Santander’s U.S. Unit to Bolster Oversight in Fed Agreement

Santander Holdings USA Inc., a subsidiary of Spain’s Banco Santander SA, agreed to strengthen its capital-distribution oversight after paying a dividend this year without Federal Reserve approval.

Santander Holdings declared a dividend on common shares payable in the second quarter even though the regulator had only approved distribution on some preferred shares in the lender’s capital plan, according to an agreement disclosed today by the Federal Reserve Bank of Boston. Madrid-based Banco Santander gave $21 million to its U.S. unit to address the violation, the Fed said.

The U.S. firm agreed to submit written procedures strengthening oversight of its capital plans to the Fed within 30 days, according to the agreement. The company also agreed it wouldn’t pay any dividends without Fed approval.

Santander Consumer USA Holdings Inc., the U.S. auto-lending unit of the Spanish bank, raised about $1.8 billion in an initial share sale in January. The firm originates auto loans through car dealerships, manufacturers and banks, with subprime loans making up more than 80 percent of its portfolio at the time of IPO.

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