and that the  provisions 
of Condition  8  (Taxation) shall  not  apply in  respect  of any  payment  of 
interest to be made on such Note(s)  which falls due after the Tax  Redemption 
Date whereupon  no additional  amounts  shall be  payable in  respect  thereof 
pursuant to Condition 8  (Taxation) and payment of  all amounts shall be  made 
subject to  the deduction  or  withholding of  the relevant  Spanish  taxation 
required to be  withheld or deducted.  To exercise a  right pursuant to  this 
Condition 6(c),  the relevant  Noteholder must  present a  duly completed  and 
signed notice of exercise in the form (for the time being current)  obtainable 
from the specified office  of any Paying and  Conversion Agent (together  with 
its Notes) by not later than 20 days  prior to the Tax Redemption Date at  the 
specified office of any Paying and Conversion Agent.

(d) No other redemption: The Issuer shall not be entitled to redeem
the Notes otherwise than  as provided in  Condition 6(a) (Scheduled  Mandatory 
Conversion, Redemption  and Purchase  -  Scheduled mandatory  conversion)  and 
Condition 6(b)  (Scheduled Mandatory  Conversion,  Redemption and  Purchase  - 
Redemption for tax reasons).

(e) Purchase: Subject to the prior written consent of the Regulator
(if so required pursuant to  Capital Adequacy Regulations or the  requirements 
of any applicable regulatory authority from time to time in force), the Issuer
or any of its Subsidiaries may at  any time purchase Notes in the open  market 
or otherwise  and  at any  price,  provided  that all  unmatured  Coupons  are 
purchased therewith.

(f) Cancellation: All Notes so redeemed or purchased by the Issuer
or any  of  its Subsidiaries,  and  all Notes  which  are converted,  and  any 
unmatured Coupons attached to or surrendered with them shall be cancelled  and 
may not be reissued or resold.

7. Payments

(a) Principal: Payments of principal  made in the circumstances  of 
Condition 6(b)  (Scheduled Mandatory  Conversion,  Redemption and  Purchase  - 
Redemption for  tax reasons),  shall  be made  only against  presentation  and 
(provided that payment is  made in full) surrender  of Notes at the  Specified 
Office of any Paying  and Conversion Agent outside  the United States by  Euro 
cheque drawn on,  or by transfer  to a  Euro account maintained  by the  payee 
with, a bank in a city in which banks have access to the TARGET2 System.

(b) Interest: Payments of interest shall, subject to Condition 5(b)
(Interest - Limitations on  interest payment) and  Condition 7(f) (Payments  - 
Payments other  than in  respect of  matured Coupons),  be made  only  against 
presentation and (provided  that payment  is made  in full)  surrender of  the 
appropriate Coupons at the Specified Office of any Paying and Conversion Agent
outside the United States in the manner described in Condition 7(a)  (Payments 
- Principal).

(c) Payments subject to fiscal laws: All payments in respect of the
Notes are subject  in all cases  to any  applicable fiscal or  other laws  and 
regulations in the place of payment or  other laws to which the Issuer or  its 
agents agree to be  subject. No commissions or  expenses shall be charged  to 
the Noteholders or Couponholders in respect of such payments.

(d) Deduction for unmatured Coupons: If a Note is presented without
all unmatured Coupons relating thereto, a sum equal to the aggregate amount of
the missing unmatured Coupons will be deducted from the amount due for payment
in respect of such Note. Each sum  of principal so deducted shall be paid  in 
the  manner  provided  in  Condition  7(a)  (Payments  -  Principal)   against 
presentation and (provided  that payment  is made  in full)  surrender of  the 
relevant missing Coupons.

(e) Payments on business days: If  the due date for payment of  any 
amount in respect of any Note or Coupon  is not a Payment Business Day in  the 
place of presentation,  the holder shall  not be entitled  to payment in  such 
place of the amount due until the next succeeding Payment Business Day in such
place and shall not be  entitled to any further  interest or other payment  in 
respect of any such delay.

(f) Payments other than in respect of matured Coupons: Payments of
interest other than in respect of  matured Coupons shall be made only  against 
presentation of the relevant Notes at  the Specified Office of any Paying  and 
Conversion Agent outside the United States.

(g) Partial  payments: If  a Paying  and Conversion  Agent makes  a 
partial payment in respect of any Note or Coupon presented to it for  payment, 
such Paying and Conversion Agent  will endorse thereon a statement  indicating 
the amount and date of such payment.

8. Taxation

Subject to  Condition 6(c)  (Scheduled  Mandatory Conversion,  Redemption  and 
Purchase - Noteholders' tax option),  payments of principal and interest  (if 
any) in  respect of  the Notes  and the  Coupons by  the Issuer  will be  made 
without withholding or deduction for, or on account of, any present or  future 
taxes, duties, assessments or governmental charges of whatever nature  imposed 
or levied by or on behalf of the Kingdom of Spain or any authority therein  or 
thereof having power to tax unless the withholding or deduction of such taxes,
duties, assessments  or governmental  charges  is required  by law.  In  that 
event, the Issuer  will pay  such additional amounts  as may  be necessary  in 
order that the net amounts received  by the Noteholders and the  Couponholders 
after such  withholding or  deduction shall  equal the  respective amounts  of 
principal and interest which would have been received in respect of the  Notes 
or (as  the case  may  be) Coupons,  in the  absence  of such  withholding  or 
deduction; except that no additional amounts shall be payable with respect  to 
any payment in respect of any Note or Coupon:

(i) to, or  to a  third party  on behalf  of, a  Noteholder who  is 
subject to such taxes, duties, assessments or governmental charges in  respect 
of such  Note or  Coupon by  reason of  his having  some connection  with  the 
Kingdom of Spain otherwise than merely by holding the Note or Coupon;

(ii) to, or to a third party on behalf of, a Noteholder who does not
provide the issuer or an agent acting on behalf of the Issuer the  information 
concerning such Noteholder  as may  be required in  order to  comply with  the 
procedures that may be implemented to comply with the interpretation of  Royal 
Decree 1145/2011 as eventually made by the Spanish tax authorities;

(iii) presented for payment more than 30 days after the Relevant Date
except to the extent that the  Noteholder thereof would have been entitled  to 
such additional amount  on presenting the  same for payment  on the  thirtieth 
such day;

(iv) where such withholding or deduction  is imposed on a payment  to 
an individual  and  is  required  to be  made  pursuant  to  European  Council 
Directive 2003/48/EC or  any other Directive  implementing the conclusions  of 
the ECOFIN Council meeting of 26-27  November 2000 on the taxation of  savings 
income or any law  implementing or complying with,  or introduced in order  to 
conform to, such Directive; or

(v) by or  on behalf of  a Noteholder  who would have  been able  to 
avoid such withholding or deduction by presenting the relevant Note or  Coupon 
to another paying agent in a Member State of the European Union.

9. Syndicate of Noteholders and Modification of Agency Agreement

(a) Syndicate of Noteholders

The Noteholders shall meet  in accordance with  the regulations governing  the 
Syndicate of  Noteholders (the  "Regulations").  The Regulations  contain  the 
rules governing  the  functioning of  the  Syndicate of  Noteholders  and  its 
relationship with  the Issuer  and shall  be attached  to the  public deed  of 
issuance (escritura pública)  in relation  to the Notes.  The Regulations  are 
contained in the Agency Agreement.

A temporary Commissioner will be  appointed for the Syndicate of  Noteholders. 
In particular, by virtue of  purchasing and/or holding Notes, each  Noteholder 
shall be deemed to have granted  to the Principal Paying and Conversion  Agent 
full power and authority to take any action and/or to execute and deliver  any 
document or notices for the purposes of attending on behalf of the Noteholders
the first  meeting of  the  Syndicate of  Noteholders  called to  confirm  the 
appointment of the temporary Commissioner, approve its actions and ratify  the 
Regulations contained in the  Agency Agreement and vote  in favour of each  of 
those  resolutions.  Upon  the  subscription  of  the  Notes,  the   temporary 
Commissioner will call a  general meeting of the  Syndicate of Noteholders  to 
ratify  or  reject  the  acts  of  the  temporary  Commissioner,  confirm  his 
appointment or appoint  a substitute Commissioner  for him and  to ratify  the 
Regulations. Provisions  for  meetings of  the  Syndicate of  Noteholders  are 
contained in  the Regulations  and in  the Agency  Agreement. Such  provisions 
shall have effect as if incorporated herein.

(b) Modification of Agency Agreement

The  Issuer  shall  only  permit  any  modification  of,  or  any  waiver   or 
authorisation of any  breach or proposed  breach of or  any failure to  comply 
with, the Agency Agreement, if to do so could not reasonably be expected to be
prejudicial to the interests of the Noteholders.

