Business Context and Reporting Period
This Form 6-K filing by Banco Santander, S.A. covers the month of July 2024, with the report dated July 29, 2024. The filing announces the completion of a capital raise through the issuance of contingent convertible preferred securities (CoCos).
Key Financial Metrics and Capital Structure
- Issuance Amount: $1,500,000,000 (one billion five hundred million U.S. dollars) in nominal value.
- Instrument Type: Preferred securities contingently convertible into ordinary shares (CoCos).
- Coupon Rate: 8.000% annual fixed rate for the first 10 years, subject to review every five years thereafter based on the 5-year UST rate plus a 391.1 basis point margin.
- Capital Classification: Eligible as Additional Tier 1 (AT1) capital under Regulation (EU) No. 575/2013 (CRR).
- Current Capital Position: As of June 30, 2024, the fully loaded consolidated Common Equity Tier 1 (CET1) ratio was 12.5%.
- Conversion Trigger: Mandatory conversion to ordinary shares if the CET1 ratio falls below 5.125%.
Material Changes and Transaction Details
The Bank completed an accelerated book-building placement targeted exclusively at professional investors and eligible counterparties. The issuance excludes pre-emptive subscription rights for existing shareholders. The securities are perpetual but callable under certain circumstances. The Bank intends to list the CoCos on the New York Stock Exchange.
Outlook, Risks, and Contingencies
- Regulatory Compliance: The Bank has filed a registration statement and prospectus supplement with the SEC. A directors' report regarding the conversion basis and exclusion of pre-emptive rights is available on the Bank's website.
- Investor Restrictions: The securities are not available to retail clients in the European Economic Area or the United Kingdom. Distribution is restricted in various jurisdictions including Italy, Spain, Canada, and Asia-Pacific regions unless specific exemptions apply.
- Discretionary Payments: Coupon payments are subject to certain conditions and the discretion of the Bank.
- Legal Status: This filing is an announcement and not an offer to sell securities in jurisdictions where registration is required.
Key Facts for Investor Verification
- Verify the full terms of the CoCos in the prospectus and prospectus supplement filed with the SEC.
- Confirm the Bank's current CET1 ratio relative to the 5.125% conversion trigger.
- Review the directors' report on the Bank's website regarding the exclusion of pre-emptive rights.
- Check the admission status of the securities on the New York Stock Exchange.
- Assess jurisdiction-specific restrictions if the investor is located in the UK, EU, Italy, or other restricted regions.