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Expert Corporate Governance Service (ECGS)
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Bankinter, March 21 2019

In item 6.5, the Board proposes to increase the number of Board members from 10 to 12, to allow the appointment of 2 independent Directors: Mr. Álvaro Álvarez-Alonso Plaza (item 6.1) and Ms. María Luisa Jordá Castro (item 6.2). After the AGM, the independent representation will increase from 30% to 42% according to our guidelines  (from 50% to 58% as per the Company's self-assessment). Also taking into account the professional background of the candidates, we recommend that shareholders approve their appointment.

In item 10.1, the Board proposes to approve a new remuneration policy for the 2019-2021 period (binding vote). No significant changes are proposed to the remuneration policy approved last year. We regret that pension contributions for the CEO (60% of her  base salary, as from 2018) substantially exceed our guidelines of 30% of the fixed  remuneration for Spanish companies. However, it should be considered that no contributions were made to the CEO's plan from 2010 to 2017, and aggregate  contributions will provide her with an annual pension expected in 31.5% of the base salary, which is in line with Spanish market's best practices. Furthermore, the CEO's fixed remuneration (€ 1'056'000 in 2018) is below the average at large Spanish banks  (approximately € 1.6 million), and we note that Bankinter is one of the few large European banks that has not set the variable to fixed remuneration ratio at the maximum of 200% allowed by CRD IV (the aggregate variable remuneration on an annual average basis is capped at 135%). Also taking into account that the overall  executive remuneration is adequately structured to realize an alignment of interests  with the shareholders in the long term, we recommend approval. We also recommend approving the Annual Remuneration Report (advisory vote in item 12), taking into account the overall remuneration structure and the very good quality of disclosure (all remuneration components are disclosed, including specific long-term targets and the level of achievement of annual KPIs)

Underlying
Bankinter S.A.

Bankinter is the parent company of a group engaged in banking activities. Services provided include: investment banking; capital market services; financial services insurance; international services such as foreign exchange transactions and travelers' checks; wholesale corporate banking; and retail and private banking services. Co. offers its products and services through the following channels of distribution: branch network; telephone banking, interactive (software) banking; agents; and Internet banking. As of Dec 31 2014, Co. had assets totalling Euro57,332,974,000 and deposits totalling Euro29,966,129,000.

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Expert Corporate Governance Service (ECGS)

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