Press release dividends

RNS Number : 0553S

Banco Santander S.A.

11 May 2009

 



Press Release

Banco Santander to continue paying dividend in cash and offers shareholders the option to receive part of their remuneration in shares 

• This plan will be applied to the second dividend payment (made in November.) 

• The Annual Shareholders Meeting would have to approve a EUR 1,000 million capital increase. 

• Shareholders will have the option to continue receiving cash or newly issued shares.

• The three remaining dividends will be paid only in cash.

Madrid, May 11th, 2009 -  Banco Santander's Board of Directors will propose to the Ordinary  Shareholders'  Meeting, which is expected to take place on its second call, on June 19th, a new plan for shareholder remuneration. 

Banco Santander's proposal consists of offering shareholders the opportunity to decide whether they prefer to continue to receive the second annual dividend (November) in cash or in newly issued Santander shares. The three other dividends will be paid only in cash.

This initiative, which is a response to suggestions from shareholders and is common practice in the international financial sector, offers maximum flexibility and enables shareholders to choose according to their tax and liquidity situation. 

According to this remuneration scheme, on the usual date of payment of the second annual dividend  each shareholder will receive one right for every share held. The value of the right will be equivalent to the amount of the dividend. Shareholders will have three options: 

-   To continue to receive a cash dividend: To do so, shareholders can sell their rights to
     Banco Santander at a fixed price equivalent to the second annual dividend. This option has the 
     same tax treatment as the dividend paid in cash, which is withholding at the rate of 18%. 

-   To sell their rights in the market:  The value of the right will fluctuate depending on market 
     prices. This option has no tax withheld. 

-   Receive new shares: Shareholders will receive for free the newly issued Santander shares to 
    which they are entitled depending on the rights held. The number of shares they will receive will
    depend on the share price at that moment. There is no tax retention.  

Shareholders will also be able to combine different alternatives, such as buying rights in the market or selling part of their rights (to the Bank or in the market) and receive the shares they are entitled to from the remaining rights. 

Banco Santander maintains its policy of remunerating shareholders in cash with a payout of approximately 50%. The Bank distributed EUR 0.6508 euros in dividends against 2008 earnings, for a total amount of EUR 4,812 million, becoming the international bank with the highest cash dividend.  

Example:

• A Banco Santander shareholder has 120 shares

• He receives 120 rights (one for each share)

• Value of each right: 0.12 euros *

• Share price (average of the five days before October 13th): for example 7.2 euros **

• Number of rights needed to receive one share: 60 

Impact of each option:

• Continue to receive cash: Once the process is closed, the shareholder will still have 120 shares plus 14.4 euros in cash (120 rights x 0.12 euros) with the corresponding tax retention.

• Sell rights in the market: Once the process is closed, the shareholder will still have 120 shares plus the amount in cash which will be higher or lower than 14.4 euros depending on the market price of the rights at the moment of the sale. This option has no tax withholding.

• Receive new shares: Once the process is closed, the shareholder will have 122 shares (the first 120 plus the two new ones (rights (120) / number of rights per share (60).) This option has no tax withholding.

*Provisional value of the right.

**A similar price to the current one has been used for this example.

 

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