Santander: We won't need extra cash to meet EU demands

Santander, the eurozone's biggest bank, said a significant charge for mis-selling payment protection insurance(PPI) hit profits in Q3, but its capital cushion would lift it out of danger territory.

The bank insisted its 9.2% ratio of Tier 1 capital meant it would not need to raise extra money to meet European Banking Authority demands, the Times reports. It is now seeking to raise this to 10% next year.

The European regulator has said Santander needs €15bn to protect its operations in the case of a credit freeze, but the bank argues it can manage with €6.5bn.

Santander also warned it expected bad loans in Spain to grow as unemployment and mortgage debt forced Spaniards to fall behind on repayments.

"We see bad loans on the rise," Alfredo Sáenz, the chief executive, said. "I said at the last presentation that the peak [for bad loan ratio] could be around 5% but I got it wrong."

Santander's net profit rose 10% in the third quarter to €1.8bn but profits fell 13% to €5.3bn for the nine months to the end of September because it had set aside €840m to compensate customers over mis-sold PPI.

The bank's shares rose 7.5% in Madrid to €6.44 following the results announcement.