Provisions for meetings of the Syndicate  of Noteholders will be contained  in 
the Regulations  and the  Agency  Agreement (which  shall  have effect  as  if 
incorporated herein).

The Issuer may, with the consent of the Commissioner, but without the  consent 
of the  Noteholders or  Couponholders,  amend these  Terms and  Conditions  to 
correct a manifest error. Subject as  aforesaid, no other modification may  be 
made to,  or waiver  of any  breach or  proposed breach  of, these  Terms  and 
Conditions except as approved by a resolution of the Syndicate of Noteholders.

Any modification, waiver  or authorisation in  accordance with this  Condition 
9(b) shall be binding on the Noteholders  and shall be notified by the  Issuer 
to the  Noteholders in  accordance  with Condition  31  (Notices) as  soon  as 
reasonably practicable after  the occurrence of  such modification, waiver  or 
authorization

                              THE EQUITY OPTION

10. Conversion

(a) Scheduled  Mandatory  Conversion: Unless  previously  redeemed, 
converted, or purchased and cancelled, the Notes shall be redeemed and settled
in three  equal installments  by the  conversion of  a third  of the  original 
aggregate principal amount of the Notes into new fully paid Shares issued  and 
delivered  to  the  Noteholders  in  the  manner  described  in  Condition  11 
(Procedure for Conversion) ("Scheduled Mandatory Conversion") on the following
dates (each, a "Scheduled Conversion Date"):

(i) the Payment Business Day falling  on or closest to 29  December 
2013;

(ii) the Payment Business Day falling on or closest to 29 June 2014;
and

(iii) the Payment Business Day falling  on or closest to 29  December 
2014.

Subject to Condition  10(e) (Conversion  - Accrued  Conversion Interest),  the 
registration by Iberclear of the  corresponding amount of newly-issued  Shares 
in an account with  Iberclear in the  name of the  relevant Noteholder or  its 
nominee shall be a good and complete discharge of the Issuer's obligations  in 
respect of the corresponding principal amount of the Notes. 

The Issuer  shall give  notice, substantially  in the  form scheduled  to  the 
Agency Agreement,  to the  Noteholders  (the "Scheduled  Mandatory  Conversion 
Notice") in accordance with Condition 31 (Notices) no later than the twentieth
(20th) Business Day prior to the relevant Scheduled Conversion Date, and shall
notify the Principal Paying and Conversion Agent of the terms of the Scheduled
Mandatory Conversion. The Scheduled Mandatory Conversion Notice shall specify
the Scheduled Conversion  Date, the  Notice Cut-Off Date  and whether  Accrued 
Conversion Interest will be paid (in part, in full or not at all).

The Issuer shall give  notice of the Conversion  Price and the expected  Share 
Settlement Date in accordance with Condition 31 (Notices) on the Business  Day 
immediately following the relevant Scheduled Conversion Date. 

(b) Mandatory Conversion Upon  Insolvency Event, Contingency  Event, 
Viability Event or Capital Treatment Event:

(i) Mandatory Conversion Upon Insolvency Event:

If an Insolvency  Event occurs at  any time while  the Notes are  outstanding, 
each Note shall, subject to and as provided in this Condition 10, be  redeemed 
and settled (the "Insolvency Event Conversion")  by the issue and delivery  of 
new fully paid Shares to the Noteholders in the manner described in  Condition 
11 (Procedure for Conversion) on the  expected date specified therefor in  the 
Insolvency Event Notice. The registration  by Iberclear of the  corresponding 
amount of newly-issued Shares in an account with Iberclear in the name of  the 
relevant Noteholder or its nominee shall  be a good and complete discharge  of 
the Issuer's obligations in respect of the Notes.

An "Insolvency Event" shall have occurred if:

(A) a  resolution is  passed, or  other action  or measure  taken  or 
adopted by the Issuer, for the  liquidation, dissolution or winding-up of  the 
Issuer, whether voluntary or  otherwise (except, in any  such case, a  solvent 
liquidation, dissolution  or winding-up  by means  of a  merger, de-merger  or 
transfer  of   assets  and   liabilities  solely   for  the   purposes  of   a 
reorganisation,  reconstruction  or   amalgamation  of  the   Issuer  or   the 
substitution in place of the Issuer of a successor in business of the Issuer);

(B) the Issuer takes any step, action or measure that results in the
approval of a reduction of the Issuer's share capital pursuant to the terms of
Article 418(3)  of the  Consolidated  Text of  the  Law on  Limited  Liability 
Companies, as approved  by Royal Decree  Law 1/2010 dated  2 July 2010  (Texto 
Refundido de la Ley de Sociedades de Capital);

(C) if the  Issuer is  declared in insolvency  (concurso) under  Law 
22/2003 of 9  July on  insolvency (Ley  Concursal) an  order is  made for  the 
liquidation, dissolution, winding-up, re-organisation or restructuring of  the 
Issuer by  reason  of  insolvency,  bankruptcy or  otherwise,  the  Issuer  is 
nationalised or intervened or  if the Board of  Directors (or other  governing 
body of the Issuer) is replaced by the Regulator.

The Issuer (1) shall  notify the Noteholders in  accordance with Condition  31 
(Notices) no later  than the third  Business Day after  the occurrence of  the 
relevant Insolvency  Event (such  notice, an  "Insolvency Event  Notice"),  in 
substantially the form scheduled to the Agency Agreement, that (i) one or more
Insolvency  Events  has  or  have  occurred,  and  (ii)  an  Insolvency  Event 
Conversion will  take place  and (2)  shall notify  the Principal  Paying  and 
Conversion Agent of the terms of the consequent Insolvency Event  Conversion. 
The Insolvency Event Notice shall specify the circumstances giving rise to the
Insolvency Event,  the  Conversion Price,  the  Notice Cut-Off  Date  and  the 
expected Share Settlement Date.

(ii) Mandatory Conversion Upon Contingency Event:

If a Contingency  Event occurs at  any time while  the Notes are  outstanding, 
each Note shall, subject to and as provided in this Condition 10, be  redeemed 
and settled (the "Contingency Event Conversion") by the issue and delivery  of 
new fully paid Shares to the Noteholders in the manner described in  Condition 
11 (Procedure for Conversion) on the  expected date specified therefor in  the 
Contingency Event Notice. The registration by Iberclear of the  corresponding 
amount of newly-issued Shares in an account with Iberclear in the name of  the 
relevant Noteholder or its nominee shall  be a good and complete discharge  of 
the Issuer's obligations in respect of the Notes.

A contingency event shall have occurred if any of the following occurs  (each, 
a "Contingency Event"):

(A) EBA Capital Ratio  Contingency Event: the  EBA Capital Ratio  is 
below the EBA Capital Ratio Threshold at the date of the financial  statements 
contained in a Quarterly Financial  Report (an "EBA Capital Ratio  Contingency 
Event");

(B) CET1 Capital Ratio Contingency Event: the CET1 Capital Ratio  is 
below the CET1 Capital Ratio Threshold at the date of the financial statements
contained in a Quarterly Financial  Report (a "CET1 Capital Ratio  Contingency 
Event"); or

(C) Loss Absorption Contingency Event:  the Tier 1 Capital Ratio  is 
below the  Tier  1  Capital Ratio  Threshold  at  the date  of  the  financial 
statements contained  in  a Quarterly  Financial  Report and  the  Issuer  has 
reported Significant Losses (a "Loss Absorption Contingency Event").

The Issuer shall give the relevant Contingency Event Notice no later than  the 
third Business Day after the  publication of the relevant Quarterly  Financial 
Report and shall notify the Principal Paying and Conversion Agent of the terms
of the consequent Contingency Event Conversion. Each Contingency Event Notice
shall specify  the circumstances  giving rise  to the  Contingency Event,  the 
Conversion Price, the Notice  Cut-Off Date and  the expected Share  Settlement 
Date.

(iii) Mandatory Conversion Upon Viability Event:

If a Viability Event occurs at any time while the Notes are outstanding,  each 
Note shall, subject to and as provided  in this Condition 10, be redeemed  and 
settled (the "Viability Event  Conversion") by the issue  and delivery of  new 
fully paid Shares to the Noteholders  in the manner described in Condition  11 
(Procedure for  Conversion) on  the expected  date specified  therefor in  the 
Viability Event Notice.  The registration by  Iberclear of the  corresponding 
amount of newly-issued Shares in an account with Iberclear in the name of  the 
relevant Noteholder or its nominee shall  be a good and complete discharge  of 
the Issuer's obligations in respect of the Notes.

