In Davos last month, Ana Botín, Executive President Banco Santander, wanted to make the virtue of the size of the Spanish lender.
She canceled the reports that the lender could leave the UK and remind President Trump via Video Link that Santander boasted more customers than the two largest US banks combined.
“Congratulations, I know a lot about your bank and you have done a fantastic job,” Trump applauded.
Others are less impressed. Ever since Botín inherited the best job from his father in 2014, the group’s shares have fallen for almost a third.
While other global banks such as HSBC and Citigroup withdrew from distant markets, there are questions about whether Santander’s widespread trace-nee that includes 10 “basic markets”, more than 170 million customers, almost 210,000 staff and total assets From 1.8 €- it still makes sense.
“Santander has a balance sheet that is as big as some major US banks, but trades much lower multiple and less profitable,” says Hugo Cruz, an analyst of European banks in KBW.
“There are questions about that [Santander] actually adds value or not. There is a conglomerate discount. “
The head of the Spanish lender are not forgotten about these problems.
The bank explores a number of strategic options for its UK’s business, one of which is potentially Exodus The British retail market, where it has been attending since 2004, said the Financial Times last month.
In two decades in which Santanger worked in the UK, the unit has largely produced stable – but insidious – returns for its home group. The bank argues that the reliability of yields in his business in the UK allows it to continue growth in more unstable markets, such as Latin America.
Santander said his model was “proven to create consistent growth” and that the value of his network “is visible in the constant improvement of the efficiency that is among the lowest of our peers, and we continue to invest in future growth.”
It is expected to report a net profit of 12.2 billion euros on Wednesday for 2024, compared to EUR 11.1 billion a year earlier. The squares with more than 0.96 times tangible bookkeeping values.
However, the weaker Great Britain returns to some of the other Santander markets, along with the British Ring and Brexit regime, caused frustrations within a wider group, according to people who are familiar with the issue.
John Cronin, analyst of the financial industry and founder of Seapoint Insights, says: “The point is [Santander] It creates a better return of capital in other markets, so the committee at intervals is to re -examine its commitment to the UK market. ”
Last week it was announced that Santander’s chair in the UK William Vereker He resigned after disagreements with the group leadership, emphasizing some discomfort within the surgery.
“What Santander has is a very strong culture,” says one banker familiar with the group. “They are very strong managers – Spanish managers who are dressed in a botín way.”
Although Botín publicly said that the job in the UK “is not for sale” and that Santanger will remain a “fundamental market”, people at the highest level of the bank have privately said that the exit is still on the cards.
Santander rejected the “Low Ball” offer for his retail jobs from Barclays last year, said the person familiar with the question. Barclays refused to comment. Analysts estimated that Santanger could generate between 11 billion euros and 15 billion euros from the sale of the unit.
Barclaya managers have also discussed the replacement of property with Santander, people have said people to know this issue.
This would suggest that the Spanish Bank transferred its hypothecular British company with a high street in Barclays in exchange for the business of US cards of the British lender, giving both larger proportions in the markets they are underway. The idea never broke the country due to regulatory and competitive obstacles.
If Botín cools down on the Santander’s hand of the UK – a job she was running just before she climbed into a chair – she warmed up to the US.
Botín began the great expansion of a corporate and investment bank of the Spanish lender.
In 2021, Santander bought Amherst Pierpont Securities, a named US Treasury Primary Sealer for $ 600 million, and the bank promised a further $ 250 million to build an investment bank.
He also recruited from Credit Suisse after a scandal-entertaining Swiss lender by UBS.
“There has been a great deal of revenue in the corporate and investment bank,” says KBW Cruz. “They hired all these people and you can see that fees grow strongly.”
During the first nine months of 2024, Santara’s investment bank brought 6.3 billion euros in revenue, or almost 14 percent of the highest lender during that period. Five years ago, the Investment Bank contributed a tenth of the bank’s total revenue.
Inner, bank leaders discuss benefits from investment in the United States since 2021 just begins to feel in 2025.
Several bankers who have joined Santander in the last two years say that a long lag because of naked bone infrastructure was missing even basic support in Back-offs-built Blue Chip clients, such as the main Hedge funds or access to data sources in the industry like Dealgic- and. “There was literally nothing,” said one Santander Investment Banker.
Some bankers have joined guarantees in the amount of about $ 4 million in salary for the first year of employment, with an understanding that something similar could be paid for the second year.
The hiring moved through the merges and acquisitions, exploited the markets of finances and capital, a wide pressure that aroused the curiosity about the size of his ambitions.
“History shows that it is difficult for European banks to compete in investment banking in the United States,” says Senior Executive Director of Roman European Lady.
However, David Serra, founder of Algebris Investments, who owns more than 1 billion euros in capital and debt in Santander, says “one big advantage” for Sandander’s US investment bank “Latin American Corridor”.
Santander has a strong presence in several countries across the region. His companies in Brazil, Mexico and Chile are expected to bring 4.6 billion euros of combined net profit for 2024, according to the consensus of analysts.
“I’m not sure you would design a bank of zero today,” Cronin says. “But geographical diversification gives revenue insulation and there is a neat and reasonable contradiction between developed and exposure to the emerging market that looks good.”
Santander aimed at the return of tangible capital – a key measure of bank profitability – of about 16 percent for 2024, significantly higher than most of its European peers.
“In the last two years, the total shareholder refund has surpassed peers and we are convinced that our model still has significant progress,” the FT Bank told.
Serra said that Santander’s high return to capital, along with the relatively low volatility of his earnings, made the Spanish lender by a convincing investment case, and suggests that his combination of retail franchise multimarket is not “out of fashion”.
“The shares, like most other quality European banks, are very underestimated,” Serra adds. “It’s one of my biggest positions. What does not like to pay 10 percent a year and grow?”
But others ask if the bank is too thin.
“Santander has to think about what he wants to do,” says Senior European Banker. “Is it retail? If so, in which countries? Is that corporate banking? Their corporate and investment banks are not bad but not great. There should be a mass review.”
Additional reporting Stephen Morris
