Banco Santander Brasil to pay $2.73 bln one-off dividend
SAO PAULO, Sept 27 (Reuters) - Banco Santander Brasil SA will modify its capital structure and pay shareholders a one-off dividend of 6 billion Brazilian reais ($2.73 billion), allowing it to return funds to its Spanish parent which has been suffering losses.
The dividend will also improve Santander Brasil's low measure of profitability. Once among the world's most profitable lenders, Brazil's private banks have struggled in recent years with the growing presence of state-run lenders that have forced margins to narrow and default rates to rise.
Santander Brasil by law has a capital structure independent of parent Banco Santander SA, limiting the means by which it can return funds. Analysts have said the parent, Europe's largest lender, may need capital to offset losses incurred in recession-hit Spain.
The dividend will also lead to improved return on equity (ROE), a measure of profitability. At present, Santander Brasil has the lowest ROE among Brazil's largest listed banks.
"The goal of this is to augment the efficiency of the bank's capital structure and put it in line with the necessities and the realities of the market," the bank said in a filing to the stock exchange late Thursday.
The improved ROE will benefit Santander Brasil when the BM&FBovespa stock exchange from 2014 gives banks the heaviest weighting in its benchmark Bovespa index.
The shift in weighting will give the index increased stability and could bring banks a greater share of investment capital.
Santander Brasil has for years held capital in excess of central bank requirements.
It said its decision to pay the dividend by raising Tier II capital and lowering Tier I capital - categories of risk-weighted assets - is within local and international standards and will not hinder its ability to grow.
(Reporting by Guillermo Parra-Bernal; Writing by Reese Ewing; Editing by Christopher Cushing)