Santander reaches EBA’s 9pc core capital, aims to achieve 10pc

MADRID | Banco Santander has reiterated its goal of having 10% core capital at the close of June, 2012, one point above the level required by the EBA. During the last few months of 2011 Banco Santander has carried out a series of measures regarding capital, allowing it to achieve a core capital ratio of 9% ahead of the European Banking Authority’s (EBA) deadline of June 30th, 2012.

The Spanish bank said that

“Santander has begun 2012 as one of the world’s most solid and well-capitalised banks, and aims to increase its core capital ratio to 10% in June, 2012, one point above the level required by the EBA, while maintaining total shareholder remuneration corresponding to fiscal year 2011 of euro 0.60 per share for a third consecutive year.”

At the start of December, the EBA disclosed its capital requirements for the main European banks. According to the EBA, Banco Santander’s additional capital needs amounted to €15.302 billion. This amount has been obtained as follows: €6.829 billion through Valores Santander, €1.943 billion through the exchange of preferred shares for ordinary new shares, €1.66 billion through the application of the Santander Dividendo Elección program (scrip dividend) at the time of the final dividend corresponding to fiscal year 2011, and €4.89 billion through organic capital generation and the transfer of certain stakes, mainly in Chile and Brazil.

Regarding the latter, Santander reached in December 2011 an agreement (implemented during the first week of 2012) to transfer 4.41% of Santander Brazil to a major international financial institution who will deliver such shares to holders of convertible bonds issued in October, 2010, by Banco Santander, when these mature, pursuant to the terms of those convertible bonds.