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Santander Bank is reconsidering its presence in the United Kingdom two decades after its acquisition of Abbey National, which 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 to exit the UK market, the people said. They added that no agreement or announcement was imminent and that the review was at an early stage.
The operation comes at a time when the Spanish lender faces lower returns in its protected business in the UK compared to other markets, and is exposed to a British court ruling over the possibility of mis-selling car loans. In November, that It allocated 295 million pounds sterling To cover potential costs of judgment.
Santander's UK bank – whose retail and UK commercial banking operations include it – has caused frustrations within the wider group in recent years, a former executive said.
They added that this was due to its persistently high cost base, the UK's ring-fenced system, its independent board, and the fact that it has not benefited from rising interest rates in recent years as much as its other markets such as Spain.
The former executive said there was “always the possibility” that Ana Botin, Santander’s chief executive, would decide to sell the beleaguered bank as a result of these frustrations. It is unclear who would be interested in purchasing the unit, two people familiar with the matter said.
Santander could still decide to keep the business.
Santander entered the UK retail banking market in 2004 through its purchase of former construction company Abbey National and emerged from the financial crisis as one of Britain's largest lenders through Abbey's merger with Alliance & Leicester and part of Bradford & Bingley. It renamed the merged 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 be seen as a sign of declining confidence in Britain at a time when the Labor government is struggling to revive the country's faltering economy.
Abe's deal helped transform Banco 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 until she was promoted to group chairman in 2014 following the death of her father.
Some investors in the Spanish group have questioned the logic of Santander Bank maintaining a presence in the disparate range of markets in which it operates. Santander shares have fallen about 30 percent since Putin became president.
The bank has already reduced its headcount in the UK, 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 employees in the UK and has 14 million customers.
The bank is considering an exit from the UK partly because it wants to focus on bigger growth regions such as the United States, people familiar with the matter said.
It has recently launched an aggressive expansion into its commercial and investment banks, recruiting a large number of former Credit Suisse bankers.
Even if Santander decides to withdraw from retail and commercial banking in the UK, people familiar with the matter said it will continue to operate in corporate and investment banking, while maintaining a location in London for that business.
UK bank Santander reported pre-tax profits of £947m during the first nine months of 2024, down from £1.73bn during the same period a year earlier, with net interest income lower and a provision made for its car finance provision. Its total assets reached £275 billion at the end of September.
“The UK is Santander’s core market and this has not changed,” Santander said.
Additional reporting from Barney Jobson in London
