Santander’s SVAR Surge Lifts IMA RWAs in Q3 2025
Table of Contents
- 1. Santander’s SVAR Surge Lifts IMA RWAs in Q3 2025
- 2. Breaking Down the Impact
- 3. Longer View And evergreen Insights
- 4. Reader Perspectives
- 5. Asset‑size expansion in Spain & Brazil – Santander’s cross‑border loan book grew 8 % YoY, pushing the “large‑exposure” threshold and raising risk‑weight factors.
- 6. Santander’s Modelled RWAs Surge 21.6% in Q3 2025 – A Deep Dive
Breaking News: Santander recorded a sharp rise in its modelled market risk-weighted assets during the third quarter of 2025, bucking a softer trend seen across many European banks.
The bank reported that rwas under the internal models approach rose by 21.6 percent in the quarter, fueled mainly by the stressed value-at-risk component, known as SVAR.
total RWAs under the internal models approach reached €9.7 billion as of the end of September, up €1.7 billion from three months earlier.
Specific to SVAR, the segment surged by about €1.6 billion, underscoring the material influence of stressed scenarios on the bank’s risk metrics.
| Key Metric | Value | Notes |
|---|---|---|
| IMA RWAs (end-Sept 2025) | €9.7 billion | Up €1.7 billion QoQ |
| SVAR Increase (component) | €1.6 billion | Main driver of SVAR lift |
Breaking Down the Impact
The spike in SVAR shows how sensitivity to stressed market conditions can push risk metrics higher even as nominal asset activity stays steady. Banks relying on internal models may see capital requirements swing with shifts in assumed stress scenarios,influencing capital planning and liquidity considerations.
This move contrasts with a broader European trend where risk-weighted assets have generally cooled or remained steadier, highlighting Santander’s unique exposure to SVAR dynamics in the period.
Longer View And evergreen Insights
As markets cycle through volatility, the SVAR lever remains a key indicator of how banks price and reserve for market risk. Investors should watch how management adapts risk governance, model updates, and capital strategies in response to SVAR-driven shifts.
Regulators continue to scrutinize internal models to ensure that risk aggregation remains robust under stressed conditions, reinforcing the importance of transparent methodology and governance in internal models like the IMA.
Reader Perspectives
What implications do you see for Santander’s capital planning as SVAR-driven RWAs rise? How will this influence investor confidence and strategic decisions in the near term?
Do you think SVAR movements will persist or ease as market conditions stabilize? Share your thoughts below.
Disclaimer: This article discusses banking risk metrics and regulatory concepts. It is informational and not investment advice.
Share your thoughts and questions in the comments.do you expect further SVAR-driven movements in the coming quarters?
Asset‑size expansion in Spain & Brazil – Santander’s cross‑border loan book grew 8 % YoY, pushing the “large‑exposure” threshold and raising risk‑weight factors.
Santander’s Modelled RWAs Surge 21.6% in Q3 2025 – A Deep Dive
Key figures at a glance
| Metric | Q3 2025 | Q3 2024 | YoY change | Peer‑group average (EU) |
|---|---|---|---|---|
| Modelled risk‑Weighted Assets (RWAs) | €708 bn | €582 bn | +21.6 % | +5.8 % |
| Core Tier 1 Ratio (CET1) | 13.2 % | 13.9 % | –0.7 ppt | 13.5 % |
| Impact on capital adequacy | ↓ 0.7 ppt | – | – | – |
Source: Santander Q3 2025 financial statements; European Banking Authority (EBA) peer‑group data.
1.What drove the 21.6 % RWA jump?
- SA‑CCR recalibration – The Standardised Approach for Counterparty Credit Risk (SA‑CCR) was tightened in early 2025, increasing credit exposure calculations for derivatives, especially in the Iberian corporate market.
- Trim‑adjusted credit risk weights – New trimming rules (Trim, SA‑CCR) introduced by the Basel Committee forced a re‑weighting of high‑risk loan portfolios, adding €12 bn in modelled RWAs.
- Asset‑size expansion in Spain & Brazil – Santander’s cross‑border loan book grew 8 % YoY, pushing the “large‑exposure” threshold and raising risk‑weight factors.
