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The keys to the Santander dividend



Santander recently confirmed that the company's payment would rise from a range of 30-40 percent to 40-50 percent. However, the entity will retain the "scrip dividend" that initially promised to withdraw.

Shareholder compensation is one of the chapters that investors analyze with a magnifying glass when a new strategic plan is published, as Santander did a few weeks ago. In this issue, Santander's originator came to confirm two reports already in progress. On the one hand, Your plan to increase the payment (part of the profits to be paid to the shareholders) in the range of 30-40% to 40-50%. On the other hand, it is Keep the 'dividend scrip' That he had promised to withdraw. Currently, the entity performs four payments in February, May, August and November. Three of them are executed in cash and one under the program Santander Davidino Alcino ("dividend scrib" above, which allows payment of shares which was very tense during the crisis because it was dilution for investors who did not choose this option). The shares of the group, which took place in March 2018, Anna Botan promised cash payment and announced that the payment was made through two semi-annual payments per year from the distribution to 2019. In the end, Santander will pay € 0.23 per share, of which 0.205 will be paid in cash and the remainder In scrip.

To justify its decision, the bank claimed that a large acceptance of the program "scrip" among shareholders. In addition, Peanut explained that this is a way to give the bank greater flexibility. It should be remembered that this is a tool that helps them make capital, explains Nuria Lárez, a Renata analyst who follows the value and participates in the presentation of the entity in London.

flexibility

Anna Botan herself referred to the issue during "Investor's Day," held in London. He explained that since his arrival in the presidency of the entity, his greatest difficulty is to find a balance between the short and long goals; As well as between the requirements of various stakeholders and shareholders, which can not always be satisfied (as in this particular issue). It's like when you cut the commissions, (which decrease your income), but it's good for the long-term of the entity, he said.

Although, Santander also claimed that his intention is to gradually increase the portion paid in cash as, in fact, has been doing for years. It also appears that the entity will reduce the shares so that the payment is not diluted to investors. During the crisis, they dilute the shareholders through "scrip". But now, no such problem because they do not have enough money to pay liquidity market does not see it as something problematic, says Nicholas Lpez, of MG Valors.

Finally, Peanut claimed that he did not intend to lower the salary of 0.23 euros per share. The commitment of maintenance has not given up, because cutting could have been one of the tools chosen by the entity to recapitalize over 12 percent in the short term as they claim foreign investors to get online with other multinational bodies more focused on investment banking, according to Antonio Aspas, Partner of Buy & Hold.

But once he promised the dividend maintenance, would Anna Botan be able to fulfill her obligation? In this regard, some analysts questioned the sustainability of the dividend, although many banking businesses have challenges on the horizon: in principle, it should not have any problem to pay. If you pay less, you can increase capital and reduce stress in the market. But I think he can afford it and has a margin, says Ignacio Cantos of Mattel Capital.

The same LVarez believes: the existence of the dividend is not in doubt with the current data, if the area of ​​payment is wide.

And whether dividend cuts is a dramatic step in an entity like Santander, with so many minority shareholders. Emilio Botan (father and predecessor of Anna Botan under the presidency of the entity) knew this and kept the tide of 0.60 euros per share, even in the worst years of the crisis, leading the bank to register (more than 100 percent or 200 percent), and as a result, Large market, who thought that this is not a healthy practice for the future of the entity. It was exactly in those years when Santander introduced the 'Scrip' To minimize impact on accounts.
However, when Emilio Botan died in 2014, his successor replaced the shareholder compensation that was applied online with the other entities (with the approval of Bankier, which pays about 50% of the benefit and always in cash). Anna Patricia lowered him to a goal of 30-40% of the rate, according to which BBVA was also observed, maintaining the "crepe," explains Negura Dez, Norurbulsa.

Now, however, and in line with the steps that the competition is adopting (to pay cash), it seems that Botn wants to recognize the shareholders through this gradual improvement of repayment.


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