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Santander is reviewing its presence in the UK two decades after its acquisition of Abbey National made it a major player on Britain’s high street, according to people familiar with the matter.
The bank is exploring a number of strategic options, one of which is exiting the UK market, the people said. They added that no deal or announcement was imminent and that the review was in its early stages.
The process comes as the Spanish lender struggles with lower yields on its UK business compared to other markets, and exposure to a UK court ruling over possible abuse of car loan sales. It’s in November set aside £295m to cover the possible costs of the judgment.
Santander UK — which includes its UK retail and commercial banking operations — has caused frustration within the wider group in recent years, one former executive said.
This is due to a persistently high cost base, the UK’s hedging regime, an independent board and the fact that it has not benefited as much from rising interest rates in recent years as other markets such as Spain, they added.
The former director said there was “always a possibility” that Ana Botín, Santander’s executive chairman, would decide to sell the beleaguered bank as a result of these frustrations. Two people familiar with the matter said it was unclear who would be interested in buying the unit.
Santander may still decide to keep the business.
Santander entered the UK retail banking market in 2004 with the purchase of the former Abbey National housing association and emerged from the financial crisis as one of the UK’s largest lenders through the combination of Abbey with Alliance & Leicester and part of Bradford & Bingley. It rebranded the combined entity as Santander UK in 2010.
At the time, Santander’s entry into the UK was seen as a huge inward investment in the country. The sale could potentially be seen as a signal of falling confidence in Britain at a time when the Labor government is struggling to revive the country’s ailing economy.
The Abbey deal helped transform Santander from a family-run regional mortgage lender into a multinational giant. Botín, whose family has controlled Banco Santander since the early 20th century, ran the UK business from 2010 to 2014, after her father’s death, to head the group.
Some investors in the Spanish group questioned the logic of Santander’s presence in the various markets where it operates. Shares in Santander have fallen about 30 percent since Botín became chairman.
The bank has already cut its UK workforce and in October announced plans to cut 1,400 jobs in the country as part of a cost-cutting plan dubbed “Project Nike”. It employs around 21,000 staff in the UK and has 14 million customers.
The bank is considering an exit from the U.K. in part because it wants to focus on higher-growth regions like the U.S., people familiar with the matter said.
He recently launched an aggressive expansion of his corporate and investment bank, hiring largely from among former Credit Suisse bankers.
Even if Santander decides to pull out of UK retail and commercial banking, people familiar with the matter said it would continue to operate in corporate and investment banking, keeping a London branch for that business.
Santander UK reported pre-tax profit of £947m for the first nine months of 2024, down from £1.73bn in the same period last year, as net interest income fell and left a provision for a decision on car financing. At the end of September, it had total assets of £275 billion.
Santander said: “The UK is a key market for Santander and that has not changed.”
Additional reporting by Barney Jopson in London
