Should Investors of Banco Santander Brasil SA (NYSE:BSBR) Be Cheering?
Banco Santander Brasil SA (NYSE:BSBR) will make changes to its capital-structure and pay its stakeholders a one off dividend amounting to $2.73B (6 billion Brazilian reais). This will allow it to give back funds to its Spanish parent company. The latter has been burdened under losses. This dividend will also improve Banco Santander Brasil SA (NYSE:BSBR)’s profitability.
The parent company
At one point of time, it was one of the most profitable lenders in the world. In the past few years, state-run lenders have encroached upon their businesses and private banks in Brazil have struggled with narrowed-down margins and rising default rates. By law, Banco Santander Brasil SA (NYSE:BSBR)’s capital-structure is segregated from that of its parent company. This gives it a certain amount of independence but it also limits the methods via which funds can be returned to the company.
Analysts aver that the recession in Spain seems to have hit Banco Santander Brasil SA (NYSE:BSBR)’s parent company in a very big way and this capital will be required to offset those losses. The dividend will also result in an increased ROE which is a measure of profitability. Currently, the bank’s ROE is amongst the lowest when compared to other banks in Brazil.
In Friday’s trading session, Banco Santander Brasil SA (NYSE:BSBR) stock rose by 7.02%. The opening price of the shares was $6.91 which rose to an intraday high of $7.10 and dropped to a close of $7.01. Approximately 11.69 million shares were traded on Friday and the average volume of shares traded over a 30 day period was $5.05 million. The 52-week low of the shares was $5.56 and the 52-week high was $8.19. The company has a market cap of $26.64 billion.
Banco Santander Brasil SA (NYSE:BSBR) is a bank based in Brazil. It operates as a multiple-service bank and offers a variety of individual and corporate-banking services