Saturday, December 3, 2011

Banco Santander SA raising $2.6B in capital

According to Bloomberg, Santander (SAN) is planning to raise $2.6B in capital. They seek to swap preferred shares for ordinary shares to boost their capital. The price will be the average of shares traded between Dec. 14 and 23. This is occurring to address the 11.5B euro shortfall European regulators identified.

What does this mean? It dilutes shares. So if you are a shareholder it dilutes your ownership of the bank. But on the other hand, if it couldn't boost its capital, what would be the result of a capital shortfall?

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