Santander: We can meet capital requirements without cutting divi
Spanish bank Santander saidit would meet new Europe-wide capital requirements without carrying out a capital increase and without cutting dividends.
The euro zone’s largest bank said it aimed to reach 10 percent core capital by June 2012, up from 9.42 per cent at the end of the third quarter. A mark to market of its European debt portfolio would have an impact of 1.5 billion euros on its balance sheet, it said.
European leaders agreed to force banks to raise more capital by June next year, to protect against losses from any Greek debt restructuring and to try to contain the region’s financial crisis.
Spain’s second largest bank BBVA said earlier on Thursday that the European Banking Authority (EBA) had identified a capital buffer of 7.1 billion euros for BBVA, 1.9 billion euros of which was related to sovereign risk.
Santander reported a 13 percent drop in nine month net profit to 5.3 billion euros, slightly under a Reuters polled forecast, due to a one-off writedown to cover mis-selling of UK insurance policies taken in the second quarter.
Investors have raised concerns about the Santander’s capital levels given its exposure to toxic Spanish real estate assets and to its home country’s sovereign debt amid a crisis of confidence in peripheral euro zone countries.
Spain remains a weak spot for Santander, despite a decade of aggressive expansion abroad, as bad loans related to a steep property downturn call for greater provisions.
The bank agreed to sell a 25 percent stake in its US consumer finance business for $1 billion last week in a move it hopes will capture capital.
Spain’s second biggest bank BBVA said on Wednesday it can generate enough capital internally to meet the European Banking Authority’s new capital requirements.
Santander and BBVA would need 3.1 billion euros each under the Europe-wide recapitalisation plan, J.P. Morgan estimates.