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Spain

Preference shares offered in Spain

Two recent issues of preference shares launched by Banco Bilbao Vizcaya (BBV) and Banco Santander, in November 1998 and December 1998 respectively, have been successfully placed in Spain and abroad, proving that this type of security is currently very attractive for investors. In both transactions, the number of preference shares issued was increased up to the maximum provided for in their respective prospectuses (euro 600 million ($696.72 million)) for BBV and euro700 million for Banco Santander).

Preference shares, which are issued by Spanish banks through subsidiaries located in foreign jurisdictions to gain a favourable tax treatment have traditionally been placed and listed in non-Spanish markets and denominated in strong currencies, such as US Dollars or Deutschmarks.

In the two transactions mentioned above, the preference shares were offered in Spain and therefore subject to Spanish public offering requirements. In addition, they were listed on the Spanish Secondary Market for Fixed Income Securities (AIAF).

One of the reasons for the success of the recent preference share issues lies in the lack of confidence in the equity stock markets generated by the recent financial crisis. Preference shares, despite their name, are closer to fixed income securities than to shares (they have no voting rights and they provide the right to a non-cumulative fixed dividend).

In the light of this promising scenario, new issues of preference shares are already being registered in Spain and more are expected in the near future.

Luis de Carlos and Leticia Celador

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