TIDMBNC
RNS Number : 2667E
Banco Santander S.A.
16 October 2018
MATERIAL FACT
Banco Santander, S.A. discloses information in connection with
the flexible compensation scheme "Santander Dividendo Elección"
(scrip dividend scheme) to be applied to the second 2018 interim
dividend. An informative document is enclosed for purposes of
article 26.1.e) of Royal Decree 1310/2005, of 4 November
(implementing Directive 2003/71/EC on the prospectus to be
published when securities are offered to the public or admitted to
trading).
Boadilla del Monte (Madrid), October 16, 2018
INFORMATIVE DOCUMENT
CAPITAL INCREASE CHARGED TO RESERVES
BANCO SANTANDER, S.A.
October 16, 2018
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THIS DOCUMENT HAS BEEN PREPARED IN ACCORDANCE WITH ARTICLE 26.1.E) OF
ROYAL DECREE 1310/2005.
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1. OBJECT
The ordinary general shareholders' meeting of Banco Santander,
S.A. ("Banco Santander", "Santander" or the "Bank") held on March
23, 2018 resolved, under item eight of its agenda, to increase the
share capital of Banco Santander, with full charge to reserves, in
an amount to be determined in accordance with the terms and
conditions set out in the resolution (the "Increase"), delegating
the execution of the Increase to the board of directors, with
authority to delegate in turn to the executive committee, pursuant
to article 297.1.a) of the consolidated Spanish Capital
Corporations Law, as passed by means of Royal Legislative Decree
1/2010, of 2 July ("Spanish Capital Corporations Law").
The executive committee of the Bank, on October 16, 2018, has
resolved to execute the Increase in accordance with the terms and
conditions set out by the ordinary general shareholders' meeting,
and has fixed the overall market value of the Increase (Amount of
the Alternative Option) in 565 million Euro, pursuant to that
resolution of the general shareholders' meeting.
In accordance with article 26.1.e) of Royal Decree 1310/2005, of
4 November (implementing Directive 2003/71/EC on the prospectus to
be published when securities are offered to the public or admitted
to trading), the preparation and publication of a prospectus
related to the admission to listing of the shares issued as a
consequence of the execution of the Increase will not be necessary
"provided that a document is made available containing information
on the number and nature of the shares and the reasons for and
details of the offer". This informative document provides such
information. This document is available at the Bank's website
(www.santander.com) and at the CNMV's website (www.cnmv.es).
2. PURPOSE OF THE INCREASE: "SANTANDER DIVIDO ELECCIÓN" SCHEME
The Increase serves as an instrument for the
shareholder-compensation scheme named "Santander Dividendo
Elección" which shall be applied to the second 2018 interim
dividend in October / November 2018. This scheme allows
shareholders to opt between receiving newly issued Santander shares
or an amount in cash broadly equivalent to the second interim
dividend of 2018. The "Santander Dividendo Elección" scheme is
similar to other programs implemented in the past by other
international banks and extended among some of the companies which
form part of the IBEX-35. With it Santander's shareholders will be
able to adapt their compensation to their preferences and personal
situation, also benefiting from a more favourable tax treatment in
case they opt to receive new shares.
"Santander Dividendo Elección" scheme works as follows. Each
shareholder will receive a bonus share right for every Santander
share held. These rights will be listed on and may be traded on the
Spanish Stock Exchanges during a 15 calendar day period. Following
the end of this period, the rights will be automatically converted
into new Santander shares. Each shareholder may opt for one of the
following alternatives:
(i) Receive new Santander shares. In this case, the shareholder
will receive free of charge the number of shares corresponding to
the number of rights held. The delivery of shares will not be
subject to Spanish withholding tax.
(ii) Receive a cash payment broadly equivalent to the
traditional second interim dividend. To this end, Banco Santander
has assumed an irrevocable commitment to acquire the bonus share
rights for a fixed price. This option will be offered only to
shareholders who have acquired their Santander shares no later than
23:59 h. on the date on which the announcement of the Increase is
published in the Official Bulletin of the Commercial Registry
("BORME") (envisaged for 17 October 2018, as set out in the
calendar shown in Section 3.4 below) and who appear as shareholders
in the registries of the Sociedad de Gestión de los Sistemas de
Registro, Compensación y Liquidación de Valores, SAU (Iberclear) as
at 23:59 h. on 19 October 2018, and only with regard to the bonus
share rights granted free of charge. Consequently, the bonus share
rights acquired on market may not be tendered in Banco Santander's
offer. This option will be subject to the same tax treatment as a
dividend distribution and, therefore, the amount to be paid to the
shareholders is currently generally subject to a 19% Spanish
withholding tax deduction.
(iii) Receive a cash payment through selling rights on market.
