Santander has dismissed as “inaccurate” a researchreport by Barclays analysts that warned the Spanish lender could need to raise nearly €18bn (£14.7bn)in new capital.
The Barclays report, entitled Capital doesn’tadd up, claimed that Santander’s domestic Spanish business has a capital-loss buffer about one-fifth the sizestated by the bank’s accounts.
“While Santander reports a 10pc core Tier 1 ratio for its Spanish business, it’s more like 2pc based on the capital that is actually available to absorb domestic losses. This suggests a €15bn to €18bn capital deficitin Spain,” wrote Barclays analyst, RohithChandra-Rajan.
Mr Chandra-Rajan argued that Santander’s accounts “overstate” the ability of its Spanish business to absorb losses by including capital that is
effectively locked up in foreign subsidiaries. He claimed that capitalwould be unavailable to the parent companyshould it be hit by newlosses in its domestic operations.
