Banco Santander launches surprise 7.5 bn euro capital hike

8th January 2015, Comments 0 comments

Spain's Banco Santander surprised markets Thursday by announcing it is seeking to raise up to 7.5 billion euros in fresh funds, a recapitalisation worth about 10 percent of its current market value.

"This operation will be carried out through an accelerated placement," said Santander, the eurozone's biggest bank by market value, after its board members held an extraordinary meeting.

The management also said it wanted to change its dividend distribution policy.

The lender did not say why it was carrying out the capital hike.

But Bloomberg news agency, which first reported that Santander was considering such a move, said new chairman Ana Botin is looking to strengthen the bank's balance sheet as investors have expressed concerns that capital at the lender is weaker than some competitors.

Botin, who took over from her father in September after he passed awat, has said the bank faces a growing challenge from tougher competition and stricter regulations.

The bank last carried out a recapitalisation in 2008, when it raised 7.2 billion euros to improve its capital ratio at the height of the financial crisis.

A property market collapse in 2008 left Spain's banks awash with bad loans and destroyed millions of jobs.

Santander was not spared from the collapse and had to write off billions in bad home loans, with some 19 billion euros wiped out from its books in 2012 alone.

© 2015 AFP

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