Santander eyes UK, U.S. growth after 7.5 billion euro cash call

Fri Jan 9, 2015 3:44pm EST
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By Jesús Aguado and Steve Slater

MADRID/LONDON (Reuters) - Santander (SAN.MC: Quote) chief Ana Botin is expected to target Britain, the United States and the bank's Spanish home market under her plan to accelerate growth after raising 7.5 billion euros ($8.8 billion) via Europe's biggest-ever quick-fire share sale.

The fundraising also reduces the likelihood Santander will spin off and separately list its British business, as it has less need to raise capital from a partial sale, bankers said.

"If you have a strong capital base and are profitable, you are unlikely to sell a good asset," one banker said in reference to a possible UK flotation, which the bank has considered in recent years but pushed back several times.

The latest guidance from Santander is that a sale would not happen in 2015.

Santander shares closed down nearly 15 percent at 5.89 euros, earlier hitting a 13-month low, after the bank sold 1.26 billion new shares late on Thursday at a 10 percent discount to its previous share price to improve its capital strength and provide funds to lend more.

Botin also cut the bank's dividend as part of a plan to remove any doubts about its capital strength, the latest sign she is stamping her mark on the bank after taking over from her late father, Emilio, who ran Santander for 28 years until his death last September.

"Ana Patricia is showing she has character and she’s wanted to make her own mark with the recent decisions, but deep down the philosophy is not that different from her father’s," said Enrique Quemada, CEO of Spanish investment bank ONEtoONE.

"She is betting on organic growth, but this capital raising will allow her to keep growing the bank, and really this is a demonstration that the bank is betting on size, size, size."   Continued...

People walk past a Banco Santander branch in downtown Rio de Janeiro August 19, 2014. REUTERS/Pilar Olivares