Another history post: Saenz

Saenz has been forced to leave his function as Santander CEO due to a false testimony conviction. The effects on Santander have been minimal. Here is a download of the relevant links.

• 2013/05/24. The behind the scene game. Botin to Saenz: "You go out from the bank through the front door" and with €88mi (ES)
• 2013/04/30. Already in March, BdE had decided and notified Santander (ES)
• 2013/04/30. Saenz resigns. An overview (ES)
• 2013/04/29. The importance of Saenz and how he was working with Botin (ES)
• 2013/04/29. No market reaction (ES)
• 2013/04/29. Saenz resigns with 2nd biggest retirement in Spanish history: €88mi (ES)
• 2013/04/29. Botin cedes to BdE and forces Saenz to resign (ES)
• 2013/04/16. BdE reopens Saenz case (ES)
• 2013/04/15. The opinion of Rajoy (ES)
• 2013/04/13. Supreme court refuses to cancel Saenz conviction (ES)
• 2013/03/23. BdE: Saenz will have to leave in case Supreme court holds conviction (ES)
• 2013/03/22. Botin defends Saenz during general assembly (ES)
• 2012/10/16. BdE will have the last word on Saenz (ES)

Finally here is a concentrate of boolshit Anglo-Saxon coverage of the topic.

• 2013/03/18. EN

NCG - Catalunya History

Happy New Year 2014

I want to keep the News (and Macro) tab clean. There are a lot of lines related to NCG in News-Acquisition, to be replaced by a summary line, with the details in this post.

• 2014/08/12. 30% of Catalunya Bank customers would leave the bank if name set to Spanish entity (BBVA) (ES)
• 2014/07/21. Spanish economy minister could change some DTA rules related to Cataluyna bank and this would mean decision later (ES)
• 2014/07/19. Only Santander and Caixabank left to buy Cataluyna bank branches in Catalonia (ES). Decision this Monday July 19th (to July 24th) ? (ES)
• 2014/07/16. Blackstone gets the NPL real estate of Cataluyna bank for €3.5bi (ES)
  That is not that part that is interesting for SAN.
  The FROB provides €572mi to cover the sell price/book value difference, in effect facilitating the sales of the Cataluynian branches (reuters)
• 2014/07/04. Due diligence for Catalunya bank: €1.4bi additional provisions to take (ES)
  Buyers ask for this amount to be assumed by Spain, and this requires EU authorization.
• 2014/06/18. Catalunya Banc privatization: competition between Santander and La Caixa (ES)
• 2014/06/05. Catalunya bank: 12 offers, 5 going to 2nd round (July 14th), including Santander's offer (ES)
• 2014/05/27. Catalunya bank privatization restarted (ES)
  That is the 3rd tentative. Target date end of June. In pieces, Santander is favorite for the branches in Catalunya. History in a separate post.
  On Mai 30th: all banches to be sold in one block, because there was no purchase interest for the banches outside Catalunya (ES)
• 2014/05/19. Analysis of the interests in NCG with focus on Botin (ES)
• 2014/05/15. 3rd tentative to sell Catalunya Banc started (ES) and (ES)
  A priori Santander is the most interested buyer.
• 2014/04/20. Process still under way... (ES)
• 2014/02/08. Preparations for the privatization (ES)
• 2014/01/21. Santander wants €4bi asset loss protection, EU refuses (ES)
• 2014/01/10. First moves around Catalunya bank this year (ES)

