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Santander raises £6 billion in surprise share issue

Spanish banking giant Santander announced a surprise £6 billion rights issue which caught many in the market off guard. Santander is the owner of Abbey and Alliance & Leicester and has a large exposure in the UK market. It had been considered that Santander was near untouchable in the international world of finance but it seems as though even the best in the world are struggling.

The company is insisting the fundraising is not of an emergency nature and purely to enable capital strength ratios to be increased at a time when investors are looking for more and more security. This view has been backed up by a number of global fund managers who were suggesting that the funding requirements of European and worldwide banks have changed somewhat over the last few months.

It is interesting to see that the Spanish government have not as yet decided to implement a banking bailout even now the property and finance markets in the country are under severe pressure. Whether we will see any activity on this front in the short to medium term remains to be seen but by all accounts the Santander fundraising does not reflect a weakening trading position.

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