Santander will issue an additional 1,750 million dollars in hybrid instruments for the purchase of Popular

Banco Santander will issue an additional 1,750 million euros in hybrid instruments for the acquisition of Banco Popular to complete the 'anti-crisis mattresses' required by regulators to address potential solvency problems without the need to resort to public money, as reported during the update of its strategic plan this week.

In a presentation to analysts and investors, the Cantabrian entity details that after the acquisition of POPULAR (POP.MC) it needs to place an additional 1,750 million euros - 750 million in instruments AT1 and 1 billion in Tier 2 - to comply with called total loss-absorbing capacity (TLAC), a requirement that is required under Basel III for all G-SIBs, of which SANTANDER (SAN.MC) forms a part as the only Spanish representative.

In January, Santander already announced that it would issue between 43,000 and 57,000 million euros of debt in 2017 and 2018 to comply with these TLAC requirements, which will come into force in January 2019. In any case, this balance is not modified after the acquisition of Popular, said financial sources consulted by Europa Press. The sources added that, as it grew in size after Popular's purchase, it is normal for Santander to increase the volume of its capital mattresses.

So far this year, the parent company of the bank headed by Ana Botín has completed around 55% of the emissions forecast for the year as a whole, after having issued almost 10 billion euros in 'anti-crisis' debt until September. However, this figure increases if you take into account the placements made by the different units of the group.

In addition to TLAC mattresses, which are only required for banks with global systemic importance - those known as 'Too Big To Fail' - Santander will also have to comply with EU minimum capital requirements and admissible liabilities, called MREL, and which will require certain capital mattresses from the entities of the Old Continent.

The level of said mattress will be determined individually for each banking group based on their level of risk and other particular characteristics, although at the moment the size is unknown.

The objective of these capital requirements is to ensure that the entities have sufficient capital to absorb possible losses and recapitalize themselves (bail-in) without the need for public aid.