• 2014/05/08. Banesco pays the 1st €400mi (ES)
• 2014/03/14. Banesco still searches for financing its purchase (ES)
• 2013/12/24. Banesco starts to sell €4bi of NCG assets (ES)
• 2013/12/18. Banesco (Venezuelan bank) wins NCG at 1st round (ES) or here (ES)
• 2013/12/18. Current NCG status: waiting for EC approval of state guarantees for future losses (ES)
• 2013/12/17. Bids for NCG from Santander (and BBVA) are formal (ES)
  and will not go to 2nd round
• 2013/12/16. 6 bids for NCG (ES)
  Santander, BBVA, CaixaBank, Banesco+Guggenheim, JC Flowers, Wilbuir Ross y Anchorage.
  Now analysis. In case a bid is significant better than the other (€200mi), it wins. If not 2nd round with the 3 best bidders.
• 2013/12/16. Last version for NCG privatization conditions (ES)
  Warranty against losses, warranty against customer indemnifications, €2.3bi of DTA kept in capital, €2.2bi of DTA out of capital, together with the fact that forgiving DTA in a bid will not be considered (gives an advantage to the big banks against the investment funds and Banesco) 
• 2013/12/16. Today: bids for NCG  (ES) and (ES)
  Deadline was changed for 12/13 to 12/16 last week.
• 2013/12/13. Last day before NCG bids. An overview (ES)
• 2013/12/10. Current status for NCG (ES)
• 2013/12/04. Guggenheim offers more to win NCG privatization (ES)
  Commitment to investments in companies, and increase of credit.
  Banesco (a Venezuelan bank) is also pushing (ES)
• 2013/12/01. NCG privatization, full steam ahead. (ES)
  We can have a decision by 2013/12/13. The article is a nice overview of the moves of most of the interested parties: BBVA, La Caixa and Guggenheim. No indication about Santander moves.
• 2013/11/25. News about Catalunya bank (ES)
  No one wants it, except in case they receive also a lot of money. Could be only the branches and passive put to sell. Could also be sold in a pack together with NCG
• 2013/11/20. Bids for NCG to 2013/12/13 (ES)

And here are some more history about NCG and Catalunya bank that I unload from the bookmarks. The privatization of NCG was a very long process. Catalunya bank will be privatized beginning of 2014, but odds that Santander wins are low (will be too many bidders).

2013/07/10. Santander prepares its offer for NCG/Catalunya bank (ES)

2013/06/28. Privatization of NCG, Catalunya bank accelerated (ES)

2013/06/19. Privatization of NCG, Catalunya bank restarted (ES)

2013/05/14. FROB intends to (re)start privatization of NCG and Catalunya bank (ES) (ES) (ES)

2013/05/10. FROB to further clean NCG and Catalunya bank before privatization (ES)

2013/03/05. Failure of Catalunya bank privatization (ES) (ES)

2013/02/27. Santander and 3 other banks to bid today for Catalunya bank (ES) (ES)

2013/02/04. FROB wants at least €1bi for Catalunya bank (ES)

2013/01/15. Catalunya bank to be sold withou asset loss warranty (ES)

2012/12/07. Big Spanish banks preparing for NCG and Catalunya (ES)

2012/10/09. Sabadell and Santander are the most interested in Catalunya bank (ES)

Trading volumes 2013/12/20

Very unusual trading volumes today:
in Madrid: 88.6mi shares against 3 months average of 50.3mi
in London: 73.3mi against 3 months average of 29.7mi
in NYSE, nothing special: 4.1mi against 6.1mi

London averages used to be much lower.
There were incredible volumes of 446mi on 2013/10/17, 394mi on 2013/10/16, 343mi on 2013/10/06, and 342mi on 2013/10/03.

What is happening?
That is more than 13.4% of all shares traded in these 4 sessions in London, where normally the volumes are not significant (in comparison with Madrid).
Perhaps this is an error in the investing.com site where this data is coming from. It is so big!

Original data is here http://www.investing.com/equities/banco-santander?cid=27672
Link does not go to the right place directly: choose SAN, then in the overview choose "London"

For today it is not an investing.com error: Here are 2 screen shots from http://www.londonstockexchange.com/

And if today is not an error, it is also not an error for the other previous big sessions.
Who bought €10bi worth of Santander shares, doing this in one of the biggest stock exchange, but (normally) insignificant for Santander (no one following Santander checks London).

So either I am phantasming, either we get a big surprise soon.

Sovereign exposure of Santander

It has been a long time that one of the doubt I had about Santander was its detailed exposure to sovereign risk, in particular to Spain. Not that I fear a default, but because it is currently a good way for the Company to make money. Recently EBA published a "transparency exercise" that details that data at 2 key dates: 2012/12/31 and 2013/06/30. It is a pity that the end data is end of Q2 2013 and not Q3. Original data is here (EN).
Btw, it is not the biggest doubt I have about the Company. The biggest one is the shareholder structure and how Botin gets his mandate. The 2nd biggest one is a detailed workout of the DTA new regulations and its impact on capital ratio, including the effects of reasonable future earnings projections in Spain to 2019. If anyone has answers to these doubts, please let them know.

Here is the sovereign exposure, all amounts in €mi.