The Issuer shall give a Viability Event Notice in accordance with Condition 31
(Notices) no  later than  the third  Business Day  after the  occurrence of  a 
Viability Event. The Viability Event  Notice shall specify the  circumstances 
giving rise to the Viability Event,  the Conversion Price, the Notice  Cut-Off 
Date and the expected Share Settlement Date.

"Viability Event" means that either (a) the Regulator has notified the  Issuer 
that it  has  determined that  Conversion  of  the Notes,  together  with  the 
conversion or  write off  of holders'  claims  in respect  of any  other  CET1 
Capital Instruments, Tier 1 Instruments and Tier 2 Instruments that,  pursuant 
to their terms or  by operation of  law, are capable  of being converted  into 
equity on  the occurrence  of a  contingency  event or  a viability  event  or 
written off  at that  time,  is, because  customary  measures to  improve  the 
Issuer's capital  adequacy  are at  the  time, inadequate  or  unfeasible,  an 
essential requirement to prevent the Issuer from becoming insolvent,  bankrupt 
or unable to  pay a  material part  of its  debts as  they fall  due, or  from 
ceasing to carry  on its business;  or (b) customary  measures to improve  the 
Issuer's capital  adequacy being  at the  time inadequate  or unfeasible,  the 
Issuer has received  an irrevocable commitment  of extraordinary support  from 
the Public  Sector  (beyond customary  transactions  and arrangements  in  the 
ordinary course) that has,  or imminently will have,  the effect of  improving 
the Issuer's capital adequacy and without  which, in the determination of  the 
Regulator, the Issuer would have become  insolvent, bankrupt, unable to pay  a 
material part  of its  debts  as they  fall  due or  unable  to carry  on  its 
business.

(iv) Mandatory Conversion Upon Capital Treatment Event:

Subject to  Condition 6(b)  (Scheduled  Mandatory Conversion,  Redemption  and 
Purchase - Redemption for tax reasons), if a Capital Treatment Event occurs at
any time while the Notes are outstanding,  each Note shall, subject to and  as 
provided in this Condition 10, be redeemed and settled (the "Capital Treatment
Event Conversion") by the issue of fully paid Shares to the Noteholders in the
manner described in Condition  11 (Procedure for  Conversion) on the  expected 
date  specified  therefor  in  the   Capital  Treatment  Event  Notice.   The 
registration by Iberclear of the  corresponding amount of newly-issued  Shares 
in an account with  Iberclear in the  name of the  relevant Noteholder or  its 
nominee shall be a good and complete discharge of the Issuer's obligations  in 
respect of the Notes.

The Issuer shall  give a  Capital Treatment  Event Notice  in accordance  with 
Condition 31  (Notices)  no  later  than the  third  Business  Day  after  the 
occurrence of a Capital Treatment  Event. The Capital Treatment Event  Notice 
shall specify the circumstances  giving rise to  the Capital Treatment  Event, 
the  Conversion  Price,  the  Notice  Cut-Off  Date  and  the  expected  Share 
Settlement Date.

A "Capital Treatment Event" shall have occurred if, as a result of any  change 
in the Capital Adequacy Regulations or the EBA Recommendations, or any  change 
in the official application or interpretation thereof becoming effective on or
after the Issue Date,  the Notes either  (i) cease to qualify  as core tier  1 
capital of the Group pursuant to EBA Recommendations, or (ii) cease to qualify
as Tier 1 Capital or any other equivalent regulatory capital category, as  the 
case may be, of the Group pursuant to the Capital Adequacy Regulations.

(v) If an  Insolvency Event, Contingency  Event, Viability Event  or 
Capital Treatment Event occurs, the Notes  will be converted in whole and  not 
in part as provided in accordance with this Condition 10.

(vi) Prior to  giving the  Insolvency Event  Notice, the  Contingency 
Event Notice,  the  Viability Event  Notice  or the  Capital  Treatment  Event 
Notice, the Issuer shall deliver to  the Commissioner a certificate signed  by 
two Authorised Signatories of  the Issuer stating  that the Insolvency  Event, 
Contingency Event, Viability Event or, as  the case may be, Capital  Treatment 
Event has occurred, and such certificate will be conclusive and binding on the
Noteholders.

(c) Optional Conversion: Each Noteholder  has the right to  convert 
the Notes held by it into  fully-paid Shares beginning on the Interest  Paying 
Date falling in December 2012, and on each Interest Payment Date thereafter.

Subject to Condition  10(e) (Conversion  - Accrued  Conversion Interest),  the 
registration by Iberclear of the  corresponding amount of newly-issued  Shares 
in an account with  Iberclear in the  name of the  relevant Noteholder or  its 
nominee shall be a good and complete discharge of the Issuer's obligations  in 
respect of the Notes.

(d) Recourse  for  Shares  and/or  cash:  Noteholders  shall  have 
recourse only  to  the  Issuer for  the  issue  of Shares  pursuant  to  these 
Conditions, including  in  the  circumstances  described  in  Condition  11(e) 
(Procedure for Conversion - Failure to Deliver Conversion Notice) or Condition
11(f) (Procedure for Conversion - Noteholder unable to receive Shares) or  any 
cash amounts  to  which  such  Holders  are  entitled  under  Condition  11(e) 
(Procedure for Conversion - Failure to Deliver Conversion Notice) or Condition
11(f) (Procedure for Conversion - Noteholder unable to receive Shares).

(e) Accrued Conversion Interest:

(i) Upon the  Share Settlement  Date in  accordance with  Condition 
10(a)  (Conversion  -  Scheduled  Mandatory  Conversion)  or  Condition  10(c) 
(Conversion - Optional Conversion), and subject to the provisions of Condition
5(b) (Interest - Limitations on interest payment) the Issuer shall pay to  the 
Noteholders in cash the Accrued Conversion Interest (if any).

(ii) Payment of any Accrued Conversion Interest will be made in Euro
by transfer to the  cash account specified by  the Noteholder in the  relevant 
Conversion Notice.

(iii) Accrued Conversion Interest will only be payable (if at all) in
the circumstances set out in Condition 10(a) (Conversion - Scheduled Mandatory
Conversion) and  Condition  10(c)  (Conversion  -  Optional  Conversion).  No 
payment or  adjustment shall  be made  in respect  of any  accrued but  unpaid 
interest on the conversion  of Notes in the  circumstances of Condition  10(b) 
(Conversion - Mandatory Conversion  Upon Insolvency Event, Contingency  Event, 
Viability Event or Capital Treatment Event).

(iv) Upon the final Scheduled Mandatory Conversion Date of a Note, or
upon a  Conversion  Date  in  respect  of all,  but  not  some  only,  of  the 
outstanding principal  amount of  the Notes,  all unmatured  Coupons  relating 
thereto (whether or not still attached) shall become void and no payment  will 
be made in respect thereof (for this purpose treating any Coupon expressed  to 
be payable on or after the relevant Conversion Date as an unmatured Coupon).

(f) Conversion ratio: The number of  Shares to be issued upon  the 
conversion of  any  Note  shall  be determined  by  dividing  the  outstanding 
principal amount  of  the  Note by  the  Conversion  Price in  effect  on  the 
Conversion Date.

(g) Conversion Price: As  at the date on  which a Conversion  Event 
Notice is published, each Noteholder shall be deemed to have accepted (i)  the 
conversion of its  holding of the  Notes into Shares  at the Conversion  Price 
provided for herein.  Such Shares shall  be issued and  settled in the  manner 
described in Condition 11 (Procedure for Conversion).

The Issuer shall procure that such number of Shares are issued and  registered 
by Iberclear  in the  manner,  and subject  to  the conditions,  described  in 
Condition 11  (Procedure  for  Conversion)  in respect  of  each  Note  as  is 
determined by  dividing the  outstanding principal  amount of  a Note  by  the 
applicable Conversion Price corresponding to the relevant Conversion Date.

The Notes are not redeemable in cash on any Scheduled Conversion Date, or as a
result of an  Insolvency Event,  Contingency Event,  Viability Event,  Capital 
Treatment Event, or otherwise except as provided in Condition 6(b)  (Scheduled 
Mandatory Conversion, Redemption and Purchase - Redemption for tax reasons).

