Santander reviews dividend and slashes executive pay amid coronavirus crisis
Santander has postponed its interim dividend and slashed pay for senior management due to the coronavirus pandemic, with chair and chief executive of the Spanish bank donating half their pay to a medical equipment fund.
The eurozone’s largest lender usually pays out an interim dividend in November, but will now consolidate the payment with the full-year dividend in May as it attempts to conserve cash ahead of a probable recession across Europe.
Santander said its board will review the dividend payment once the “full impact of the pandemic” and consequent collapse in global markets is known.
“The scale of the task before us demands a huge collective effort, with governments, central banks and other authorities, the private sector, charities and individuals, working together to limit the spread and provide care for those affected,” Santander executive chairman Ana Botin said.
Botin and chief executive Jose Antonio Alvarez will both take 50 per cent cuts to their total compensation this year to support a medical equipment fund the bank is creating to help fight Covid-19.
Botin was paid a total of €10m (£9.3m) last year, and has a pension worth €48m. Santander’s non-executive directors will also take a 20 per cent cut to their compensation to support the fund, which the bank said would be worth an initial €25m.
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The bank is also reviewing its bonus policy “so that the maximum required resources are directed to supporting customers”.
Botin and Alvarez are the first European financial executives to take pay cuts linked to coronavirus, and the move could put pressure on other European lenders to follow suit as businesses and households grapple with the impact of the outbreak.
Although Standaner said it met the capital requirements to maintain its current dividend policy of a 40 per cent to 50 per cent payout ratio and is “comfortable with its capital buffers over regulatory requirements,” its board will review its 2020 dividend payout in order to direct resources towards people and businesses in need.
The number of coronavirus cases in Spain rose to 33,089 on Monday, making Spain the second hardest-hit European country, after Italy. The country’s death toll surpassed 2,000.
Spain has been in lockdown since 14 March, and Prime Minister Pedro Sanchez said on Sunday he would seek parliamentary approval to extend a two-week state of emergency by 15 days in an effort to combat the spread of Covid-19.
Santander announced yesterday that it would hold its annual shareholders’ meeting at its Madrid headquarters rather than the northern port city of Santander, without guests attending in person.
The bank’s shares rose as much as 4.44 per cent in early trading in London.