The Banco Santander Central Hispano S.A. (Santander) common stock has appreciated significantly since our 4Q 08 and FY 2008 update report, reflecting positive investor reaction to a broad-based rise in global equity markets over the same period. Looking ahead, we remain concerned about the weak macroeconomic outlook in Santander’s key markets, as well as deterioration in asset quality, which is likely to drive up loan loss provisions....

In April 2009, the Bank of Spain forecast Spanish GDP to contract by 3% in 2009 and a further 1% in 2010, having already officially entered recession. An IMF note (Global Economic Policies and Prospects, 13-14 March 2009) forecasts the Eurozone economy to contract by 3.2% in 2009 and grow by 0.1% in 2010. The UK government forecasts its economy to contract by 3.5% in 2009, before posting a slight recovery in 2010. Analysts polled by the Brazilian…

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Banco Santander Central Hispano S.A. (Santander) has reported modest results for 4Q 08 and FY 2008. Although Net Interest Income (NII) grew robustly, supported by fee-based and insurance income, the bottom-line was weakened by a sharp rise in impairment losses. Looking ahead, although we are concerned about the rise in the Non-Performing Loan (NPL) ratio and the slowdown in the global economy…