For the purposes of this Condition 10(g):

"Closing Price" means in respect of a Share on any Exchange Business Day,  the 
sale price in the Share Currency of  the Share (rounded to the nearest  second 
decimal place, with 0.005 being rounded down) published by or derived from the
SIBE or such other source as shall be Determined by an Expert at the close  of 
trading on such Exchange Business Day,  provided that if on any such  Exchange 
Business Day such price is not available or cannot otherwise be determined  as 
provided above, the  Closing Price in  respect of such  Exchange Business  Day 
shall be the Closing Price, determined  as provided above, on the  immediately 
preceding Exchange Business  Day on  which the same  can be  so determined  or 
Determined by an Expert;

"Conversion Price" means, in respect of the Conversion Date, the higher of:

(i) the Reference Market Price of a Share on the Exchange  Business 
Day immediately preceding such date;

(ii) the Closing Price of a Share multiplied by 0.75 on the Exchange
Business Day immediately preceding such date; and

(iii) the Floor Price,

provided, however, that the  Conversion Price may not  be greater than  either 
(i) €15.00 (the  "Ceiling Price"),  or (ii) the  Reference Market  Price of  a 
Share multiplied by 0.75, whichever is higher;

(h) Fractions of a Share: Fractions  of a Share will not be  issued 
on conversion. However, if more than one  Note is to be converted at any  one 
time by the same Noteholder such that the Shares to be issued upon  conversion 
thereof are to  be registered in  the same  name, the number  of Shares  which 
shall be issued upon  conversion thereof shall be  calculated on the basis  of 
the aggregate principal amount of the Notes so to be converted. If a fraction
of a Share would otherwise fall to be issued upon conversion, the Issuer shall
make or procure  that there  is made,  on the  Share Settlement  Date, a  cash 
payment equal to such fraction of the  Reference Market Price per Share as  at 
the relevant Conversion Date by Euro cheque drawn on, or by transfer to a Euro
account maintained by the  payee with, a  bank in a city  in which banks  have 
access to the  TARGET2 System  in accordance  with instructions  given in  the 
relevant Conversion Notice.

11. Procedure for Conversion

(a) Exercise of Conversion Right: To exercise the Conversion  Right 
attaching to  any  Note,  the  Noteholder must  comply  with  Condition  11(c) 
(Procedure for Conversion - Conversion Notice and Endorsement of Note).

(b) Issue of Shares: Subject  to Condition 11(c) (Procedure  for 
Conversion -  Conversion Notice  and Endorsement  of Note),  the Shares,  upon 
issue, shall be registered in the name of the Noteholder in an account of such
Noteholder with Iberclear or, as the case may be, in the name of a nominee  on 
behalf of the Noteholder in the  account of such nominee with Iberclear.  The 
date of  such registration  is referred  to herein  as the  "Share  Settlement 
Date".

In connection with the conversion of  any Notes, the Issuer shall execute  the 
relevant capital  increase  and  grant  and  file  the  relevant  public  deed 
(escritura pública)  in  respect of  the  issue of  the  new Shares  with  the 
Mercantile  Registry  of  Madrid  within  five  (5)  Business  Days  from  the 
Conversion Date. The Issuer shall also use its best endeavours to register the
newly-issued Shares and have these Shares listed and/or admitted to trading on
the Stock Exchanges as  soon as practicable after  the Conversion Date but  in 
any event by not later than twenty (20) Business Days following the Conversion
Date.

The Share Settlement  Date for  newly-issued Shares is  generally expected  to 
occur between one and two weeks after the relevant Conversion Date in the case
of a Scheduled  Mandatory Conversion and  between two and  three weeks in  all 
other cases.

In the Conversion Event Notice, the  Issuer, through the Principal Paying  and 
Conversion Agent,  will  notify the  Noteholders  of the  relevant  Conversion 
Event, the  Conversion  Date, the  Notice  Cut-Off Date,  the  expected  Share 
Settlement Date and the aggregate number  of newly-issued Shares to be  issued 
and delivered on the Share Settlement Date.

(c) Conversion Notice and Endorsement  of Note: In order to  obtain 
delivery of the relevant Shares upon conversion, the Noteholder must:

(i) complete, execute and deposit  at the Noteholder's own  expense 
during normal business hours:

(A) Optional Conversion: in the case of the exercise of a  Conversion 
Right, not  later  than the  fifth  (5) Business  Day  prior to  the  relevant 
Interest Payment Date; and

(B) Mandatory Conversion:  in all  other cases, not  later than  the 
date specified in the Conversion Event  Notice which date shall be no  earlier 
than the  tenth  (10)  Business Day  after  the  date of  publication  of  the 
Conversion Event Notice (the "Notice Cut-off Date"),

at the Specified Office  of any Paying  and Conversion Agent  a notice in  the 
form obtainable from the Specified Office  of any Paying and Conversion  Agent 
(a "Conversion Notice") specifying:

(1) a euro account with a bank in a city in which banks have  access 
to the TARGET2 System to which any cash amount payable on or in respect of the
conversion  (including  any  cash  amount  payable  in  the  circumstances  of 
Condition 11(e)  (Procedure for  Conversion -  Failure to  Deliver  Conversion 
Notice) and Condition 11(f) (Procedure  for Conversion - Noteholder unable  to 
receive Shares) shall be credited; and

(2) details of the Iberclear account and the name or names in  which 
the newly-issued Shares shall be issued and delivered;

(ii) authorise, in the Conversion  Notice, the Principal Paying  and 
Conversion Agent to endorse each Note with the corresponding principal  amount 
written-down in respect of the relevant Conversion; and

(iii) represent and agree in the  Conversion Notice that at the  time 
of execution and deposit of  such Conversion Notice it  or the person who  has 
the beneficial interest in that Note is  not in the United States (within  the 
meaning of Regulation S) and it, or  such person, purchased such Note, or  the 
beneficial interest therein, in a transaction made in accordance with Rule 903
or Rule 904 of Regulation S.

No Shares will be issued and  delivered to a Noteholder unless the  Noteholder 
satisfies the foregoing conditions.

A Conversion Notice once deposited shall not be withdrawn without the  consent 
in writing of the Issuer.

(d) Conversion  Expenses: The  Issuer will  pay all  stamp,  issue, 
registration or other similar taxes and duties (if any) arising in the Kingdom
of Spain on the issue of Shares on conversion of the Notes, their transfer and
delivery to or  to the  order of the  converting Noteholder,  any expenses  of 
obtaining a listing and/or admission to  trading for such Shares on the  Stock 
Exchanges and all charges  of the Paying and  Conversion Agents in  connection 
therewith as provided in the Agency Agreement. Subject thereto, as conditions
precedent to conversion,  the Noteholder must  pay to the  Issuer (or to  such 
person as  the Issuer  may direct)  all stamp,  issue, registration  or  other 
similar  taxes  and  duties  (if  any)  ("Conversion  Expenses")  arising   on 
conversion which may be payable:

(i) in the country  in which the Specified  Office of the  relevant 
Paying and Conversion Agent is located (if not the Kingdom of Spain); and

(ii) in any other jurisdiction,

as a result of the issue, transfer or delivery of Shares or any other property
or cash upon conversion to or to the order of the converting Noteholder.

(e) Failure  to  Deliver  Conversion  Notice:  Failure  properly  to 
complete and deliver a Conversion Notice may result in such Conversion  Notice 
being treated as null and void and the Issuer shall be entitled to procure the
sale of any applicable Shares to which the relevant Noteholder may be entitled
in accordance with this Condition 11(e).  Any determination as to whether  any 
Conversion Notice has  been properly  completed and delivered  as provided  in 
this Condition 11 shall be made by  the Issuer in its sole discretion,  acting 
in good faith, and shall, in the absence of manifest error, be conclusive  and 
binding on the relevant Noteholders. If a duly completed Conversion Notice  is 
not delivered to the Specified Office of  a Paying and Conversion Agent on  or 
before the Notice Cut-off Date,  then at any time prior  to date on which  the 
Board of Directors  of the Issuer  (or the Executive  Committee or such  other 
administrative body, director, officer, manager  or employee of the Issuer  to 
whom the Board of  Directors shall have delegated  authority in this  respect) 
authorises the creation and issue  of any Shares in which  all or some of  the 
aggregate principal amount of a Note is converted, the Issuer may in its  sole 
and absolute discretion (and the relevant  Noteholders of such Notes shall  be 
deemed to agree thereto), elect to have all Shares in respect of which no duly
completed Conversion Notice(s)  have been  delivered on or  before the  Notice 
Cut-off Date as  aforesaid registered  in the name  of, and  in the  Iberclear 
account of  (or of  a nominee  for), a  person appointed  by the  Issuer  (the 
"Selling Agent") on behalf  of the relevant Noteholders.  The Issuer may,  in 
its absolute  discretion, appoint  itself as  Selling Agent  and register  the 
relevant Shares  in a  third-party account  of the  Issuer with  Iberclear  on 
behalf of the relevant Noteholders, but it shall have no obligation to do so.

The Selling Agent shall hold such Shares  until the date falling on the  third 
anniversary of the Share Settlement Date or,  if such date is not an  Exchange 
Business Day, the next succeeding date  that is an Exchange Business Day  (the 
"Share Hold Period").