Given that the rights will be listed, the shareholders may sell
them on market at any time during the trading period described in
section 3.5 below at the prevailing market price rather than at the
guaranteed price offered by Banco Santander. The proceeds for the
on market sale are currently subject to a 19% Spanish withholding
tax deduction for shareholders who are resident in Spain.
Additionally, shareholders will be able to combine the above
mentioned alternatives in view of their specific needs.
Shareholders who do not make an election will receive new shares
unless they have previously given (in previous programs) permanent
instructions as described in section 3.5 below.
3. DETAILS OF THE OFFER
3.1. Number of rights needed and number of shares to be issued
Pursuant to the formulae set forth in section 2 of the general
shareholders' meeting resolution, the executive committee has set
the following details of the Increase:
(i) The number of bonus share rights needed to receive a new
share is 123. The shareholders of Banco Santander who have acquired
their Santander shares no later than at 23:59 h. on the day of
publication of the announcement of the Increase in the Official
Bulletin of the Commercial Registry ("BORME") (envisaged for 17
October 2018) and who appear as shareholders in the registries of
Iberclear as at 23.59 h. on 19 October 2018, will be allotted a
bonus share right for each share of Santander held. Therefore, the
aforementioned shareholders will have the right to receive a new
share for each 123 old shares held on the mentioned date.
Such number of rights has been calculated as follows,
considering that the number of outstanding shares of the Bank is
16,136,153,582, that the Amount of the Alternative Option is
565,000,000 Euros, as indicated above, and that the average market
price of the Santander share in the term set out in the capital
increase resolution (PreCot) is 4.301 Euros:
Num. rights = NTAcc / (Amount Alternative Option / PreCot) =
16,136,153,582 / (565,000,000 / 4.301) = 122.834684170 = 123 rights
(rounded up to the nearest whole number).
(ii) The number of shares to be issued is 131,188,240.
Nevertheless, the actual number of shares which shall be finally
issued may be lower, as it will depend on the number of rights
acquired by Banco Santander under its commitment to purchase bonus
share rights. Banco Santander will waive the bonus share rights it
acquires by virtue of such commitment. Therefore, only the shares
corresponding to the bonus share rights not acquired by Banco
Santander will be issued. This number results from the following
formula:
NAN = NTAcc / Num. rights = 16,136,153,582 / 123 = 131,188,240
new shares (rounded down).
To ensure that the number of bonus share rights necessary to
receive a bonus share, and the number of bonus shares to be issued,
are whole numbers, Pereda Gestión, S.A., a subsidiary of Banco
Santander, has waived 62 bonus share rights, corresponding to 62
Santander shares owned by her.
3.2. Amount of the Increase and reserve against which it will be charged
In view of the number of shares to be issued set out above, the
maximum amount of the Increase is 65,594,120 Euros. The amount by
which the Bank's capital will actually be increased is dependant
upon the number of shares finally issued.
The amount of the Increase will be charged against the share
premium reserves, which amounted to 51,053 million Euros as of
December 31, 2017.
3.3. Price of the commitment to purchase rights
The gross price at which Banco Santander commits to purchase
rights is 0.035 Euros per right, calculated pursuant to the formula
set forth in the Increase resolution as follows:
Price of the commitment to purchase the bonus share rights =
PreCot / (Num. of rights + 1) = 4.301 / (123 + 1) = 0.034685483 =
0.035 (rounded up or down to the nearest Euro thousandth and, in
case of a half Euro thousandth, rounded up to the nearest Euro
thousandth).
As a result, those shareholders willing to receive their
compensation in cash, will be able to sell their bonus share rights
to Banco Santander at a fixed gross price of 0.035 Euros.
3.4. Calendar
The envisaged calendar for the execution of the Increase is the
following:
(i) October 17, 2018. Publication of the announcement of the
Increase in the Official Bulletin of the Commercial Registry
("BORME"). Reference date for the allotment of rights (23:59 h.
CET) (last trading date).
(ii) October 18, 2018. Beginning of the trading period of the
rights. Santander share quotes "ex-coupon" (ex date).
(iii) October 29, 2018. Last date to request compensation in
cash (sale of rights to Santander Group).
(iv) November 1, 2018. End of the trading period of the rights.
Acquisition of bonus share rights by Banco Santander from those
shareholders who have requested cash broadly equivalent to the
traditional second interim dividend.
(v) November 5, 2018. Cash payments to those shareholders who have so requested.
(vi) November 6, 2018. Banco Santander waives the rights
acquired from those shareholders who have requested their
compensation in cash (sale of rights to Santander Group). Closing
of the Increase.
(vii) November 6 - November 13, 2018. Actions for the
registration of the Increase and admission to listing of the new
shares on the Spanish Stock Exchanges.
(viii) November 14, 2018. Beginning of ordinary trading of new
shares on the Spanish Stock Exchanges[1].
