Pardon... I forget the possibility of differences in tax systems.Acording to Spanish Law any amount distributed as dividend
or explicit participation on benefits of any share is object of an inmediate tax "pay" ranging 20-25% of the amount paid,
despite the fact than it can be returned (total or partialy)to the shareholder the next fiscal year, acording to the individual
income tax of the shareholder. In practice that means that individuals or entities,on reciving any pay as benefit, authomaticaly
make a loan to the Spanish Treasury at 0% of interest until they made the annual liquidation of taxes. Been that so, it is clear,
that, at least in Spain is more interesting for individuals or entities to get money as a modificati�n of facial value of a share
(not subjet to inmediate pay) than to get it as dividend ,or similar concept, taking into acount what I had explained. This
mechanism is not a particular extravagancy of the spanish tax system, it also applies to other European countries.If in the States is
not the same as I belive,I love your tax system.
You did mean ESF (Espirito Santo Financial) and not ESP (Extra-Sensory Perception) right?... ;-)
I think ESF is a lot like STD was 3-4 years ago... whether they perform in a similar way over the next 3-4 years is the big question. With the STD chairman stating he wants to double earnings for STD in the next 2-3 years, I'm just as happy to keep my money growing in STD...
Garcon, ESP is a decent bank. Very profitable but for my money,
the stock is not as liquid as STD. That is, if you want to get out of ESP quickly, you may lose something in the timing. STD is ahead of ESP in their moves to branch out in South America. ESP is probably a very good long term holding. I have watched it off and on over the past year. It is just not my type of stock.
I apologize in advance for this tangent, but does anyone have opinion of Espirito Santo Financial? John Dessauer followers will recognize this Portugese financial holding company. Seems to be very similar to B Santander in terms of potential, if somewhat further behind in stature.
I've tried to set up and ESF BB.
From the archives of the online WSJ...
Spain's Santander Proposes 2-For-1 Share Split
SANTANDER, Spain (Dow Jones)--Banco Santander SA (STD), Spain's
most international bank, said Wednesday it's planning a 2-for-1 share split
in the second half of the year to make its stock cheaper for retail investors.
A bank spokesman told Dow Jones Newswires the stock split will be
proposed to shareholders on March 21. He added that it will take place
after the takeover of its affiliate Banesto SA (BNSTY).
Santander is offering to pay for the 52% of Banesto it doesn't already own
with 100 million new shares, an operation which will raise its share capital
by 21%. Once the bid is complete, it will then reduce its share capital by
8%, returning ESP20 a share to investors.
After these operations, Santander will give each shareholder two new
shares for each share held, subject to approval.
Santander's shares closed Tuesday at 7,280 pesetas (ESP)
($1=ESP153.63), down ESP40 on the day.
Banco Santander SA (STD) is the parent company of Grupo Santander,
Spain's most international banking group, which has a huge exposure to
Latin America. It has five main areas of operation: retail banking in Spain
under the brand name Banco Santander; retail banking in Spain through its
affiliate Banesto SA (BNSTY); retail banking abroad; Santander
Investment; and corporate banking and capital markets. Santander holds
slightly less than 50% of Banesto, which it is seeking to expand to 100%.
Stkjunky, for your first question my answer is yes, provided we are using equivalent terms(and in any case acording to
spanish law).Let me put an example: suppose you have a share of 1US$ in the capital of a company X, also suppose that the company is
making a lot of benefits.If the company gives you 1US$ as currency dividend then: first the company must pay 25 cents to the
treasury at the same time it pays you 75 cents.Another possibility is to give you another share (stock dividend?) of 1$.In this last
situation you must pay only if your whole properties (shares,houses,cars,and the like )excede of an amount stablishd around 150.000$
and in this case the tax rate is by far lower than if you received the money in currency. Moreover in the
particular case of Santander refund of 20 Pts. there is no question about taxes because it is refunding you a part of your own money.
I don�t now if it is the same in the US right,sorry.But I think that for any operation made in US by a foreing company what may be applied the US law, in the same maner that in any other coutry the local law must be applied.
I don�t belive you are missing anything, probably I had not explained the story clear enough, or/and the tax systems are quite diferent.