By Jeannette Neumann and Christopher Bjork
MADRID-- Banco Santander SA said it will raise up to EUR7.5
billion ($8.88 billion) in a capital hike, a bid by its new
executive chairman, Ana Botín, to address long-standing concerns
among investors and analysts that its financial cushion is thinner
than those of other big European banks.
Santander said in a regulatory filing Thursday that it would
raise the capital through an accelerated book building process,
which entails selling the stock overnight to institutional
investors. Santander chose Goldman Sachs Group Inc. and UBS AG to
oversee the capital hike, a person close to the bank said.
The bank, the eurozone's largest by market value, said the share
sale would amount to 9.9% of its capital level before the hike.
Analysts estimated that the hike would put Santander's capital
level--under international regulations known as "fully loaded"
Basel III criteria--at around 10% of risk-weighted assets, more in
line with its European peers.
Santander said in its most recent quarterly earnings report in
November that its capital ratio was expected to be about 8.5% to
8.6% of risk-weighted assets at the end of 2014, a source of
concern for analysts and investors.
The Spanish stock market regulator suspended trading in the
bank's shares Thursday ahead of the afternoon announcement.
The bank is also slashing its dividend in 2015 to EUR0.2 per
share, down from the EUR0.6 per share it has paid since 2007.
Santander said it would divide the annual payment to shareholders
into three cash dividends and one scrip dividend.
The capital hike is one of several major decisions by Ms. Botín
to put her stamp on the bank since taking over as the bank's
executive chairman in September after the death of her father,
longtime chairman Emilio BotíSHYn.
Since then, Ms. BotíSHYn has replaced Javier Marín, an executive
who was close to her father, as Santander's chief executive
officer. She also disbanded an international advisory board,
distancing the bank from a board member who is the target of a
high-profile criminal investigation into suspected fraud during his
leadership of a different bank.
She also appointed a new chief financial officer and three other
board members, a bid to rejuvenate a board that analysts and
investors had criticized as too old and chummy with Mr. Botín.
Ms. Botín has overseen the launch of competitive terms for a
checking account in Catalonia, a bid to bolster the bank's presence
in the economically-powerful Spanish region. Analysts have said
that move won't make a major difference in Santander's revenue in
Spain, but shows that Ms. Botín won't be outpaced by other rivals
who have expanded in Catalonia recently.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
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