3.5. Allotment of rights and procedure to opt for cash or new shares
The bonus share rights will be allotted to the shareholders of
Banco Santander who have acquired their Santander shares no later
than at 23:59 h. on the day of publication of the announcement of
the Increase in the Official Bulletin of the Commercial Registry
("BORME") (envisaged for 17 October 2018) and who appear as
shareholders in the registries of Iberclear as at 23:59 h. on 19
October 2018. The trading period of the rights will begin on the
next business day and will have a term of fifteen calendar days
(from October 18 to November 1, 2018).
During the trading period of the rights, the shareholders may
opt for cash or new shares as explained above, as well as for
acquiring on market bonus share rights to subscribe for new shares.
However, those shareholders who wish to accept the commitment to
purchase rights offered by Banco Santander and receive cash at the
guaranteed price shall need to communicate their decision no later
than October 29, 2018. The commitment to purchase rights is
addressed only at the rights allotted free of charge to
shareholders, and not to those acquired on market. To choose among
the alternatives offered by the "Santander Dividendo Elección"
scheme, shareholders will have to contact the entities where their
Santander shares and corresponding bonus share rights are
deposited. Specifically:
(i) Shareholders whose shares are deposited at Grupo Santander.
These shareholders may opt to receive, in the current program,
their compensation in cash at the guaranteed fixed price offered by
Banco Santander from time to time. To this end, they will have to
contact their usual branch and give the relevant order.
Shareholders who opted in any previous "Santander Dividendo
Elección" scheme to receive cash in subsequent programs at the
guaranteed price will receive their compensation in cash and no
communication shall be required. In the absence of an express
communication, shareholders who have not opted in previous programs
to receive cash permanently will receive new shares. Grupo
Santander shall not charge any fees or costs to those shareholders
who opt to receive cash at the guaranteed fixed price or to receive
new shares. In case of sale of the rights on market, Grupo
Santander shall charge the usual fees or costs pursuant to the
applicable regulations.
(ii) Shareholders whose shares are deposited with other
entities. These shareholders will have to contact the entity where
their shares are deposited to make their decision. Specifically, if
they want to receive cash at the fixed purchase price of Banco
Santander's commitment, they shall make their option no later than
October 29, 2018. In the absence of an express communication,
shareholders will receive new Santander shares[2]. The depositary
entities may charge to shareholders fees or costs related to the
allotment of shares or to the sale of rights pursuant to the
applicable regulations.
In any event, shareholders are urged to take into account the
tax treatment of each of the options available to them, which are
briefly summarized in section 5 below (and, in particular, the fact
that withholding taxes may be applicable). The Increase is carried
out free of fees and costs for shareholders in connection with the
allotment of the new shares, with Banco Santander assuming the
costs for the issue, subscription, placing on market, listing and
other related costs.
4. NATURE OF THE SHARES TO BE ISSUED
4.1. Face value, issue price and representation of shares
The new shares to be issued in the Increase will be ordinary
shares with a face value of fifty Euro cents (0.5) each, of the
same class and series as those currently outstanding. The new
shares will be issued at an issue price of fifty Euro cents (0.5),
that is, without issuance premium, and will be represented in
book-entry form, the records of which will be kept by Sociedad de
Gestión de los Sistemas de Registro, Compensación y Liquidación de
Valores, S.A.U. (Iberclear) and its participant entities.
4.2. Reserves to which the shares will be charged and balance sheet used for the Increase
The Increase is free of charge and, therefore, does not require
any payment from the shareholders. As stated above, the Increase
will be charged against the share premium reserves, which amounted
to 51,053 million Euros as of December 31, 2017.
The balance sheet used for purposes of the Increase is that
corresponding to December 31, 2017, duly audited by
PricewaterhouseCoopers Auditores, S.L. on February 16, 2018 and
approved by the ordinary general shareholders' meeting on March 23,
2018 under item one A of its agenda.
4.3. Shares in deposit
Following the end of the trading period of the bonus share
rights, the new shares that have not been capable of being allotted
due to causes not attributable to Banco Santander will be kept in
deposit and available to those who evidence lawful ownership of the
relevant bonus share rights. Three years after the end of the bonus
share rights trading period, the shares still pending to be
allotted may be sold at the risk and expense of the interested
parties in accordance with article 117 of the Spanish Capital
Corporations Law. The net proceeds of the sale will be deposited in
the Bank of Spain or in the General Deposit Bank (Caja General de
Depósitos) at the disposal of the interested parties.
4.4. Rights of the new shares
The new shares will confer the same voting and economic rights
upon their holders as the currently outstanding ordinary shares of
Banco Santander from the date on which the capital increase is
declared to be subscribed and paid up, which is envisaged to happen
on November 6, 2018.