As soon  as reasonably  practicable following  the expiry  of the  Share  Hold 
Period, the Selling Agent may sell the Shares, but it shall have no obligation
to do so. Subject to the deduction by or on behalf of the Selling Agent of any
amount payable in respect of its liability to taxation and the payment of  any 
capital, stamp, issue, registration and/or transfer taxes and duties (if  any) 
and any  fees or  costs incurred  by  or on  behalf of  the Selling  Agent  in 
connection with the  issue, allotment and  sale thereof, the  net proceeds  of 
sale, converted into euros at the Prevailing Rate on the Notice Cut-off  Date, 
if necessary, shall as  soon as reasonably practicable  be deposited with  the 
General Deposit Account of  the Bank of  Spain to be  claimed by the  relevant 
Noteholders.

The deposit of such proceeds with the  General Deposit Account of the Bank  of 
Spain shall be treated for all purposes as a good discharge of the obligations
of the Issuer in respect of the relevant Conversion.

The Issuer and the  Selling Agent shall  have no liability  in respect of  the 
exercise or non-exercise of any discretion or power pursuant to this Condition
11(e) or in respect of any sale of  any Shares, whether for the timing of  any 
such sale or the price at or manner in which any such Ordinary Shares are sold
or the inability to sell any such Shares.

For so long as any Shares are not sold by the Selling Agent in accordance with
this Condition 11(e),  such Shares shall  continue to be  held by the  Selling 
Agent until  the  relevant Noteholder  delivers  a duly  completed  Conversion 
Notice together with evidence satisfactory to  the Issuer that, at the  Notice 
Cut-off Date, such person was a Noteholder.

(f) Noteholder  unable  to receive  Shares:  if any  Noteholder  is 
unable to take delivery of Shares  due to any applicable laws or  regulations, 
or any judicial or  administrative order or decision,  in the jurisdiction  of 
residence of such  Noteholder, or due  to any provisions  of the  constitutive 
documents such Noteholder, then:

(i) Evidence:  such  Noteholder  shall  include  evidence  of  the 
relevant restriction or prohibition in the Conversion Notice;

(ii) Sale  of Shares:  if, upon  receipt of  the relevant  evidence 
referred in paragraph (i) above, the  Issuer is satisfied that Shares may  not 
be issued and delivered to such Noteholder, the Issuer shall appoint a Selling
Agent, at such Noteholder's cost and expense, to:

(A) register  the relevant  Shares in  a third-party  account of  the 
Issuer with Iberclear on such Noteholder's behalf; and

(B) immediately thereafter use its reasonable endeavours to sell the
relevant Shares;

(iii) Payment of proceeds: As  soon as reasonably practicable,  and 
subject to the deduction by  or on behalf of the  Selling Agent of any  amount 
payable in  respect  of its  liability  to taxation  and  the payment  of  any 
capital, stamp, issue, registration and/or transfer taxes and duties (if  any) 
and any  fees or  costs incurred  by  or on  behalf of  the Selling  Agent  in 
connection with the issue, allotment and sale of such Shares, the net proceeds
of sale, converted  into euros at  the Prevailing Rate  on the Notice  Cut-off 
Date, if necessary, shall  be deposited in the  euro account specified by  the 
relevant Noteholder for that purposes in the relevant Conversion Notice.

(g) Conversion Date: The conversion date in respect of a Note  (the 
"Conversion Date") shall be:

(i) in  the case  of Scheduled  Mandatory Conversion,  each of  the 
dates specified as a Scheduled Conversion Date in Condition 10(a)  (Conversion 
- Scheduled Mandatory Conversion); and

(ii) in the case of Optional Conversion, the first Interest  Payment 
Date immediately following the date of the relevant Conversion Notice; and

(iii) in all  other cases,  the Business  Day on  which the  relevant 
Conversion Event Notice is published.

12. Rights Arising on Conversion

(a) Rights  in respect  of Shares  issued upon  conversion:  Shares 
issued upon  the conversion  of any  Note will  be delivered  with full  title 
guarantee, will be  fully paid,  free from any  liens, charges,  encumbrances, 
pre-emptive rights or  other third-party  rights and, subject  as provided  in 
Conditions  12(b)  (Rights  Arising  on  Conversion  -  Dividends  and   other 
distributions) and 12(c) (Rights Arising on Conversion - Voting rights) and to
any mandatory provisions of applicable law:

(i) such Shares will rank pari passu in all respects with all other
Shares in issue on the Share Settlement Date; and

(ii) the holders  of such Shares  will be treated  by the Issuer  as 
Shareholders for  all  purposes  with  effect from  and  including  the  Share 
Settlement Date.

(b) Dividends  and  other  distributions: Shares  issued  upon  the 
conversion of any Note will (subject to any mandatory provisions of applicable
law) rank pari passu in respect of Dividends and other distributions declared,
paid or made, or rights granted, with  all other Shares in issue on the  Share 
Settlement Date except  that such  Shares will not  rank for  any Dividend  or 
other distribution declared, paid or made on, or rights granted in respect of,
the Shares for which the Record Date precedes the Share Settlement Date.

(c) Voting rights: Shares  issued upon the  conversion of any  Note 
will (subject to any mandatory provisions  of applicable law) rank pari  passu 
in respect  of voting  rights with  all other  Shares in  issue on  the  Share 
Settlement Date except that they will not rank for any voting rights where the
entitlement to voting rights accrues to Shareholders by reference to a  Record 
Date which precedes the Share Settlement Date.



                     ADJUSTMENTS TO THE CONVERSION PRICE

13. Dividends

(a) Adjustment Event: If and  whenever the Issuer shall  distribute 
any Extraordinary Dividend or any  Non-Cash Dividend to the Shareholders,  the 
Floor Price and the Ceiling Price (each, a "Benchmark Price") shall be subject
to adjustment in accordance with this Condition 13.

(b) Extraordinary Dividend:

An "Extraordinary Dividend" means a Cash Dividend which exceeds the  Threshold 
Amount. A  Cash  Dividend (the  "Relevant  Cash Dividend")  will  exceed  the 
Threshold Amount if (and only if) the aggregate of the Fair Market Value of:

(i) the Relevant Cash Dividend; and

(ii) all other Cash  Dividends paid in or  declared by reference  to 
the same Financial Year of the Issuer as the Relevant Cash Dividend,

exceeds the Threshold Amount.

For the purposes of this Condition 13:

"Threshold Amount" means, in respect of any Cash Dividend (the "Relevant  Cash 
Dividend"), 100 per cent.  of the aggregate  of the Fair  Market Value of  all 
Cash Dividends (excluding for this purpose  any other Cash Dividend which  was 
itself an Extraordinary Dividend)  attributable to the  Financial Year of  the 
Issuer immediately preceding  the Financial  Year to which  the Relevant  Cash 
Dividend is attributable; and

"Previous Relevant Cash Dividends" means, in respect of any Cash Dividend (the
"Relevant Cash Dividend"), the aggregate on a per Share basis of all  previous 
Cash Dividends (excluding the Relevant Cash Dividend) attributable to the same
Financial Year of the Issuer as the Relevant Cash Dividend.

(c) Effective  Date: For  the purposes  of this  Condition 13,  the 
"Effective Date" means the  first date on which  the Shares are traded  ex-the 
relevant Dividend on  the Relevant  Exchange or, in  the case  of a  purchase, 
redemption or buy  back of  Shares or any  depositary receipts  (or any  other 
receipts  or  certificates)  representing  Shares,  the  date  such  purchase, 
redemption or buy back  is made or, in  the case of a  Spin-Off, on the  first 
date on which the Shares are  traded ex-the relevant Spin-Off on the  Relevant 
Exchange or (in any such case), if later, the date upon which the Fair  Market 
Value of the  relevant Dividend  is capable  of being  determined as  provided 
herein.