Residual Maturity	Total Gross	of which Loans	Total Net	of which AFS	of which At fair value	of which Trading
End 2012
0-3M	651	166	643	0	0	446
3M-1Y	4452	784	3843	0	0	3059
1Y-2Y	2797	1699	2566	0	0	867
2Y-3Y	5925	4789	5615	125	0	-120
3Y-5Y	6991	3057	6293	2939	0	217
5Y-10Y	22144	2812	22010	19180	0	18
10Y-more	4839	2049	4615	2410	0	-85
Total Spain	47798	15356	45586	24654	0	4403
Total Group	66051	15997	55014	34519		3326
end S1 2013
0-3M	1344	150	1343	0	131	1062
3M-1Y	6156	1294	5639	199	13	4132
1Y-2Y	2752	1357	2376	2	82	-80
2Y-3Y	4453	3365	4182	183	549	84
3Y-5Y	13672	4833	12679	8172	291	-747
5Y-10Y	29989	3088	29541	25277	295	881
10Y-more	8594	1956	7824	6202	208	-542
Total Spain	66958	16044	63584	40035	1570	4790
Total Group	90877	16762	74743	52231	1570	3025
Relative growth
0-3M	106.45%	-9.64%	108.86%	NM	NM	138.12%
3M-1Y	38.27%	65.05%	46.73%	NM	NM	35.08%
1Y-2Y	-1.61%	-20.13%	-7.40%	NM	NM	-109.23%
2Y-3Y	-24.84%	-29.73%	-25.52%	46.40%	NM	-170.00%
3Y-5Y	95.57%	58.10%	101.48%	178.05%	NM	-444.24%
5Y-10Y	35.43%	9.82%	34.22%	31.79%	NM	4794.44%
10Y-more	77.60%	-4.54%	69.53%	157.34%	NM	537.65%
Total Spain	40.09%	4.48%	39.48%	62.39%	NM	8.79%
Total Group	37.59%	4.78%	35.86%	51.31%	NM	-9.05%

Net sovereign exposure to Spain Q2 2013 at €64bi, up 40% in 6 months, representing 85% of the total exposure to sovereign risk! That includes €16bi of direct loans. However €40bi of this exposure is available for sale.
That is much more than I thought and the increase is impressive for 2 reasons: (1) 40% growth in 6 months and (2) it happens after the height of the Spanish crisis that happened in summer 2012.
I think this is a good part of the explanation of the RWA decrease by 8% in Q2 2013.

elconfidencial.es article about Santander on 2013/12/15

Link is here ES

Articles at that high quality level about Santander are a rarity. As such it deserves its own post. The article gives a framework to understand recent moves, and lower surprises for future news.

Here is a summary

• Bank of Shangai purchase is significant and part of a global strategy.
• Botin objective is to reach top 10 bank level.
• The completion of cleanup work in Spain and close of legal problems (Botin's hidden account in Switzerland and Arenz's indictment) allow to go on
• What is missing is growth in Asia, wholesale bank, asset managment
• Asset management: the recent AM deal with Warburg Pincus and General Atlantic has been misinterpreted. The objective is to grow that part and the 50-50 deal (Santander keeps 50%) is setting up a JV with specialized partners. The move of all AM subsidiaries to London is a prerequisite to do efficient AM business.
• Asia. We are at the 3rd move in China this year: 2 in consumer finances, and now the Bank of Shangai. That one is significant and a 1st step for further growth.
• Wholesale bank: Santander is insignificant in that business.
  Seems to be at the stage of evaluation to mitigate the risks, and define the general strategy

Banks for growth need capital (not cash). Article's author only mentioned capital in clever way: "still has a questioned capital situation" . Usage of "questioned" and not "questionable" is neutral statement. It is such a big subject that better to leave it out.

Related to that there are 4 missing subjects in the "Capital tab"

• The current push Santander is making to lower its RWA, independently of new RWA regulations that will come with the EZ banking union .
• The DTA in Brazil. The Company has €4bi DTA in Brazil. 24% of the total. The only information I have is that the country passed (very) favorable regulation during spring 2013. Source is a priori not trustable (JPM), but as it is positive for the Company it is probably true. 
• An evaluation of the DTA utilization in Spain using sensible net earnings projections. Spain has around 65% of the group DTA totals. Even if only 50-70bpp are kept in core capital from the Nov 2013 new Spanish DTA regulations, is -a priori- a disappointment, it could be positive in the following way:  Kept in the capital are the pensions related DTA, which can be used only at very long term. What is out are the provisions/past losses DTA, which are easy to use as soon as the Spanish subsidiary make benefits. And this comes together with the progressive DTA exclusion from core capital on 5 years (2014-2019). But all that need to be checked.
• Dividend as script as a way to raise capital in a situation where new rights issues option is closed due to undervaluated shares.

