The loss of a Banco Santander lawsuit in Brazil and that could carry out a cost of up to 800 million euros, and some 400 million euros net, will not have a significant impact on the price of the entity chaired by Ana Botín or on their ROTE targets for this second, according to analysts at Renta 4 or Bankinter.
Banco Santander would have lost a tax lawsuit in Brazil on how to account for social contributions (PIS) and the financing of Social Security (Cofins) between 1998 and 2014 in the South American country, which will have an extraordinary negative impact on the accounts of the subsidiary of about 245 million euros.
The total impact before taxes would amount to 4,500 million Brazilian reals (approximately 860 million euros), of which 2,200 million Brazilian reals (420 million euros) were claimed from Santander Brasil and the rest from subsidiaries of Banco Santander Brasil. Likewise, the amount corresponding to the Santander Brasil claim may still be recurring by the bank. The Spanish bank also considers it recoverable. However, you will have to wait for the sentence to be published to ensure the steps to take.
The amounts claimed from the subsidiaries will have to assume an extraordinary charge of negative 245 million euros in the Brazilian accounts. Bankinter’s financial analyst, Rafael Alonso, believes that the news will have a neutral impact on Banco Santander’s price. In fact, the stock has barely reacted to the news. In the last two sessions, after the news broke, the bank’s titles have scored 1.91%.
From the bank they hope to be able to offset this impact in the income statement through the sale of a stake that will bring them a capital gain of 100 million euros and the use of provisions that can be released. All in all, it will not imply a change in the ROTE forecasts for this quarter, which will exceed 15% thanks to the good behavior of the business. In this sense, Alonso from Bankinter points out that after the ruling of the Brazilian Supreme Court, Banco Santander will only have to undo the accounting movement made in the first quarter of 2023. Between January and March, the bank made a provision for legal risks that would cover the impact of the recent ruling.