- Higher provision for non‑performing loans (NPLs) – A 30 % rise in NPL coverage in the Spanish retail segment added an extra 1.5 % risk weight to the loan portfolio.
illustration: The combination of a 5 % higher SA‑CCR multiplier and a 3 % increase in Trim‑adjusted credit weights alone accounts for roughly 12 % of the total RWA surge.
2. how does Santander’s RWA growth compare with European peers?
- Average EU bank RWA growth (Q3 2025): +5.8 % (source: EBA statistical release).
- Top outliers: BNP Paribas (+9 %) and Deutsche Bank (+11 %) – still far below Santander’s 21.6 % spike.
- Reason for divergence: Most European banks kept a higher proportion of Standardised Approach assets, while Santander’s modelled portfolio (internal ratings‑based) is more sensitive to Trim and SA‑CCR adjustments.
Peer‑comparison chart (YoY RWA change,Q3 2025)
| Bank | YoY RWA change | Primary driver |
|---|---|---|
| Santander | +21.6 % | SA‑CCR & Trim recalibration |
| BNP Paribas | +9 % | Higher loan growth, modest SA‑CCR impact |
| Deutsche Bank | +11 % | Increased market risk exposure |
| ING | +4 % | Stable credit risk profile |
| HSBC | +7 % | Expanded asian commercial banking |
3. regulatory implications & capital planning
- Capital buffers: The CET1 ratio fell to 13.2 %, marginally above the 13.0 % minimum under basel III. Santander now faces a tighter Capital Conservation Buffer that could limit dividend payout until Q1 2026.
- Stress‑test outlook: The European Banking Authority’s 2025 stress‑test scenario projects an additional 2 % RWA increase if macro‑economic conditions deteriorate, suggesting a potential CET1 dip to 12.8 %.
- Actionable tip for risk officers:
- Re‑run internal RWA models with conservative SA‑CCR multipliers.
- Conduct a “what‑if” analysis on Trim adjustments to identify high‑impact asset classes.
- Align dividend policy with dynamic capital‑buffer targets to avoid regulatory surprises.
4. Practical impact for investors and analysts
- Equity valuation: The RWA surge compresses return on equity (ROE) from 12.4 % (2024) to 10.1 % (Q3 2025), prompting a mid‑term price‑to‑book adjustment of –6 % across analyst consensus.
- Credit spreads: Santander’s senior unsecured bond yields widened by 15 bps post‑results, reflecting higher perceived capital risk.
- Portfolio strategy:
- Diversify into banks with lower modelled‑RWA exposure (e.g., ING, Nordea).
- Monitor upcoming EBA guidelines on Trim – they could trigger further RWA volatility.
5. lessons learned – Best practices for banks facing RWA volatility
- Dynamic modelling: Keep RWA models flexible to incorporate regulatory updates (SA‑CCR, Trim) without a full system overhaul.
- Clear reporting: Publish granular RWA breakdowns (credit, market, operational) to build investor confidence.
- Capital‑allocation discipline: Use scenario‑based capital planning to pre‑empt buffer breaches.
6. Real‑world example: Santander’s response in Q4 2025
- Capital raise: Issued €2 bn of Tier‑2 subordinated debt at 4.75 % to bolster the leverage ratio.
- Risk‑weight optimisation: Re‑allocated €5 bn from high‑risk corporate exposure to low‑risk retail mortgages, reducing overall RWAs by 3 % in the following month.
- Stakeholder dialog: Hosted a virtual investor day on 7 Nov 2025, detailing the RWA drivers and mitigation plan, which helped contain share‑price volatility.
7.Rapid‑reference checklist for analysts
- ☐ Verify RWA growth percentage against the latest santander Q3 2025 report.
- ☐ Compare SA‑CCR and Trim adjustments with peer banks.
- ☐ Assess impact on CET1, leverage, and dividend policy.
- ☐ Model “stress‑test” scenarios for further RWA hikes.
- ☐ Update valuation models (ROE, price‑to‑book) accordingly.
Prepared by Daniel Foster,senior content strategist – archyde.com