What is also missing in the article is the organic growth. Santander is very aggressive in the US and UK. In UK they have negative fees since beginning of 2012 with very good results. In the US, together with the rebranding, they introduced the extra20 account: Same story: negative fees!.

Finally there is Spain. the 300bpp deposit share growth, and 87% liquidity level is a promise for significant growth as soon a credit is reopened in the country.

Santander buys 8% of Bank of Shangai for €470mi

ES and here is the official communicate in English (EN)

That is a 2nd purchase in China this year. Beginning of the year they made a purchase in consumer finance (should find the link back). But this purchase is much bigger.

Purchased from HSBC

A more commented article here (ES), the day after the announcement, including previous operations in China

• May 2013: Bought 20% of Bank of Beijing Consumer Finance
• March 2013: Fortune Auto Finance, a JV with Anhui Jianghuai Automobile (JAC) , Santander has 50%

And a good overview from Reuters (EN)

These moves are very significant, and are typical when Santander wants to seriously enter a country. They first start an activity in Consumer finance business. With minimum investments; it allows them to learn the market. Then they make small entry in retail banking, till the good opportunity appears. It was a surprise that the Shangai deal occurred so quickly after the consumer deals.
There are 2 other major markets where Santander is in a similar situation. Germany and USA.

Change log

Here come the significant changes to the blog. The daily changes to "News" and "Macro" are not listed.

• 2014/01/10. New section in "Technicals"
• 2013/12/21. New section in "Technicals"
• 2013/12/16. Added sections "RWA recent evolution" and "DTA in Brazil "  in "Capital"
• 2013/12/13. New section in "Technicals"
• 2013/12/10. First version of "acquisition" tab
• 2013/12/09. Significant rewrite of the "capital" tab
• 2013/12/04. Put the "organization" tab information into "various" tab
  Deleted the forum, reused as "technicals", with information from Strike

Santander risks

There is no shortage of published risks about Santander. Some are valid, other are at best rumors, at worst manipulations.

First the bad:

• Spain will leave the €
  phantasm, the € is mainly a political achievement, and even if it happens it will be not killing for Santander because the subsidiaries are responsible for their own liquidity. Beginning of 2014, Latvia joins the €. 
• Spain will default
  Spain did default in the past as result of war defeat, they are to proud to do that when not forced, anyway the situation is not that bad and is quickly improving. Even in case Spain defaults, Santander has put a limit on the sovereign exposure.
• Cyprus: the money will flow out of the Spanish banks
  Cyprus reinforced the trend of deposit flow into Santander Spain, as fly for quality
• Santander will be forced to make fire sales
  reality: since 2008 the acquisition/disinvestm... are strongly positive
• Brazil is crashing
  The NPL in Q2 and Q3 2013 went strongly down and the rate of improvement is accelerating, The revenue (in BRL) is growing above inflation
• Santander is transferring money into Spain from foreign subsidairies
  only in the form of dividends, the rest is phantasm
• Refinanced loans will crash Santander
  Reclassification occurred in Q2 2013, no additional provisions, only €2bi of loans on time for payments had to be classified as -technical- NPL
• The real estate crisis in Spain will kill Santander
  That was really painfull indeed. €6bi of provisions done only for real estate Spain in 2012, so now even the performing loans to companies with real estate purposes are provisioned
• Santander capital is too low. BISIII will kill them
  DTA new regulations puts Santander confortably about the 8% minimum (fully loaded in Jan 2014, so withour utilization of the DTA). In 2014 we will have RWA computation rules at EU level that can be (very) favorable. There are also €4-5bi of additional capital from the next 3 dividends payments as script.
• CEO Saenz legal problems will force him to leave the company and this will cause a major problem
  He did leave the company, but this did not cause any problem
• Spain is in riots, proof of that is that the unemployment is at 27%
  no riots
• Santander is a Spanish company, and because Spain is in crisis the company is in crisis
  Company has good geographical diversification, and this allowed the company to go unharmed through the crisis

Then the sensible

• Dividend cut.
  The key date will be next shareholders general assembly (in March 2014?)
  The best argument against a dividend cut is that Santander management did not cut it.
  The guidance tab give an idea of the future EPS. They do not comfortably support a €0.6 dividend on expanding share numbers. However the gap to reach a 50% cash payout is in the range of 20% of net earnings. This can potentially be covered by growth, because Santander has the capital available. Alternative is shares repurchases.
• Emilio Botin succession. He is born in Oct 1934.

