Botín empowers the CEO in Santander to adhere to the ECB’s expectations

Santander Bank has decided to align itself as much as possible with the supervisory expectation of the European Central Bank (ECB). The board of directors has held a conclave this thursday to approve relevant changes at the highest management level. The CEO, Jose Antonio Alvarez, will assume new executive functions and will report directly to the management body. The group has prepared this organizational change hand in hand with the monetary authority, from which it already has the approval.

The body chaired by Christine Lagarde does not see very well the model of governance of the Spanish banking system, so Ana Botin and the rest of the team wants to comply with a scheme that pleases Frankfurt. Although in recent years it has been adapting its structure, the assumption of greater executive powers by the CEO was still pending. In any case, the president will continue as number one and with skills on strategy.

Banco Santander thus guarantees the cgreat distinction in the functions of the president and the CEO, and in line with best governance practices. Álvarez will report exclusively to the council; and the executive committee, chaired by the president, will continue ensuring coordination and setting priorities as usual. For their part, the control functions will continue to have direct access to the administrative body and its committees.

With these changes, Santander also intends to consolidate the management of the new engines of technological growth, PagoNxt and Digital Consumer Bank, which will remain under the responsibility of Botín. Meanwhile, the regions, countries and global businesses will report to the CEO, Álvarez. In this way, the group based in Boadilla del Monte wants accelerate digital transformation initiatives and continue to improve operational execution to increase connectivity throughout the group with the aim of becoming the best open platform for financial services.

In parallel, the board of directors of Banco Santander will propose to the shareholders’ meeting the appointment of German of the SourceCEO of Deloitte until this month of February, as new independent director. He will join the council once all regulatory clearances are obtained. From the source will replace Álvaro de Souzawho has been a director since 2018 and was non-executive chairman of Santander Brazil from 2017 to 2021. Santander’s board of directors is made up of 15 members, of which two thirds are independent.

It will be seen with its shareholders on April 1

in the same meeting other matters have been discussed, such as the date of the shareholders’ meeting that will finally take place on April 1 at Ciudad Grupo Santander, which they can attend in person or follow online. In this meeting, in addition to submitting the new corporate governance scheme and the appointment of the independent director for approval, he will request the approval of the distribution of a new dividend.

The new remuneration will be in cash and 5.15 cents per sharepayable from May 2 2022 as part of a complementary remuneration charged to the 2021 financial year, as well as a second repurchase of shares worth 865 million of euros that will be launched once the corresponding regulatory approvals are obtained, thus fulfilling the commitment assumed at the end of last year when it recovered the dividend after the lifting of the veto by the European Central Bank (ECB).

Banco Santander paid a first interim cash dividend for last year of 4.85 cents in the fourth quarter of 2021, whose value amounted to 841 million euros. So, with the new cash dividend and the new share buyback, the capital distributed to shareholders on account of the 2021 financial year will be around 3,400 million euros, which is equivalent to a dividend yield of 7%, according to the average price of the bank’s share in 2021, which stood at 3.01 euros. It will also be submitted to the board for approval. authorization to the board to reduce the capital outstanding shares of the group up to 10% through the purchase and subsequent redemption of shares; for example, in the framework of possible share buyback programs in the future.

Santander Bank earned 8,124 million euros in 2021. The entity obtained this attributable result at the end of the year compared to losses of 8,771 million the previous year, when the bank made an update of goodwill and deferred tax assets (DTAs) without cash effect. With these gains, the group chaired by Ana Botín was already 25% higher in current euros than that obtained in 2019, before the pandemic.