Some more detail on Santander
- Adam Edwards
- Feb 13
- 2 min read
I've been continuing my interest in what's happening with Santander, and have been interested in a potential purchase by NatWest (article 1 / article 2 - both from the FT)
In 2023, Banco Santander engaged in preliminary discussions with NatWest regarding the potential sale of its UK retail division. Despite these talks, Santander has publicly affirmed that its UK operations are not for sale, emphasizing the UK's significance within its diversified global strategy.
Santander's UK arm has faced challenges, including high operational costs, stringent ringfencing regulations, and returns that lag behind its other markets. These factors have led to internal deliberations about the future of its UK presence.
Conversely, NatWest is poised for expansion, especially as the UK government moves closer to fully divesting its stake in the bank. Under CEO Paul Thwaite, NatWest has pursued acquisitions, such as parts of Sainsbury's Bank and a £2.5 billion portfolio of prime residential mortgages from Metro Bank.
Analysts estimate that Santander's UK business could be valued between €11 billion and €15 billion. However, finding a suitable buyer presents challenges. Mergers with major UK banks like Barclays or NatWest could lead to significant market concentration, potentially raising regulatory concerns.
Key Takeaways
Santander held informal talks with NatWest in 2023 about selling its UK retail business.
The bank insists publicly that the UK unit is “not for sale,” but internal discussions suggest otherwise.
Santander UK’s profitability has lagged behind other markets, partly due to high costs and strict UK regulations.
NatWest, anticipating full privatisation, is seeking acquisitions and remains interested in Santander UK.
Barclays previously made a low offer for Santander UK, which was rejected.
The estimated sale value of Santander UK is between €11bn and €15bn.
Santander’s UK net profits fell by 15% in 2024, adding pressure to reconsider its presence in the market.
Brexit and ringfencing rules have made the UK a less attractive market for Santander.
Santander’s leadership is divided on whether to exit the UK, with some executives privately considering it.
Barclays explored a swap deal, offering its US cards business in exchange for Santander’s UK unit, but it did not materialise.
Santander is expanding in the US, acquiring Amherst Pierpont Securities and investing in corporate banking.
Latin America remains a major profit driver, with key markets like Brazil, Mexico, and Chile generating strong returns.
The bank’s corporate and investment banking expansion is expected to deliver results by 2025.
Some analysts believe Santander’s global structure leads to inefficiencies and lower market valuation.
Despite challenges, Santander believes its diversified model provides long-term resilience and growth potential.