Goldman, UBS Start Year With a Bang After Santander Fee Windfall

This content was published on January 9, 2015 - 17:55

(Bloomberg) -- If the New Year’s resolution of Goldman Sachs Group Inc. and UBS Group AG was to secure the lead in 2015’s ranking of stock-sale underwriters, they may have pulled it off in record time.

Banco Santander SA picked the U.S. and Swiss banks to find buyers for a 7.5 billion-euro ($8.8 billion) capital increase, the largest-ever accelerated share sale in Europe and likely to be one of the most coveted mandates of the year.

Goldman and UBS may split a payment of 56 million euros to 113 million euros, based on typical fees of 0.75 percent to 1.5 percent of the transaction amount, according to people familiar with the matter. Representatives for Goldman and for UBS declined to comment.

Santander Chairman Ana Botin sold stock as she shapes her vision for Spain’s biggest bank about four months after taking over. Named chairman in September after her father’s death, Botin is bolstering capital to address investor concerns about insufficient buffers compared to peers.

“Goldman Sachs and UBS both scored a major coup,” said Mark Williams, author of “Uncontrolled Risk,” a book on the rise and collapse of Lehman Brothers, and executive-in-residence at Boston University. Santander’s willingness to make the banks preferred underwriters at the expense of others signals “greater profit potential,” he said.

Analysts predict banks in Spain, Portugal and Italy are among those that may come to the markets as the European Central Bank pushes institutions to raise equity levels, and takes a more conservative view of their assets. The ECB took on the role of supervisor of Europe’s biggest banks last year.

“The world is quite uncertain, so when you need capital you go out and get it immediately,” said Christoph Stanger, co- head of equity capital markets for Europe, the Middle East and Africa at Goldman Sachs.

Tight Control

Goldman Sachs last year ranked first in Europe in advising on initial and secondary share sales, while UBS ranked fourth, according to data compiled by Bloomberg. After the Santander sale, both have a headstart on rivals when it comes to pitching their services to companies planning to raise capital.

“It’s great to start the year with such a league-table boost,” said Javier Martinez-Piqueras, co-head of equity capital markets for Europe, the Middle East and Africa at UBS.

The sale also marked a departure from companies appointing at least one local bank for large transactions, a practice that can help to ensure there are enough domestic buyers.

“Botin is a new chairman but one who is extraordinarily well known and trusted” by investors, said Martinez-Piqueras. Her popularity, combined with a liquid stock and a large market capitalization, helped find demand quickly for the deal, he said.

Santander shares fell as much as 14 percent in Madrid today and closed at 5.89 euros. “Today’s decline in the stock price is normal since the price paid in the private placement was 9.9 percent lower than the last price the shares traded, so now they are basically adjusting to that price,” said Nuria Alvarez, an analyst at Spanish bank Renta 4 Banco SA in Madrid.

‘Good Groundwork’

Working with only two banks is “unusual for a deal of this size, but it was an accelerated book-build which means you need to keep tight control on the team running the deal,” said Christopher Wheeler, banks analyst at Atlantic Equities LLP in London. “It also seems the CEO had made sure of support from the largest shareholders before launch, so good groundwork.”

While the move signals a change of course from her father, who considered the bank sufficiently capitalized, Botin, 54, didn’t change one of Santander’s key bankers: Andrea Orcel, 51, the head of UBS’s investment bank. He was a confidante and golf buddy of the late Chairman Emilio Botin and helped Santander on several of its deals, including the Spanish bank’s purchase of assets from ABN Amro Group NV.

A spokeswoman for Santander declined to comment in an e- mailed response.

--With assistance from Macarena Munoz in Madrid and Manuel Baigorri in London.

To contact the reporters on this story: Ruth David in London at; Ambereen Choudhury in London at; Aaron Kirchfeld in London at To contact the editors responsible for this story: Aaron Kirchfeld at; Elisa Martinuzzi at Elizabeth Fournier, Elisa Martinuzzi

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