Santander Brasil Plans $2.7 Billion Payout to Its Shareholders

Photographer: Paulo Fridman/Bloomberg

Pedestrians pass a Banco Santander Brasil SA bank branch in Sao Paulo. Close

Pedestrians pass a Banco Santander Brasil SA bank branch in Sao Paulo.

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Photographer: Paulo Fridman/Bloomberg

Pedestrians pass a Banco Santander Brasil SA bank branch in Sao Paulo.

Banco Santander Brasil SA (BSBR), the fourth-largest Brazilian bank by market value, plans to pay out 6 billion reais ($2.7 billion) to stockholders and issue the same amount of dollar-denominated debt.

Shareholders will have the option of using their payments to acquire the subordinated debt, the bank said yesterday in a regulatory filing. The goal of the plan, which also includes a reverse stock split to reduce transaction costs for investors, is to increase shareholder returns while shifting to a cheaper form of capital, the Sao Paulo-based company said.

The deal would conclude around January if approved at a meeting of shareholders. The bank’s Madrid-based parent, Banco Santander SA (SAN), committed to buying the debt in an amount proportional to its stake, Santander Brasil said. The company said it will maintain a 21.5 percent capital ratio, a gauge of leverage measuring total capital in relation to risk-weighted assets. The notes will be Tier 1 and Tier 2 capital.

For the reserve split, Santander Brasil proposed that investors get one voting or non-voting share for every 55 voting or non-voting shares they hold.

For the payout, investors will receive 0.015086372746 reais per voting or non-voting share. Holders of units, comprised of a voting and non-voting share, would receive 1.58406913833 reais per unit.

The plan also includes a distribution of 0.047619048 non-voting share to each voting or non-voting share, and five non-voting shares for every unit.

To contact the reporter on this story: Cristiane Lucchesi in Sao Paulo at clucchesi5@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Christine Harper at charper@bloomberg.net

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