Santander plans to raise up to £5.9bn through the sale of 1.3m new shares, with reports suggesting the fundraising will be used to acquire other banks.
The bank issued a statement to the stock exchange yesterday saying the funds will be used to boost capital, start paying an all-cash dividend and help achieve growth plans.
Shares in Santander have been temporarily suspended while the bank’s board members meet to finalise the plans.
Investment banks Goldman Sachs and UBS are coordinating the listing, which will take place as an “accelerated book-building offering” instead of a public offering. This means only qualified customers will be eligible to purchase the new shares.
Santander comfortably passed the European stress tests carried out last year ahead of the new Basel III capital requirement regulations due in 2019.
Under the stress test, Santander’s common equity tier one ratio fell from 10.4 per cent to 8.9 per cent under a hypothetical recession scenario. The minimum requirement under Basel III is 5.5 per cent. The bank says it will aim to reach a stressed ratio of 10 per cent by the end of 2015, helped by the capital raised through the fundraising.
Following the announcement, the Financial Times reported that Santander is eyeing the acquisition of Italian bank Banco Monto dei Paschi di Siena. Shares in the Italian bank jumped 10 per cent on the news.