Santander considers bond issue

Spain's biggest bank Santander is considering launching a bond issue, taking advantage of a government offer to guarantee new bank debt, Expansion reported yesterday, citing unnamed financial sources.

Santander would be the first Spanish bank to avail itself of the government's guarantees.

A Santander spokesman declined to comment on the report.

Last month, the Spanish government announced an aid package for the financial sector to tackle the global credit crisis, in line with similar packages agreed across the European Union.

The initiatives include €100 billion (Dh367bn)of state guarantees in 2008 for new financing by credit entities operating in Spain to boost liquidity and jump start lending.

"Santander is evaluating not only the impact on its image of being the first bank to take up the government's guarantees, but also the need to open up the (interbank) markets again," the sources cited by Expansion said. Santander was the first Spanish bank to take measures to shore up its capital base, as the solvency bar has been raised following government bailouts across Europe.

On Friday, the bank said investors had signed up for all of its €7.2bn rights issue, which will raise its core tier 1 capital to seven per cent from a previous target of six per cent.

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