Analysis of the Impact of Santander's Share Repurchase on European Bank Stocks and Industry Trends

1. Capital Adequacy and Regulatory Compliance
   : The Common Equity Tier 1 (CET1) ratio of European banks is generally around 14% [1][2], far higher than the minimum regulatory requirement of 4.5% and buffer capital. The 1.32% capital reduction caused by Santander’s repurchase this time does not touch the regulatory red line, reflecting the feasibility of its capital structure optimization.
2. Impact on Shareholder Returns
   : Repurchases reduce the number of outstanding shares, which will directly push up earnings per share (EPS) and book value per share (BVPS) [0], and enhance shareholder returns through capital gains. Compared with dividends, repurchases may have tax advantages and improve return efficiency.
3. Impact on Valuation
   : Repurchases are usually regarded as a signal that the company undervalues its own value or is confident in its future profit prospects [0]. Currently, European bank stocks are generally undervalued, and this signal may attract investors and increase the valuation multiples (such as P/E, P/B) of Santander and the industry.
4. Market Reaction Verification
   : Santander’s stock rose by 1.03% on December 23, 2025 [0], indicating that the market has a positive attitude towards the repurchase plan, which initially verifies the above analysis logic.

1. Transformation of Capital Management Strategy
   : From simply meeting regulatory requirements to proactively optimizing capital structure, it reflects that European banks are paying more attention to shareholder returns and market value management on the basis of sufficient capital.
2. Supporting Role of Regulatory Environment
   : The European Central Bank’s reduction of capital requirements and positive feedback from stress test results [2][3] provide policy space for banks to implement repurchase plans, which is an important external factor driving this trend.
3. Industry Demonstration Effect
   : As one of the leading European banks, Santander’s repurchase behavior may trigger industry follow-up and accelerate the valuation repair process of European bank stocks.

: If subsequent bank earnings fall short of expectations, excessive repurchases may weaken the capital buffer capacity and affect the resilience to deal with future risks. In addition, if regulatory policies tighten, it may restrict the implementation of repurchase plans [0].
: The repurchase plan is expected to activate the market activity of European bank stocks and provide investors with investment opportunities for valuation repair. At the same time, banks can improve operational efficiency and market competitiveness by optimizing their capital structure [1].

• Santander’s share repurchase plan complies with regulatory requirements and has no substantial impact on capital adequacy
• The repurchase plan enhances the potential for shareholder returns and sends a positive valuation signal
• European banks generally have the capital conditions to implement repurchase plans, and the regulatory environment supports this strategy
• The market has a positive short-term reaction to Santander’s repurchase plan, and the possibility of industry follow-up is high