Madrid’s financial City approves YPF dividend payment strategy

MADRID | YPF, the subsidiary in Argentina of Spanish oil company Repsol, will carry out last year’s dividend payment in shares in response to pressure from Cristina Fernández de Kirchner’s government. The republic’s authorities have vehemently expressed their desire for the corporation to increase investment activity in the country instead of distributing the cash to stockholders.

The board approved this week the transfer of 1.057 billion pesos from reserve for future dividends to unappropiated retained earnings, which would now amount to 6.353 billion pesos. YPF will increase capital by 5.789 billion pesos, assigning 564 million pesos to meet regulations and legal reserves. YPF’s Guillermo Reda said this move

“responds to the firm’s plans and allows it to maintain the high level of undertakings of the last few years.” The company set an investing level of up to 15 billion pesos for 2012.

But the Argentinian government is not satisfied with YPF’s decision. Mirabaud analysts in Madrid described the measure as having been taken against the position favoured by the Kirchner cabinet. Yet, as at Banesto Bolsa and Link Securities, experts believe that the risk of nationalisation becoming anything else than a vague threat is remote.

In Thursday’s note to investors, Banesto admitted there may be further confrontations with Argentina’s national and regional authorities and stock prices would still experience certain degree of volatility. Sabadell analysts said that the Kirschner government seemed more interested in proving its ability to influence the company than improving its investment policy.