(d) Adjustment  to the  relevant Benchmark  Price for  Extraordinary 
Dividend: If  and  whenever the  Issuer  shall distribute  any  Extraordinary 
Dividend to  the  Shareholders,  in  relation  to  each  Note  for  which  the 
Conversion Date has  not occurred prior  to the Effective  Date, the  relevant 
Benchmark Price shall be adjusted by multiplying the relevant Benchmark  Price 
in force immediately prior to the Effective Date by the following fraction:

                                      

where:

A = the Reference Market Price of one Share on the Effective Date;
B = the Fair  Market  Value  on the  Effective  Date  of the  portion  of  the 
    Extraordinary Dividend attributable to one Share, with such portion  being 
    determined  by  dividing   the  Fair   Market  Value   of  the   aggregate 
    Extraordinary Dividend by  the number  of Shares entitled  to receive  the 
    Extraordinary Dividend;
C = the amount (if  any) by which  the Threshold Amount  exceeds any  Previous 
    Relevant Cash Dividends and  which, for the avoidance  of doubt, shall  be 
    equal to the Threshold Amount if no Previous Relevant Cash Dividends  have 
    been paid and shall  be zero if the  Previous Relevant Cash Dividends  are 
    equal to, or greater than, the Threshold Amount;

(e)  Adjustment  to  the  relevant  Benchmark  Price  for   Non-Cash 
Dividend: If and whenever the  Issuer shall distribute any Non-Cash  Dividend 
to the Shareholders, in  relation to each Note  for which the Conversion  Date 
has not occurred  prior to the  Effective Date, the  relevant Benchmark  Price 
shall be  adjusted  by  multiplying  the relevant  Benchmark  Price  in  force 
immediately prior to the Effective Date by the following fraction:

                                      

where:

A = the Reference Market Price of one Share on the Effective Date; and
B = the portion  of  the  Fair Market  Value  on  the Effective  Date  of  the 
    aggregate Non-Cash Dividend attributable to  one Share, with such  portion 
    being determined  by  dividing the  Fair  Market Value  of  the  aggregate 
    Non-Cash Dividend by the number of Shares entitled to receive the relevant
    Non-Cash Dividend (or, in the case  of a purchase, redemption or buy  back 
    of Shares or any depositary or other receipts or certificates representing
    Shares by or on behalf of the  Issuer or any Subsidiary of the Issuer,  by 
    the number  of  Shares  in  issue  immediately  following  such  purchase, 
    redemption or buy back, and treating as not being in issue any Shares,  or 
    any Shares represented  by depositary or  other receipts or  certificates, 
    purchased, redeemed or bought back).

(f) Effect of adjustment: The relevant Benchmark Price as adjusted
pursuant to this Condition 13 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

14. Bonus Issues

(a) Adjustment event:  If and  whenever the Issuer  shall make  any 
Bonus Issue, the relevant  Benchmark Price shall be  subject to adjustment  in 
accordance with this Condition 14.

(b) Effective  Date: For  the purposes  of this  Condition 14,  the 
"Effective Date" means the date of issue of the relevant Shares.

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A = the aggregate number of  Shares in issue immediately  before the issue  of 
    such Shares; and
B = the aggregate number  of Shares in  issue immediately after  the issue  of 
    such Shares.

(d) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 14 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

15. Alteration to Nominal Value

(a) Adjustment event: If and whenever there shall be an  alteration 
to  the  nominal  value   of  the  Shares  as   a  result  of   consolidation, 
reclassification or subdivision, the relevant Benchmark Price shall be subject
to adjustment in accordance with this Condition 15.

(b) Effective  Date: For  the purposes  of this  Condition 15,  the 
"Effective Date" means the date on which such consolidation,  reclassification 
or subdivision becomes effective.

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A = the number  of  Shares in  issue  immediately before  such  consolidation, 
    reclassification or subdivision; and
B = the number  of  Shares  in issue  immediately  after  such  consolidation, 
    reclassification or subdivision.

(d) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 15 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

16.  Shares,   Rights  and   Share-Related  Securities   Issued   to 
Shareholders

(a) Adjustment event: If and whenever the Issuer or any  Subsidiary 
of the Issuer or (at the direction or request or pursuant to any  arrangements 
with the issuer or any Subsidiary of the Issuer) any other company, person  or 
entity shall issue, grant or offer Shares, Share-Related Securities, Rights in
respect of Shares or Rights in  respect of Share-Related Securities to all  or 
substantially all of the Shareholders as a class by way of rights as a  result 
of which, in each  case, Shareholders have  the right to  acquire Shares at  a 
Consideration per  Share which  is less  than 95  per cent.  of the  Reference 
Market Price of the Shares on the Effective Date, the relevant Benchmark Price
shall be subject to adjustment in accordance with this Condition 16.

(b) Effective  Date: For  the purposes  of this  Condition 16,  the 
"Effective Date"  means  the  first  date  on  which  the  Shares  are  traded 
ex-rights, ex-warrants or ex-options on the Relevant Exchange.

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A = the number of  Shares in issue  on the Exchange  Business Day  immediately 
    preceding the Effective Date;
B = the number of Shares which  the Aggregate Consideration would purchase  at 
    the Reference Market Price of the Shares on the Effective Date; and
C = (1) in  the case  of an  issue, grant  or offer  of Shares,  the 
    number of Shares comprised in the issue, grant or offer; or
  (2) in the  case of an  issue, grant or  offer of  Share-Related 
    Securities or Rights, the maximum number  of Shares which could be  issued 
    upon exercise  in  full  of  the rights  to  subscribe  for,  purchase  or 
    otherwise acquire  Shares  pursuant to  the  terms of  such  Share-Related 
    Securities or Rights at the initial price or rate.

(d) Formula: If on the date (the "Specified Date") of issue,  grant 
or offer of the relevant Share-Related Securities, Rights in respect of Shares
or Rights in respect of Share Related Securities the maximum number of  Shares 
which could be issued upon  exercise in full of  the rights to subscribe  for, 
purchase or  otherwise acquire  Shares pursuant  to the  terms of  such  Share 
Related Securities  or  Rights  is  to  be  determined  by  reference  to  the 
application of a formula  or other variable feature  or the occurrence of  any 
event at some subsequent time then, for the purposes of this Condition 16, "C"
shall be determined by the application of such formula or variable feature  or 
as if the relevant event occurs or  had occurred as at the Specified Date  and 
as if  such subscription,  purchase  or acquisition  had  taken place  on  the 
Specified Date.

(e) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 16 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

17. Issue of Other Securities to Shareholders

(a) Adjustment event: If and whenever the Issuer or any Subsidiary
of the Issuer or (at the direction or request or pursuant to any  arrangements 
with the Issuer or any Subsidiary of the Issuer) any other company, person  or 
entity  shall  issue   any  Securities  (other   than  Shares,   Share-Related 
Securities, Rights in respect  of Shares, Rights  in respect of  Share-Related 
Securities or  Spin-Off  Securities)  to  all  or  substantially  all  of  the 
Shareholders as a class by way of rights or grant any Rights in respect of any
Securities (other than Shares, Share-Related Securities, Rights in respect  of 
Shares  or  Rights  in  respect   of  Share-Related  Securities  or   Spin-Off 
Securities) or assets  to all or  substantially all of  the Shareholders as  a 
class, the  relevant  Benchmark  Price  shall  be  subject  to  adjustment  in 
accordance with this Condition 17.

(b)  Effective  Date:  For  the  purposes  of  this  Condition  17, 
"Effective Date"  means  the  first  date  on  which  the  Shares  are  traded 
ex-rights, ex-warrants or ex-options on the Relevant Exchange.

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A = the Reference Market Price of one Share on the Effective Date; and
B = the Fair Market Value on the Effective  Date of the portion of the  rights 
    attributable to one Share.

(d) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 17 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

18. Issues of Shares at Below Reference Market Price

(a) Adjustment  event:  If and  whenever  the Issuer  shall  issue, 
wholly for cash  or for  no consideration,  any Shares  or the  Issuer or  any 
Subsidiary of the Issuer or  (at the direction or  request or pursuant to  any 
arrangements with  the issuer  or  any Subsidiary  of  the Issuer)  any  other 
company, person or  entity shall issue  or grant,  wholly for cash  or for  no 
consideration,  Rights  in  respect  of   Shares  or  Rights  in  respect   of 
Share-Related Securities as a result of  which, in each case, persons to  whom 
the Shares or Rights are issued or granted have the right to acquire Shares at
a Consideration per Share  which is less  than 95 per  cent. of the  Reference 
Market Price of the Shares on the date of the first public announcement of the
terms of such issue or grant, the relevant Benchmark Price shall be subject to
adjustment in accordance with this Condition  18. However, if any such  issue 
or grant  also falls  within the  terms of  Condition 16  (Shares, Rights  and 
Share-Related Securities Issued  to Shareholders) or  constitutes an issue  of 
Shares consequent upon the conversion  of any Note or  on the exercise of  any 
rights of  conversion  into, or  exchange  or subscription  for,  Shares,  the 
relevant Benchmark Price shall not be subject to adjustment in accordance with
this Condition 18.

(b) Effective  Date: For  the purposes  of this  Condition 18,  the 
"Effective Date" means the date  of issue of such Shares  or, as the case  may 
be, the issue or grant of such Rights.

