EUROPE’S largest bank Santander is to become the latest Spanish bank to issue preference shares to bolster its capital ratios and increase liquidity.<br /><br />The bank is understood to be seeking the blessing of the country’s market regulator to issue preference shares worth €2.5bn (£2.2bn), although a spokesman for Santander was unable to confirm the reports.<br /><br />The issue is believed to be aimed at replacing earlier issues that the bank is to redeem after five years and follows similar moves by Spanish rivals.<br /><br />BBVA, the second largest Spanish bank after Santander, raised €1bn via a preference share issue late last year – a measure that was quickly mimicked by a host of other lenders, which opted to raise around €12bn between them. Santander, which own Abbey National in the UK, is likely to pay a better-than-average interest rate on the preference shares, given its financial strength.