Seekingalpha article 2013/12/03

Link is here EN

That is a really weak article:

"Is The 7% Dividend Sustainable"
How does he compute 7%? DY are computed gross, and taking new shares, gross equals net.

"it was hit particularly hard as millions of dollars of mortgage loans went"
Spanish crisis hart is in companies with real estate purpose (NPL in the range of 50% and 30% mandatory provisions on the performing other 50%) not mortgage as was in the US.

"Santander has largely been maintaining or raising its dividend, pushing the yield up to its current level"
Wrong. Santander has cut its dividend from €0.65 (2008) to €0.60 (since 2009)

"In assessing the sustainability of the current dividend, it's worth noting that a dividend cut is not unprecedented for Santander. As the mortgage market started melting down, Santander cut its dividend from $0.36 per share down to $0.15 in order to preserve cash for ongoing operations. But is a similar situation ahead for the bank"
Where does he get that?

"2013 earnings are expected to come in somewhere around $0.60 per share. When compared to the current annual dividend payout of $0.6"
2013 dividend will be €0.6. Does he understand the difference between € and $?

"The primary advantage to Santander is that it allows the company to maintain its cash position"
Wrong. The main advantage of the dividend script is that it allows Santander to increase capital.  And this without making new rights issue at discounted price. In fact the current shareholders are given the money to participate, tax free, and if they don't want they can simply sell the new shares.

And once again an article missing the recent €12-13bi in capital boost Santander got through the new DTA regulation.
That news is the single most important news related to Santander since July 2012. It is a major element in dividend sustainability as it either allows shares repurchase either (but not exclusive) provides capital for significant growth (organic or through M&A or both). The 2nd major element about dividend sustainability is future EPS; Have a look at "Guidance" tab for that. The 3rd major element will be in 2014: RWA regulations due to EZ banking union. Have a look at "Capital" tab for that.

Blinking F

There is an interesting comment:

"Shouldn't cash flow be studied rather than earnings as an indicator of dividend sustainability?"

That does not work for banks because the product they buy and sell is money. The variations in working capital are in the cash flow. markets.ft.com or google finances provide cash flow for Santander (EN).
2010: operating cash flow of €52bi, 2011: 36bi, €2012: €24bi.

Better with an example: Say bank X has $2000bi in deposits and $900bi in loans. That means they have accumulated a free cash flow of $1100bi from variation of working capital only. Does this mean they can distribute a $1100bi dividend or start a $1100bi share repurchase program? Technically yes (they have the money), but regulations prohibit that, and with reason. This is controlled though capital ratio and EPS comes there.
Now that bank X has $1100bi cash they cannot give to shareholders, but can use them for own trading, or control some raw materials, because that is a lot of money. Of course this is somewhat risky, and investors (in that case depositors) would ask a corresponding return. But nicely for bank X, the deposits are insured by the governments, so that they don't need to pay high return.
Not good and makes the financial system unstable? Here come the lobbies.

ESMA (European Securities and Market Authority) has identified deficiencies in the process of the 3 main ratings agencies related to sovereign ratings (S&P, Moody's, Fitch). (EN). Fine up to 20% of turnover (ES) or (ES).

ESMA identified deficiencies and issues for improvement in the following areas:

• Independence and avoidance of conflicts of interests; 
• Confidentiality of sovereign rating information; 
• Timing of publication of rating actions; and 
• Resources allocated to sovereign ratings. 

Curious to see how this will evolve. Around summer 2012, ratings agencies had an active role in the EU sovereign crisis. I guess it is payback time, on topics easy to prove.

Seekingalpha article 2013/11/27

Today there was a new article about Santander on SA. (EN)
It is positive tone.
But I will never ever have a new activity on SA.
There are 2 main reasons for that:

• US/UK news have a very low quality in general, especially or at least when handling non US topics
• too many frustrating manipulations.