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A = the number of  Shares in issue  on the Exchange  Business Day  immediately 
    preceding the date of the first  public announcement of the terms of  such 
    issue or grant;
B = the number of Shares which  the Aggregate Consideration would purchase  at 
    the Reference Market Price of the Shares  on the date of the first  public 
    announcement of the terms of such issue or grant; and
C = (1) in the  case of  an issue of  Shares, the  number of  Shares 
    issued; or
  (2) in the  case of  an issue or  grant of  Rights, the  maximum 
    number of Shares  which could  be issued upon  exercise of  the rights  to 
    subscribe for, purchase  or otherwise acquire  Shares and, if  applicable, 
    Share-Related Securities  pursuant to  the terms  of such  Rights and,  if 
    applicable, Share-Related Securities at the initial price or rate.

(d) Formula: If  on the  date (the  "Specified Date")  of issue  or 
grant of the  relevant Rights in  respect of  Shares or Rights  in respect  of 
Share-Related Securities the maximum  number of Shares  which could be  issued 
upon exercise in full  of the rights to  subscribe for, purchase or  otherwise 
acquire Shares and,  if applicable, Share-Related  Securities pursuant to  the 
terms of such  Rights and, if  applicable, Share-Related Securities  is to  be 
determined by reference  to the  application of  a formula  or other  variable 
feature or the occurrence of any event  at some subsequent time then, for  the 
purposes of this Condition 18, "C"  shall be determined by the application  of 
such formula or variable  feature or as  if the relevant  event occurs or  had 
occurred as at  the Specified Date  and as if  such subscription, purchase  or 
acquisition had taken place on the Specified Date.

(e) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 18 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

19. Share-Related Securities Issued Other than to Shareholders

(a) Adjustment event: If and whenever the Issuer or any  Subsidiary 
or (pursuant to arrangements with the  Issuer or any of its Subsidiaries)  any 
other person or entity shall issue,  wholly for cash or for no  consideration, 
any Share-Related  Securities or  shall grant  to any  existing Securities  so 
issued such rights as  to make such securities  Share-Related Securities as  a 
result of which, in each case, persons to whom the Share-Related Securities or
such rights  are issued  or granted  have the  right to  acquire Shares  at  a 
Consideration per  Share which  is less  than 95  per cent.  of the  Reference 
Market Price of the Shares on the date of the first public announcement of the
terms of issue of  such Share-Related Securities or  the terms of such  grant, 
the relevant Benchmark Price shall be subject to adjustment in accordance with
this Condition 19. However, if any such issue or grant also falls within  the 
terms of Condition 16 (Shares,  Rights and Share-Related Securities Issued  to 
Shareholders), Condition 17  (Issue of  Other Securities  to Shareholders)  or 
Condition 18 (Issues of Shares at Below Reference Market Price), the  relevant 
Benchmark Price shall  not be subject  to adjustment in  accordance with  this 
Condition 19.

(b) Effective  Date: For  the  purposes of  this Condition  19  the 
"Effective Date" means the  date of issue of  the Share-Related Securities  or 
the grant of the relevant rights.

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A = the number of  Shares in issue  on the Exchange  Business Day  immediately 
    preceding the date of the first  public announcement of the terms of  such 
    issue or grant;
B = the number of Shares which  the Aggregate Consideration would purchase  at 
    the Reference Market Price of the Shares  on the date of the first  public 
    announcement of the terms of such issue or grant; and
C = the maximum number of Shares which  could be issued upon exercise in  full 
    of the  rights to  subscribe  for, purchase  or otherwise  acquire  Shares 
    pursuant to  the terms  of such  Share-Related Securities  at the  initial 
    price or rate.

(d) Formula: If on the date (the "Specified Date") of issue of  the 
relevant Share-Related Securities or date of grant of such rights the  maximum 
number of Shares which could be issued upon exercise in full of the rights  to 
subscribe for, purchase or otherwise acquire  Shares pursuant to the terms  of 
such Share-Related  Securities  is  to  be  determined  by  reference  to  the 
application of a formula  or other variable feature  or the occurrence of  any 
event at some subsequent time then, for the purposes of this Condition 19, "C"
shall be determined by the application of such formula or variable feature  or 
as if the relevant event occurs or  had occurred as at the Specified Date  and 
as if  such subscription,  purchase  or acquisition  had  taken place  on  the 
Specified Date.

(e) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 19 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

20. Amendment of Terms of Rights or Share-Related Securities

(a) Adjustment event: If and whenever the rights to subscribe  for, 
convert, exchange, purchase or otherwise acquire Shares pursuant to the  terms 
of  any  Rights  or  Share-Related  Securities  are  amended  (other  than  in 
accordance with their terms of issue (including terms as to adjustment of such
rights)) so that following such amendment  the Consideration per Share is  (1) 
reduced and (2) less than  95 per cent. of the  Reference Market Price of  the 
Shares on the date of the first public announcement of the proposals for  such 
amendment, the  relevant Benchmark  Price shall  be subject  to adjustment  in 
accordance with this Condition 20.

(b)  Effective  Date:  For  the  purposes  of  this  Condition  20, 
"Effective Date" means  the date of  amendment of such  rights referred to  in 
Condition 20(a) (Amendment of  Terms of Rights  or Share-Related Securities  - 
Adjustment event).

(c) Adjustment to the relevant Benchmark Price: In relation to each
Note for which  the Conversion Date  has not occurred  prior to the  Effective 
Date, the  relevant  Benchmark Price  shall  be adjusted  by  multiplying  the 
relevant Benchmark Price in effect immediately prior to the Effective Date  by 
the following fraction:

                                      

where:

A is the  number or  Shares issue  on the  Exchange Business  Day  immediately 
  preceding the date  of the first  public announcement of  the proposals  for 
  such amendment;
B is the number of Shares which the Aggregate Consideration (calculated taking
  account of the amended rights) would purchase at the Reference Market  Price 
  of the Shares on the date of the first public announcement of the  proposals 
  for such amendment  (or, if lower,  at the subscription,  purchase or  other 
  acquisition price before the relevant amendment); and
C the maximum number of Shares which could be issued upon exercise in full  of 
  the rights to subscribe for,  purchase or otherwise acquire Shares  pursuant 
  to the  terms of  such Rights  or Share-Related  Securities at  the  amended 
  subscription, purchase or acquisition  price or rate  (but giving credit  in 
  such manner as shall be  Determined by an Expert  to be appropriate for  any 
  previous adjustment  under Condition  16 (Shares,  Rights and  Share-Related 
  Securities Issued to Shareholders),  Condition 19 (Share-Related  Securities 
  Issued Other than to Shareholders) or this Condition 20).

(d) Formula:  If  on  the  date  (the  "Specified  Date")  of  such 
amendment the maximum number of Shares which could be issued upon exercise  in 
full of the  rights to  subscribe for,  purchase or  otherwise acquire  Shares 
pursuant to the  terms of  such Rights or  Share-Related Securities  is to  be 
determined by reference  to the  application of  a formula  or other  variable 
feature or the occurrence of any event  at some subsequent time then, for  the 
purposes of this Condition 20, "C"  shall be determined by the application  of 
such formula or variable  feature or as  if the relevant  event occurs or  had 
occurred as at  the Specified Date  and as if  such subscription, purchase  or 
acquisition had taken place on the Specified Date.

(e) Effect of adjustment: The relevant Benchmark Price as  adjusted 
pursuant to this Condition 20 shall apply, with effect from and including  the 
Effective Date, to each  Note for which the  Conversion Date has not  occurred 
prior to the  Effective Date.  Any such adjustment  shall be  subject to  any 
subsequent adjustment pursuant to these Conditions.

21. Minor Adjustments and No Adjustments

(a) Rounding and  adjustments of  less than  one per  cent: On  any 
adjustment of the relevant Benchmark  Price, the resultant adjusted  Benchmark 
Price, if not an integral multiple of  one cent, shall be rounded down to  the 
nearest whole cent.  No adjustment shall  be made to  the relevant  Benchmark 
Price where such adjustment  (rounded down if applicable)  would be less  than 
one per cent. of the relevant Benchmark Price then in effect. Any  adjustment 
not required to be made, and any amount by which the relevant Benchmark  Price 
has been rounded down, shall be carried forward and taken into account in  any 
subsequent adjustment  but such  subsequent adjustment  shall be  made on  the 
basis that  the adjustment  not  required to  be made  had  been made  at  the 
relevant time.

(b) Employee  share schemes:  No adjustment  shall be  made to  the 
relevant Benchmark Price where Shares  or other securities (including  rights, 
warrants or options) are  issued, offered, exercised, allotted,  appropriated, 
modified or granted to or for the benefit of, or are subscribed, purchased  or 
otherwise acquired  by, employees  or  former employees  (including  directors 
holding or formerly holding executive office) of the Issuer or any  Subsidiary 
or any  associated company  of the  Issuer pursuant  to any  employees'  share 
scheme or plan (including a dividend reinvestment plan).

