SANTANDER has raised all the necessary capital to meet regulators’ demands six months ahead of schedule, the bank declared yesterday.
It said that it had raised the lion’s share – €6.83bn (£5.6bn) – through a controversial bond conversion known as Valores Santander.
The project involved activating a clause that converted a huge slice of its debt, much of it bought by its retail customers, into less valuable equity, causing a row in Spain over accusations that it had taken a “cavalier attitude” towards its investors.
Of the other €8.2bn, the bank found €1.94bn by swapping preferred shares for common shares, €1.66bn by issuing a scrip dividend (which can be issued in shares rather than cash) and the remaining €4.89bn from accrued earnings and offloading stakes in Chilean and Brazilian businesses.
Altogether, the bank said that the moves bring its core tier one capital ratio up to the nine per cent demanded by the European Banking Authority.
The news came as its UK business unveiled the appointment of a former RBS executive charged with kickstarting the bank’s stalled purchase of 318 branches from its nationalised rival.
Martin Bischoff – no relation to the Lloyds chairman of the same surname – will join Santander UK from RBS in order to oversee the integration of the branches, which the bank wants to complete by the end of this year, about a year behind schedule.
Bischoff who is moving from a senior role at RBS-owned Citizens Financial Group, will be in charge of the retail side of the operation.
The purchase of the branches became so fraught last year that Santander UK was forced to renegotiate the entire deal with RBS over the summer, making the arrival of a former RBS insider particularly useful to the bank.
It is not yet clear what kind of discount on the purchase Santander UK could get, given that the worsening macro-economic situation could have significantly changed the value of some of the assets.
The bank has also not ruled out sales of chunks of its international business to bring its capital up further to ten per cent.