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# Santander's ECB Capital Add-On Falls To 1.65% For 2027, Yet Minimum CET1 Still Edges Up To 9.92%
- URL: https://www.bullished.co/santanders-ecb-capital-add-on-falls-to-1-65-for-2027-yet-minimum-cet1-still-edges-up-to-9-11565899/
- Published: 2026-10-28T10:06:32.000Z
- Updated: 2026-10-28T10:06:32.000Z
- Description: The ECB cut the bank's Pillar 2 requirement, but a higher countercyclical buffer lifts its overall minimums from 2026 levels.
- Author: Matteo Parrino
- Tags: SEC Filings, SAN, Industry: Financials

The European Central Bank lowered Banco Santander's Pillar 2 capital requirement to [1.65%](https://www.sec.gov/Archives/edgar/data/891478/000095010326016265/dp255629%5F6k.htm?ref=bullished.co) from 1.74% for 2027, the bank said Wednesday, but a bigger countercyclical buffer still nudges its overall minimum capital requirements higher. Pillar 2 is the extra capital a supervisor demands on top of the baseline rules, set after a yearly review.

## Why the add-on shrank

[At least 0.93%](https://www.sec.gov/Archives/edgar/data/891478/000095010326016265/dp255629%5F6k.htm?ref=bullished.co) of the 1.65% must be met with Common Equity Tier 1 capital, the highest-quality layer, the bank said. The reduction from the 1.74% that applies in 2026 comes because, from 1 January 2027, no add-ons tied to the ECB's supervisory expectations on the provisioning calendar for non-performing exposures will apply.

Santander was told of the decision after the ECB's annual Supervisory Review and Evaluation Process, the bank said. The new requirements take effect on 1 January 2027.

## A buffer outweighs the cut

Minimum CET1 for 2027 is 9.92%, against 9.85% since 1 January 2026\. Minimum total capital rises to 14.14% from 14.11%, increases of 7 and 3 basis points (hundredths of a percentage point).

The countercyclical capital buffer, which rises by 13 basis points, drives the increase. The lower Pillar 2 requirement offsets part of it, trimming the CET1 and total capital requirements by 5 and 9 basis points respectively.

The bank's footnote says the buffer figure of 0.6836% is estimated to include a 0.50% activation on exposures in Spain, equal to 0.11% at group level.

## Still above the line

Santander's phased-in ratios at 30 September 2026 were 12.69% for CET1 and 17.01% for total capital. The bank said it keeps a surplus over both requirements.

The 9.92% CET1 minimum is built from several layers, per the bank: Pillar 1 at 4.50%, Pillar 2 at 0.93%, a 2.50% conservation buffer, a 1.25% surcharge as an other systemically important institution set by Banco de España, a 0.0572% systemic risk buffer and the countercyclical buffer.

Against a 9.92% CET1 minimum from 1 January 2027, Santander reported 12.69% at 30 September 2026.

### Sources

- [Form 6-K — Santander has been informed by the European Central Bank (" ECB "), after following its Supervisory Review and Evaluation Process (" SREP "), of its decision regarding the minimum prudentia](https://www.sec.gov/Archives/edgar/data/891478/000095010326016265/dp255629%5F6k.htm?ref=bullished.co) — SEC EDGAR