Santander shares have fallen 10% after its new chair Ana Botín announced a major fundraising and dividend cuts to shore up the eurozone’s biggest bank.
The shares dropped to €6.17 a day after the Spanish bank asked shareholders for €7.5bn (£5.9bn), about 10% of its share capital, with plans to sell 1.258bn shares at €6.18-€6.50 a share. The stock was suspended on the Madrid stock exchange pending the announcement on Thursday.
The share sale could dilute the Botín family’s holding to 2%.
Analysts questioned whether the surprise cash call was necessary, triggering speculation that it could herald a big acquisition. This prompted a sharp rise in the shares of the struggling Italian lender Monte dei Paschi di Siena.
Santander passed the European bank stress tests last year but was shown to be weaker than many other lenders. It survived the global financial crisis and Spanish recession relatively unscathed, without falling into quarterly or annual losses.
Unlike many other banks, it kept dividends unchanged after the 2008 crisis, but now intends to cut its 2015 payout to 20 cents a share, from 60 cents.
Former investment banker Baroness Vadera, who was a close adviser to Gordon Brown during the banking crisis, was recently appointed as the new chair of Santander’s UK arm, replacing Treasury mandarin Lord Burns. Botín, who had been running the UK arm as chief executive, returned to Spain in September to run the overall banking group after the death of her father. She has been succeeded by newly recruited Nathan Bostock.
As part of the boardroom shakeup, Botín ousted Santander’s group chief executive, Javier Marín, in November and replaced him with the finance boss, José Antonio Alvarez.