However US/UK news and comments are interesting to follow for the simple reason that they influence a significant share of the total investments. Any significant push can be a significant investment opportunity. As an example I bought 13k SAN ADR on 2012/07/25 and then 13k again on 2012/07/27. The reason: the big investors helped by the press was making the final push to break Spain. It was very efficient: IBEX diving. And because of that it was obvious that a response from the EZ authorities and Spain was imminent. 

The article itself is a sensible presentation of the last Santander financial statements but without any context information and some mandatory topics not touched. Some errors and partial understanding also:

• "It has about $1.9 billion in managed funds
  Must be 1000 times more
• "It is able to achieve this efficiency through cost savings, such as the shared IT platform across its business units"
  Missing the 10% market size requirement, and others (I should dig the Mexico IPO filing. It has a very deep level of information including on that subject)

The current missing mandatory subjects in a article about Santander are DTA, Basel III/capital/acquisitions, EZ banking union, dividend sustainability.

As always I prefer the comments

• "Ive noticed alot of SAN branches opening in my area (NJ) any thoughts?"
  Yeap Sovereign now under Santander brand
• "They used to operate under a different brand. SAN's american divsion decided to rebrand those banks as geniune Santander banks. Not much else to it."
  It is much more than that. It comes together with extra20 account. Part of a major commercial push in NE US. I have never read any rumors about that, but I think one of the main hunting ground for Botin will be US. All will depend on the BISIII effect on opportunities prices.
• "I think the market is near the top, I'm expecting a drop (next 1-2months) to buy at lower prices."
  DTA new regulation is nearby (This Friday?). Low probability he gets a buying window at lower price (except significant non forecastable macro event)
• "The yield is only apparently high. Investors have to consider that taking the scrip dividend they don't get anything they didn't already have before. "
  Plain wrong, but too long for here.
• My friend Jaypar.
  "They've increased the share count tremendously" Please check the capital increases to have a measure of the stuff
  "Maximum cash dividend payout". If BdE extends the measure in 2014, also for companies with capital surplus, could cause perhaps one more dividend under script than initially planned, not much more
  "Would like to see an analysis of what SANs earnings..." That is why I love the leakages Santander did. But this is not enough. Growth is needed, or share repurchases to have a LT payout at 40-50%. That is why I love any news about DTA, capital surplus, deleveraging caused by BISIII or EZ banking union

I have set the copyright notice and made the blog public.

DTA

2013/12/05. Information from CFO Alvarez for analysts, on Monday 2012/12/02 (ES).
Impact of new regulation on fully loaded BIS III: between 50 and 70bpp, meaning a tierI core capital between 8.5-8.7%
That is really less than I thought. Will update the capital tab.
There are so many things that are not clear in my head
Let's start with what is clear.
-When BIS III starts in Jan 2014, some items are excluded from the capital directly. It is not the case for the DTA. The exclusion is 10% per year till 2024. When saying "Fully loaded", that means that the capital situation is evaluated with all DTA out. Before the DTA regulation of last Friday that means 240 bpp out, leaving a fully loaded BIS II tier I capital ratio of 8.2%. After the new DTA regulations, that means 170bpp-190 bpp out, leaving a capital ratio fully loaded between 8.7% and 8.9%. But this will not not occur because together with yearly 10% exclusion, some DTA are also utilized, transforming them into net earnings hence core core capital.
What is not clear:
- What are the exactly the DTA excluded from capital, amount per category?
- At which rate and under which circumstances can they be utilized, per category?
- Using a reasonable net earnings projection in Spain, together with the 10% rate of effective rate of exclusion from capital, how will be effective capital ratio evoluate?

2013/12/03. Start to appear analysis about DTA regulation effects (ES)
However due to the technical complexities of the computation, the entities continue to value the concrete impact.

