9th January 2015
Santander is relying on shareholders to boost its capital with plans to sell 1.3 million new shares, worth up to £5.9 billion.
In a stock exchange statement the global bank said the money will be used to increase capital, start paying an all-cash dividend and fulfil growth plans. The shares were temporarily suspended on the Madrid stockmarket on Thursday ahead of the announcement.
The move by the eurozone’s biggest bank comes as a surprise to markets and shows new chairman Ana Botin wants to place her stamp on the business.
The new share issue will do little to dampen rumours that Santander is planning to snap up other global banks. The Financial Times is reporting that Santander has its eye on Italian bank Banco Monto dei Paschi di Siena. The Italian bank is apparently looking for a buyer after performing poorly in European banking stress tests.
However, Santander comfortably passed the recent stress tests and there has been speculation about whether it may float its UK arm.
Investment banks Goldman Sachs and UBS are co-ordinating on the listing of the new shares which will not be a public offering but an ‘accelerated book-building offering’, which means only qualified customers will be eligible to purchase the new shares.
While analysts agreed the strengthening of the balance sheet made sense in a tough eurozone environment, there were concerns about what the money is for.
Yohan Salleron, equity manager at France’s Mandarine Gestion, told Reuters: ‘We met Santander one month ago and they didn’t say they needed a capital increase. We need to understand why they need [it].’