Santander hits pause on €5bn buyback after US takeover
Santander has been forced to hit the pause button on its bumper buyback programme announced earlier this year to comply with US regulation.
The Spanish-headquartered bank told markets on Thursday it would temporarily suspend the €5bn (£4.3bn) buyback launched in February to comply with US regulation around its takeover of Webster.
The lender struck a $12.2bn deal at the beginning of February to snap up US-based Webster Financial in a bid to ramp up its presence in the US.
The deal is set to place Santander in the top-10 biggest retail and commercial banks in the US when measured by assets. Webster was valued at $75 a share in the deal with $48.75 in cash and the remainder in stock.
But on Thursday the bank said it will stop buying back shares between the period of 24 April 2026 and 26 May 2026, where Webster shareholders will vote on the deal.
Santander bows to US restrictions
US securities laws generally restrict a company from buying back its own shares while it is in the middle of a merger or acquisition involving a shareholder vote, particularly when the payment for that acquisition includes new shares of the company.
Santander is funding the deal with a mix of 65 per cent cash and 35 per cent stock, meaning for every share of Webster bought, the owner will receive $48.75 in cash and a portion of Santander shares.
Following the deal, Santander’s CET1 ratio – a crucial metric of financial health for a lender – is expected to hold up robustly around the 12.8 per cent to 13 per cent mark.
The deal marks the latest move in Santander’s M&A strategy after the bank was speculated to beat out its peers in the UK to purchase TSB Bank for a deal expected to amount to £2.9bn.
TSB will add five million customers, £34bn in mortgages and £35bn in deposits to Santander’s portfolio, as well as its 218 branches.