2013/11/30. Here is the Reuters notice about DTA (EN)
Reuters states that  Santander has €4bi DTA. That is a small mistake, Santander group has €16.9bi net DTA (tax assets less tax credits). Possibly the mistake comes from the fact that one entity of the group "Santander SA" has 3.95bi of DTA. But there are other entities in the group...
However only the DTA generated in Spain are affected by the RDL of Friday. I am trying find the Spanish numbers but to no avail yet. Should be in the range of 12-13bi. Santander has significant tax assets in Brazil  (4.3bi) and US (1.4bi), but there are also significant tax credits in Brazil (395mi), UK (325mi), Consumer Germany (106mi) , and Mexico (112mi). Looking at these numbers, I fear Reuters took Brazil for Spain.
More probably the Reuters news is based on the elconfidencial.es news as here (ES). In that article the DTA for all banks are stated. For Santander the numbers for Brazil are sublisted as "Santander SA" with €4bi, Hence the mistake [Update: I think SA in that elconfidencial.es article stands for South America, mainly Brazil]. This confirms my opinion about the quality of information coming from US sources.
On the credit of Reuters, here is the official publication related to the RDL of Friday (ES). I think the information related to the DTA starts at page 95368. It is unreadable and only a local source can give sense to it.

2013/11/30. Some details appear about the Royal Ley Decree approved yesterday by the Spanish government, and they are unexpectedly favorable to Santander: (ES).
There are 3 categories of DTA: (a) Past losses, (b) provisions, (c) pensions.
Santander has a lot of (b) and (c). The expectations were that (a) and (b) would be kept as core capital. This is not the case: (b) and (c) are kept.
As a result, the boost in core capital for Santander is probably higher than €11.3bi!

Also worth noting: NCG has 4.5bi of DTA, of which nearly 3bi from past losses. This has a direct impact on which company can bid higher for it. Investment funds cannot, because they will not be able to absorb this category of DTA. Santander (and BBVA) can!
This is not limited to NCG. Spanish government could have saved all DTA. By keeping past losses out of core capital, they have build a protection against the takeover of any Spanish company with significant accumulated losses by external funds. They have given an advantage to the buyers with already a significant existing revenue stream in Spain. The cost is low for Spanish companies: some DTA out of capital, but compensated by the believe that future earnings will lower the effect.

!!!New regulation for DTA approved in Spain!!!
Will allow Santander to keep €11.3bi as tier I core capital under BISIII (that is GS numbers, and said brutally, I don't trust US analysts when related to Spain, let's wait for a confirmation from a trustful source before opening the bottle).
This is even more significant as Santander increased capital through script as if that change would not occur.
The company has now effectively a significant capital surplus.
Utilization?
I fear we have to wait until the next shareholder general assembly (March 2014?) for at most hints.

2013/11/29. DTA regulations for later today (ES). 60% of the DTA confirmed by Guindos to be kept as tier I capital (ES), just after the minister council.
and Goldman Sachs uses this to up Santander target prices by 11% to €11.95, but without buy. I think this is incoherent. Probably a typo for the 11.95. Other news says 7.5.
Santander would save €11.3bi of tier I capital

2013/11/26 Guindos: DTA regulation will be approved this Friday 29th. Will only keep 25-30bi in capital (for a total of 50bi of DTA all banks)  (ES)
Only 25-30bi could indicate that "DTA linked to retirement" are not kept. This would be a deception as it hits mainly Santander and BBVA.
Every day the notices are changing. Must be a huge political game involving the banks, the Spanish regions, the Spanish government and EU. Let's hope that this Friday we get the decision to stop the drama. However I am not sure this news is the last episode of the drama.  

2013/11/25 The current news about DTA mixed with uniformity across EZ for stress tests, RWA, and rules for NPL. All favorable for Spanish banks (ES)

2013/11/22. Best article about DTA, and the most optimistic ever. Possible that Santander saves all DTA they have in Spain: 16.9bi! That means an additional 240bpp of core capital available for acquisitions and growth. If that occurs, Botin will have his most interesting period since ABN Amro deal. (ES)

2013/11/21. Still not done with the DTA. Santander pushing to include the DTA related to retirement funds. Last target date is 11/29-12/05. (ES)

2013/11/14. News about DTA! (ES)

Next friday?
and indeed the bids for NCG are suspended till DTA decision

 Santander, BBVA, CaixaBank y en menor medida el venezolano Banesco han condicionado la presentación de su oferta vinculante a la aprobación de los créditos fiscales. El presidente de Banco Santander, Emilio Botín, reconoció públicamente hace casi un mes que para pujar por la firma gallega había antes que conocer la norma para conocer exactamente que créditos fiscales activará el Gobierno en la subasta. Novagalicia tiene en balance a 2.000 millones de euros en créditos fiscales. Y con otros 2.500 latentes, que pueden aflorar si se dan una serie de circunstancias.

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