Banco Santander said on Thursday that it would begin a capital increase of as much as 7.5 billion euros (US$8.8 billion), equal to almost a tenth of its stock market value, in a bid to strengthen its balance sheet.
The Spanish bank, one of Europe’s largest financial institutions, said in a statement to the Spanish stock market regulator that it planned to issue new shares via “an accelerated” sale. In 2008, Banco Santander undertook a similarly large capital increase equivalent to 7.2 billion euros at Thursday’s exchange rates.
The move comes after a significant management overhaul. In September, the bank decided to maintain its family leadership by appointing Ana Patricia Botin as executive chairwoman, after the death of her father, Emilio Botin, who ran and transformed Banco Santander over two decades from a family-controlled regional bank into Spain’s largest bank by assets.
Photo: AFP
Two months later, Botin made her own significant changes, removing Javier Marin, who had been appointed chief executive two years earlier by her father, and promoting instead Jose Antonio Alvarez, Santander’s chief financial officer, as the new chief executive.
Banco Santander does not regularly make public its capital ratio, unlike most of its European rivals. Marin, however, estimated shortly before his ouster that the capital ratio would be about 8.5 percent at the end of last year, under the so-called Basel III rules, slightly below the 9 percent level the bank had initially forecast.
Shares in Banco Santander rose 3 percent on Thursday, before trading was suspended by the stock market regulator pending a statement from the bank. Banco Santander said it would provide further details on the capital increase on Thursday, after a meeting of its board.
The bank also said it expected the board to approve a change in its dividend payment policy. Shareholders will be offered cash for three of the four payments expected this year, while one will be in shares. The overall dividend payout, however, is likely to be US$0.20 per share this year, the bank said, compared with US$0.60 last year.
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