Spanish bank Santander - - the Eurozone's biggest bank by market capitalisation - - is raking in cash and may have too much capital in 2010, prompting it to return cash to shareholders via a special dividend.

With many big banks struggling to recover from the crisis, Alfredo Sáenz, Santander chief executive, told the Financial Times that Santander has set a target for core tier one capital  - - the narrowest ratio of financial stability, including only equity capital and reserves  - - of 7 per cent of risk-weighted assets, which it regards as adequate for its retail banking model.

At the end of June, the bank's ratio was 7.5 per cent, and after a successful IPO of its Brazilian subsidiary this month, it added a further 0.6 of a percentage point this month when it made a €1.43bn ($2.1bn) capital gain. By the second half of next year, according to Sáenz, retained profits would improve the ratio further:

“The organic capital generation of this bank will take us to 8.5 per cent," Sáenz told the FT. "At this rate, we would then have to take a decision -- either we do a bigger payout, an extraordinary dividend, a payback, or we stay with 8.5 per cent until the legislative clouds have cleared.”

The "legislative clouds" may take some years to clear as there are various proposals at global, EU and national levels, regarding capital requirements and additional capital to support risky operations.

Under the leadership of its now 75-year old executive chairman, Emilio Botín, the 1857 vintage Santander, has grown to 90m customers and 170,000 employees.

Some 40 per cent of its business is split between the UK and Brazil.

In its home base, the financial regulator, Banco de España, insisted on extra provisioning during the construction boom; made it unattractive for Spanish banks to hold exotic securities and coupled with a serious attention to risk on the part of the banks themselves, Spain's biggest banks have come through the housing crash relatively unscathed.

SEE: Finfacts article Sept 07, 2009: Irish Central Bank declared its impotence before launch of the euro; Why Spain's biggest banks survived huge housing boom

On Tuesday, Germany's Deutsche Bank published a presentation on the Spanish property market.

Presentation: Spain's Real Estate and Construction Markets