By Jesús Aguado and Steve Slater
MADRID/LONDON (Reuters) - Santander (MC:SAN) chief Ana Botin is expected to target Britain, the United States and its Spanish home market under her plan to accelerate growth at the bank after raising 7.5 billion euros (5.80 billion pounds) via Europe's biggest-ever rapid share sale.
The fundraising also reduces the likelihood Santander will spin off and separately list its British business, as it has less need to raise capital from a partial sale, bankers said.
"If you have a strong capital base and are profitable, you are unlikely to sell a good asset," one banker said in reference to a possible UK flotation, which the bank has considered in recent years but pushed back several times.
The latest guidance from Santander is that a sale would not happen in 2015.
Santander shares tumbled 11.8 percent to 6.05 euros by 1500 GMT, hitting a 10-month low, after the based bank sold 1.26 billion new shares late on Thursday at a steep discount to improve its capital strength and provide funds to lend more.
The eurozone's biggest bank sold the shares at 6.18 euros apiece, a 10 percent discount to its previous share price.
Botin also cut the bank's dividend as part of a plan to remove any doubts about its capital strength, the latest sign she is stamping her mark on the bank after taking over from her late father, Emilio, who ran Santander for 28 years until his death last September.
"Ana Patricia is showing she has character and she's wanted to make her own mark with the recent decisions, but deep down the philosophy is not that different from her father's," said Enrique Quemada, CEO of Spanish investment bank ONEtoONE.
"She is betting on organic growth, but this capital raising will allow her to keep growing the bank, and really this is a demonstration that the bank is betting on size, size, size."
After 120 days in charge, Botin's move to tackle capital and dividend strategy, after previous changes in governance and leadership, means the focus will shift to growth, she said. "The objective of this transaction is to accelerate our plans to grow organically," she said in a memo to staff.
INCREASED LENDING
She said growth in the markets Santander operates in should average more than 3 percent in 2016 and it wanted to take advantage by increasing lending and improving loyalty among its 100 million customers. That could be based on the success of the bank's 123 current account in Britain, which has grown from 1 million to 3 million customers in less than three years.
Bankers said she was likely to target Britain and the United States, where both economies are improving, as well as Spain and Portugal. The bank wants to grow its risk-weighted assets by about 6 percent in 2015, or roughly 35 billion euros, through more lending for example.Santander said its core capital ratio (on the basis of the full Basel III rules laid down by global regulators) should reach nearly 10 percent this year and 10 to 11 percent by 2016. Some analysts said that could put pressure on other banks to follow suit.
Santander denied it would use the capital to fund acquisitions, as in a past route to rapid expansion under Emilio Botin. But the hike still prompted speculation it could look at purchases, with Italy's Monte dei Paschi (MI:BMPS) and Portugal's Novo Banco seen as possible targets.
Shares in Monte Paschi had jumped 12 percent on Thursday, but pulled back 4 percent on Friday as the talk cooled.
Spanish newspaper El Confidencial, citing an unnamed market source, said pressure from new euro zone bank supervisors had partly pushed Santander to raise the funds, though the Spanish bank denied it was prodded by the European Central Bank.
There was demand for about $15 billion of shares in Santander's offer, a person familiar with the matter said.
Goldman Sachs (N:GS) and UBS
