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Santander loses €10,798 million due to adjustment caused by COVID-19

The entity, which has adjusted the UK and US goodwill for the coronavirus, announces the payment of a stock dividend for this year.

Banco Santander has closed the first half of the year with the first losses in history. The coronavirus crisis has forced the bank to minimize the valuation of its activity in several countries in which it operates as expectations about economic growth in those territories, such as the UK, the US and Poland, are reduced.

This is an accounting operation that, together with the adjustment of tax credits -the losses that can be offset in the following years before the Treasury-, has yielded some ‘red numbers’ of €10,798 million. Its shares fall at this time more than 2 per cent in the Stock Market.

It is the first time that Santander has settled a negative quarter, since even in mid-2011, at the worst moment of the previous crisis, it did not make a loss, but the profit then plummeted to €47 million. Without taking this accounting adjustment into account, the entity chaired would have achieved profits of €1,908 million, 48 per cent less than a year ago, mainly motivated by provisions that have exceeded €7,000 million to face the pandemic.

The depreciation, based on the impact on the economic forecasts, is quantified at 12.6 billion, of which 10,100 correspond to goodwill and another 2,500 million to fiscal DTAs. Of all these amounts, the UK accounts for 6,101 million, the US about 2,330 million, Poland almost 1,200 million and the subsidiary Santander Consumer Financier, 477 million.
In September last year, Banco Santander made another adjustment of its goodwill for the business in the UK, of 1,500 million, on that occasion due to the effects of ‘Brexit’.
Despite these numbers, the entity has decided to return payment to its shareholders through a scrip dividend (in shares), an option that the European Central Bank (ECB) does not veto as it has no impact on capital. Thus, the European supervisor has recommended that no cash remuneration be distributed until the end of the year. Santander will pay 0.1 euros to its shareholders with shares this year and will reserve six basic capital points in its capital to make a cash payment when Frankfurt allows it.

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