(c) Adjustments not permitted by law: The relevant Benchmark  Price 
may not be adjusted so that the potential conversion of any Note would require
Shares to be issued in circumstances not permitted by applicable law.

22. Retroactive Adjustments

(a) Adjustment Event: If  and whenever a Benchmark  Price is to  be 
adjusted pursuant  to  any  of  Condition ‎13  (Dividends)  to  Condition  ‎20 
(Amendment of Terms of Rights or Share-Related Securities) and the  Conversion 
Date in relation  to any Note  is after the  Record Date for  any such  issue, 
distribution, grant or  offer as is  mentioned in the  relevant Condition  but 
before the relevant adjustment becomes effective under the relevant  Condition 
the retroactive adjustment set out in this Condition ‎22 shall apply.

(b) Adjustment to the Conversion Right: Upon the date on which  the 
relevant adjustment  becomes  effective  under  the  relevant  Condition  (the 
"Retroactive Adjustment Date") the  Issuer shall procure  that there shall  be 
issued to the  converting Noteholder  or in accordance  with the  instructions 
contained in the relevant Conversion  Notice such additional number of  Shares 
(the "Additional Shares") as, together with the Shares issued or to be  issued 
on conversion of the relevant Note (together with any fraction of a Share  not 
so issued due  to Condition ‎10(h)  (Conversion - Fractions  of a Share),  is 
equal to the number of Shares which  would have been required to be issued  on 
conversion of such Note if the relevant adjustment to the Benchmark Price  had 
in fact  been  made  and  become effective  immediately  before  the  relevant 
Conversion Date. In calculating the number of any such additional Shares  the 
provisions of  Condition ‎10(h)  (Conversion -  Fractions of  a Share)  shall 
apply mutatis mutandis.

(c) Issue of Shares: Such  Additional Shares, upon issue, shall  be 
registered in the name of the Noteholder in an account of such Noteholder with
Iberclear or, as the case may  be, in the name of  a nominee on behalf of  the 
Noteholder in the account of such nominee with Iberclear.

(d) Rights Arising  on Conversion:  In the case  of any  Additional 
Shares, each reference  in Condition  ‎12(a) (Rights Arising  on Conversion  - 
Rights in  respect  of Shares  issued  upon conversion)  to  Condition  ‎12(c) 
(Rights Arising on Conversion - Voting rights) to the Conversion Date shall be
deemed to be a reference to the relevant Retroactive Adjustment Date.

23. Aggregate Consideration and Consideration per Share

(a) Applicability of this Condition: For the purpose of calculating
any adjustment to the relevant  Benchmark Price pursuant to these  Conditions, 
in the case of any:

(i) issue,  grant or  offer  of Shares,  Share-Related  Securities, 
Rights in respect of Shares or Rights in respect of Share-Related  Securities; 
or

(ii) grant to any  existing securities issued of  such rights as  to 
make such securities Share-Related Securities; or

(iii)  amendment  of  the  terms  of  any  Rights  or   Share-Related 
Securities (other than in accordance with their terms of issue),

the "Aggregate Consideration" and the  "Number of Shares" shall be  calculated 
or determined (if necessary)  in accordance with  the following provisions  of 
this Condition 23 and  the "Consideration per Share"  shall, in each case,  be 
the relevant Aggregate Consideration divided by the relevant Number of Shares.

(b) Shares for cash:  In the case  of an issue,  grant or offer  of 
Shares for cash:

(i) the Aggregate Consideration shall  be the amount of such  cash, 
provided that in no such case shall any deduction be made for any  commissions 
or any expenses paid  or incurred by  the Issuer for  any underwriting of  the 
issue or otherwise in connection therewith; and

(ii) the Number of Shares shall  be the number of Shares so  issued, 
granted or offered.

(c) Shares not for cash: In the  case of the issue, grant or  offer 
of Shares for a consideration in whole or in part other than cash:

(i) the Aggregate Consideration  shall be the  amount of such  cash 
(if any) plus the consideration other than  cash, which shall be deemed to  be 
the Fair  Market  Value  thereof  or,  if  pursuant  to  applicable  law  such 
determination  is  to  be  made  by  application  to  a  court  of   competent 
jurisdiction, the value thereof  as determined by such  court or an  appraiser 
appointed by such court, irrespective of the accounting treatment thereof; and

(ii) the Number of Shares shall  be the number of Shares so  issued, 
granted or offered.

(d) Issue of Share-Related  Securities: In the  case of the  issue, 
grant  or  offer  of  Share-Related   Securities  or  Rights  in  respect   of 
Share-Related Securities or the grant to any securities issued of such  rights 
as to make such securities Share-Related Securities:

(i) the Aggregate Consideration shall be:

(A) the  consideration  (if any)  received  by the  Issuer  for  such 
Share-Related Securities and (if  applicable) Rights or, as  the case may  be, 
such grant; plus

(B) the  additional consideration  (if any)  to be  received by  the 
Issuer upon (and  assuming) the exercise  in full of  the rights to  subscribe 
for, purchase  or otherwise  acquire  Shares pursuant  to  the terms  of  such 
Share-Related Securities at the initial price or rate and (if applicable)  the 
exercise in full of the rights to subscribe for, purchase or otherwise acquire
Share-Related Securities pursuant to the terms  of such Rights at the  initial 
price or rate,

the consideration in each case to be determined in the same manner as provided
in paragraphs (b) and (c) of this Condition 23; and

(ii) the Number of Shares shall be the number of Shares to be issued
upon (and assuming)  such exercise  in full of  the rights  to subscribe  for, 
purchase  or  otherwise  acquire  Shares   pursuant  to  the  terms  of   such 
Share-Related Securities at the initial price or rate and (if applicable)  the 
exercise in full of the rights to subscribe for, purchase or otherwise acquire
Share-Related Securities pursuant to the terms  of such Rights at the  initial 
price or rate.

(e) Amendment  of  Share-Related  Securities/Rights  in  respect  of 
Share-Related Securities: In the  case of the amendment  of the terms of  any 
Share-Related Securities and/or Rights in respect of Share-Related  Securities 
(in either case, other than in accordance with their terms of issue):

(i) the Aggregate Consideration shall be:

(A) the  consideration  (if any)  received  by the  Issuer  for  such 
amendment; plus

(B) the  additional consideration  (if any)  to be  received by  the 
Issuer upon (and  assuming) the exercise  in full of  the rights to  subscribe 
for, purchase  or otherwise  acquire  Shares pursuant  to  the terms  of  such 
Share-Related Securities at the initial  price or rate or  (in the case of  an 
amendment to the terms of such Share-Related Securities) the amended price  or 
rate and (if applicable) the exercise in full of the rights to subscribe  for, 
purchase or otherwise acquire Share-Related  Securities pursuant to the  terms 
of such Rights at the initial price or rate or (in the case of an amendment to
the terms of such Rights) the amended price or rate,

the consideration in each case to be determined in the same manner as provided
in paragraphs (b) and (c) of this Condition 23; and

(ii) the Number of Shares shall be the number of Shares to be issued
upon (and assuming)  such exercise  in full of  the rights  to subscribe  for, 
purchase  or  otherwise  acquire  Shares   pursuant  to  the  terms  of   such 
Share-Related Securities at the initial  price or rate or  (in the case of  an 
amendment to the terms of such Share-Related Securities) the amended price  or 
rate and (if applicable) the exercise in full of the rights to subscribe  for, 
purchase or otherwise acquire Share-Related  Securities pursuant to the  terms 
of such Rights at the initial price or rate or (in the case of an amendment to
the terms of such Rights) the amended price or rate.

(f) Rights in respect of Shares:  In the case of the issue,  grant 
or offer of Rights in respect of Shares  or the amendment of the terms of  any 
Rights in respect  of Shares  (other than in  accordance with  their terms  of 
issue):

(i) the Aggregate Consideration shall be:

(A) the consideration received by the Issuer for any such Rights  or, 
as the case may be, such amendment; plus

(B) the additional consideration to  be received by the Issuer  upon 
(and assuming) the exercise in full  of the rights to subscribe for,  purchase 
or otherwise  acquire Shares  pursuant to  the  terms of  such Rights  at  the 
initial price or rate  or (in the case  of an amendment to  the terms of  such 
Rights) the amended price or rate,

the consideration in each case to be determined in the same manner as provided
in paragraphs (b) and (c) of this Condition 23; and

(ii) the Number of Shares shall be the number of Shares to be issued
upon (and  assuming) the  exercise in  full of  the rights  to subscribe  for, 
purchase or otherwise acquire Shares pursuant  to the terms of such Rights  at 
the initial price or rate or (in the case of an amendment to the terms of such
Rights) the amended price or rate.

(g)

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