SANTANDER is set to offload a 7.8 per cent stake in its Chilean subsidiary, worth approximately $1bn (£639m), in an effort to increase its core capital to 10 per cent by 30 June 2012.
The bank is selling the shares in order to meet new regulatory requirements for capital ratios, with the European Banking Authority (EBA) stating European banks must have a nine per cent capital ratio by mid-2012 after accounting for write-downs in the value of their sovereign bonds.
The sale of approximately 14,741.6m common stock shares of Banco Santander Chile leaves 67 per cent of the share capital of Banco Santander Chile under the control of the group, led by Emilio Botin (pictured).
The EBA announced the harsher guidelines in late October, hoping that the capital-raisings will restore confidence in the European banking system.
Banks are required to submit their plan of action to national authorities by the end of 2011. In addition, banks are expected “to withhold dividends and bonuses”, in order to meet the targets, according to the EBA.
Some analysts believe Santander’s decision to sell stocks could set a precedent for other banks scrambling to meet the target for capital ratios on time.
Among those struggling, it was reported yesterday that Commerzbank, Germany’s second largest lender, may need €5bn (£4.3bn) to meet the new requirements, instead of the €1.9bn originally expected. Despite the rumours, yesterday Commerzbank chief executive Martin Blessing stood by previous statements that the bank would not need outside assistance.