Shares in Spanish banking giant Banco Santander (BNC) slumped 11 per cent on news that new executive chairwoman Ana Botín - who took the helm following the death of her father, Emilio Botín - is raising fresh capital and slashing the dividend.
Specifically, Santander is raising €7.5bn (£5.9bn) from selling new shares to institutional investors to finance organic growth. Despite adequately passing European regulatory stress-testing in October, some analysts think that reflects concerns that the lender isn't as well capitalised as its largest rivals. But the move has also prompted speculation that Santander could be eying acquisitions: shares in struggling Italian bank Monte dei Paschi di Siena (It: BMPS), for example, jumped sharply on the news.
In a move apparently designed to address the perception that Santander's payout ratio is excessive, the bank is also hacking back its dividend to just 20¢ year from this year - comprising four 5¢ payments - from the 60¢ annual payout instigated by Ms Botín's father. Unfortunately, that will see 2015's prospective yield on the shares fall from a fat near-10 per cent to an unremarkable 3.3 per cent.