4.5. Admission to listing
The Bank will apply for the listing of the new shares on the
Madrid, Barcelona, Bilbao and Valencia Stock Exchanges through the
Spanish Automated Quotation System (Mercado Continuo), and shall
take the steps and actions that may be necessary with the competent
bodies of the foreign Stock Exchanges on which Banco Santander
shares are traded (currently London, Warsaw, Buenos Aires and New
York -through ADSs -American Depositary Shares-) in order for the
new shares issued under the Increase to be admitted to trading.
Subject to the granting of the relevant authorizations, it is
expected that the ordinary trading of the new shares in the Spanish
Stock Exchanges will begin on November 14, 2018.
5. TAX REGIME
Below there is a brief description of the tax regime currently
applicable in Spain to the options available for shareholders. This
description does not constitute tax advice and does not include all
tax considerations that may be relevant for each shareholder in
view of his particular circumstances. Therefore, shareholders are
advised to consult with their tax advisors the tax regime
applicable to them.
The delivery of the shares issued in the Increase will be
considered for tax purposes as a delivery of fully paid-up
free-of-charge shares, and therefore, shall not be considered
income for purposes of Personal Income Tax (Impuesto sobre la Renta
de las Personas Físicas) ("IRPF"), Corporate Income Tax (Impuesto
sobre Sociedades) ("IS"), or Non-Resident Income Tax (Impuesto
sobre la Renta de no Residentes) ("IRNR"), whether or not the
shareholders act through a permanent establishment in Spain.
The acquisition value, both of the new shares received in the
Increase and of the shares from which they arise, will be the
result of dividing the total cost by the applicable number of
shares, both old and new. The acquisition date of the new shares
will be that of the shares from which they arise.
If the shareholders sell their bonus share rights on the market,
the amount so obtained will be taxed as follows in 2018:
(i) For purposes of the IRPF and the IRNR without permanent
establishment, the amount obtained in the sale on the market of the
bonus share rights granted in the Increase follows the same rules
as those applying to pre-emptive rights. Consequently, the amount
obtained in the transfer of the bonus share rights on the market
will be treated as a capital gain for the seller in tax period in
which the transfer takes place. This is without prejudice to the
potential application to those shareholders who are subject to the
IRNR without a permanent establishment in Spain of the relevant
international treaties, including those for the avoidance of double
taxation and for preventing tax evasion to which Spain is a party
and to which those shareholders may be entitled, as well as to the
exemptions and other rules envisaged in the regulations of the
IRNR.
In addition, for those transferors who are subject to IRPF and
who are shareholders of Banco Santander, the amount obtained for
the transfer of the bonus share rights will be subject to a
withholding tax deduction (currently, 19%).
(ii) Taxation under the IS and the IRNR with permanent
establishment in Spain, to the extent that a full business cycle
has been completed, will be determined in accordance with the
relevant accounting rules, with the pertinent adjustments, if
applicable, as set forth under Law 27/2014, of 27 November, on
IS.
In the event that the holders of the bonus share rights accept
the Bank's commitment to purchase the bonus share rights for a
fixed price, the tax regime applicable to the amount obtained in
the transfer to the Bank of the bonus share rights held in their
capacity as shareholders will be that applicable to cash dividends
and, therefore, shall be subject to applicable withholding and
taxation.
It must be taken into account that the tax analysis above does
not envisage all possible tax consequences of the various options
available in connection with the "Santander Dividendo Elección"
scheme. In particular, no reference is made to the tax consequences
in their countries of residence for those shareholders who are not
tax resident in Spain. Hence, shareholders are encouraged to
consult their tax advisors with regard to the consequences of this
remuneration scheme considering their particular situation, as well
as to pay attention to potential changes of tax regulations and
administrative constructions thereof that may take place.
Finally, holders of American Depository Receipts (ADRs) and
Crest Depository Interests (CDIs) representing shares of Santander
are encouraged to consult their tax advisors on the tax
implications in Spain and abroad resulting from the specificities
of these securities and from the various options available to
them.
6. FOREIGN JURISDICTIONS WHERE BANCO SANTANDER IS LISTED
The options, terms and procedures indicated in this informative
document may not be the same as those applicable to the
shareholders owning Santander shares on the foreign stock exchanges
where the Bank is listed. These shareholders are urged to consult
the public announcements made and other documents published in
their jurisdictions.
* * *
Banco Santander, S.A.
_______________________________
Jaime Pérez Renovales
Secretary of the Board of Directors
[1] Estimated date. Subject to the granting of the relevant
authorizations. The admission to trading of the new shares on the
foreign Stock Exchanges on which the shares of the Bank are traded
shall also be requested.
[2] Special arrangements may exist for those shareholders who
hold their shares through the UK nominees and in the form of ADRs -
please note section 6.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
DIVFFAESMFASESS
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