Bankinter to Raise Capital

Bankinter to Raise Capital - WSJ.com: "Bankinter SA said Tuesday it will issue a three-year, €406 million ($567.5 million) mandatory convertible bond, driving its main capital ratio above the 8% minimum set by the country's central bank earlier this year.

Madrid-based Bankinter, believed to be one of the Spanish banks in more urgent need of fresh capital due to mounting bad loans tied to the property sector, said its core capital ratio will rise to 8.23% after the issue, from 6.92%.

The move comes after Spain's government and central bank said last month that all of the country's banks must have regulatory capital of at least 8% of assets, with some unlisted lenders forced to have capital ratios of no less than 10%. The move is intended to reassure foreign investors that Spain's financial sector will remain solvent despite the fallout from the 2008 real-estate crash, including a surge in bad loans and a rise in funding costs amid a fight for scarce deposits.

'Bankinter is moving fast to adjust to additional capital requirements... but this will come at a cost to net profit due to the high financing cost of this issue,' Banca March analysts said in a research note."

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