TLDR:
- Ana Botin is pushing for Santander’s expansion in the US retail banking market
- Santander plans to launch a digital bank in the US next month
- The bank has been hiring for its US investment banking division
- Botin has focused on expanding Santander’s digital capabilities during her 10-year tenure
- Santander’s share price has fallen about 40% since Botin’s appointment in 2014
Ana Botin, chairman of Banco Santander SA, is setting her sights on the United States as the next frontier for the Spanish banking giant. After a decade at the helm, Botin is steering Santander towards a significant expansion in the US market, with plans to launch a digital bank next month.
Santander’s approach to the US market is twofold. First, the bank is preparing to launch a digital retail banking operation, leveraging its technology-based Digital Consumer Bank division.
This move aims to tap into the vast potential of the US market without the need for extensive brick-and-mortar branches.
Secondly, Santander has been bolstering its US investment banking presence. The bank embarked on a hiring spree last year, aiming to double the size of its investment banking unit.
This strategy has already shown promising results, with Santander reporting “strong” revenue growth in the first half of this year.
Challenges and Opportunities
Despite Botin’s ambitious plans, entering the US market poses significant challenges. European banks have historically struggled to gain a foothold in the competitive US banking landscape.
Currently, Santander serves only about 4.5 million customers in the US, representing a mere 1.3% of the population.
However, Botin sees enormous potential for growth. The digital banking initiative, branded as Openbank, will serve as a crucial test case for Santander’s ability to expand its retail presence in the US market.
Digital Transformation and Global Strategy
Botin’s focus on digital capabilities extends beyond the US market. Since taking over as chairman in 2014, she has prioritized expanding Santander’s digital offerings, particularly in consumer banking and payments.
This strategy has involved creating separate divisions for digital retail businesses and payment services.
The bank’s global approach now centers on five key subsidiaries serving clients worldwide, moving away from country-specific strategies. This simplified structure aims to increase profitability and create a more cohesive global banking platform.
Performance and Investor Perceptions
While Botin has made significant strides in modernizing Santander and boosting its capital position, the bank’s share price has fallen approximately 40% since her appointment.
This decline is partly attributed to the challenging environment of negative interest rates set by the European Central Bank, which affected financial stocks across the board.
Despite this, Santander has seen increased profitability and has tripled its investor payouts over the past three years. The bank is set to return over €6 billion to shareholders this year through dividends and share buybacks.
