That Santander Dividend

We know that we were caught touting the Santander dividend on a couple of occasions last year when the stock was yielding 8 percent. But do we feel the same now that the eurozone banks turmoil has raised that figure to around 11 points? Less than the reader might imagine.

The accompanying chart shows the ratio of the number of new mortgages constituted to houses sold since 2007. That they are approaching equality indicates inexactly to what degree Spanish banks are compensating for an unfriendly credit environment by neglecting what is their real business in this world - that of making loans* - in order to shore up their reserves. Simple logic would have it that the profitability that fuels the dividend will be affected, and the 60 cent disbursement will be under siege.

*Ibex Salad's readership includes people from both within and without the finance industry. Out of respect for the latter, without wishing to talk down to the former, we'll repeat that mortgages are loans, to be used for any purpose, guaranteed by a property. Nothing more, nothing less. That the number of residential mortgages being issued is approaching the number of house sales contracted makes it clear that Spanish banks are almost exclusively lending to clear embargoed homes off their books. Purely the picking of poisons.

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