MADRID – Spain’s Santander on Monday said that starting during the first quarter of 2022 it would change the group’s financial reporting of segments, reallocating certain costs of the corporate centre segment to the business units with no impact on the group’s consolidated financial figures nor on its targets.
The lender said that its aim was to provide “more transparency” and further clarity regarding its minimum requirement for own funds and eligible liabilities (MREL) and total loss absorbing capacity (TLAC), to better allocate the cost of the eligible debt issuances to the business units.
The change in the group’s financial reporting will have a negative impact of 766 million euros ($841 million) on the country units’ net interest income, a measure of earnings on loans minus deposit and wholesale funding costs.
This will, however, be offset by transferring a positive contribution in the same amount in the corporate centre, the lender said.
Other financial costs, primarily the cost of funding the excess capital held by the business unit above of group’s core tier-1 ratio had been reassigned accordingly to the units.
In addition, the corporate and investment banking branches of Santander in Europe and other business lines have been integrated into the Spain unit to reflect how the business will be managed and supervised.
Regulators try to ensure that banks’ liability structures provide sufficient TLAC or funds and eligible liabilities to absorb losses and facilitate the recapitalisation of the bank in accordance with European Union regulations.
The European Banking Authority has developed TLAC and MREL reporting and disclosure requirements to guide banking institutions as they comply with their disclosure and reporting obligations, and to make that information available to authorities and investors.
($1 = 0.9113 euros)
(Reporting by Jesús Aguado; editing by Aurora Ellis)
