Spain's Santander to boost capital, cut dividend

MADRID (Reuters) - SANTANDER (SAN.MC), the euro zone's biggest bank, will cut its dividends this year and boost its capital with a 7.5 billion euro ($8.8 billion) share placement, it said on Thursday.

Though the Spanish lender, under new chief Ana Botin, passed a health check of European banks' capital strength last year, 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 Francois 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 that it will cut its payout from 2015 earnings to 0.20 euros per share against 0.60 euros previously.

The capital increase comes after a six-month shake-up under Botin, who ousted CEO Javier Marin in November and replaced him with finance boss Jose Antonio Alvarez. Botin took charge after her father Emilio Botin, 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.

($1 = 0.8495 euros)

(Additional reporting by Steve Slater and Sudip Kar-Gupta in London; Writing by Sarah White; Editing by David Goodman)

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