Santander, the eurozone’s biggest bank, will cut its dividends this year and boost its capital with a €7.5bn (£5.9bn) share placement.
The Spanish lender, under new chair Ana Botín, passed a health check of European banks’ capital strength last year, but the review showed its position to be weaker than many of its peers.
Analysts have questioned whether the bank, which makes most of its revenue outside Spain, should bolster capital even though it survived the global financial crisis and Spanish economic downturn without posting quarterly or annual losses.
“I think it’s the right thing to do. They needed to strengthen their capital base,” said François Savary, chief investment officer at Swiss bank and fund management group Reyl, which owns some Santander shares.
Santander, one of the few major banks to keep dividends unchanged after the 2008 global financial crisis, said on Thursday it would cut its payout from 2015 earnings to 20 cents per share against 60 cents previously.
The capital increase comes after a shakeup under Botín, who ousted chief executive Javier Marín in November and replaced him with finance boss JoséAntonio Alvarez. Botín took charge after her father, Emilio Botín, who ran the bank for 28 years, died in September.
Goldman Sachs and UBS have been lined up to run the capital increase, a source familiar with the matter said. The banks declined to make immediate comment.