Santander reviews UK retail banking presence amid broader assessment, source says

This is something I read in Reuters, I used to live close to Santander and have a fondness for the city and (by extension) the bank. I remember getting a tour of the headquarters in the city, which are incredibly fancy.

Summary

Santander is reviewing its UK retail banking operations as part of a broader strategic assessment, potentially scaling back or even exiting the market to focus on growth regions like the US. Despite the UK being a core market, Santander faces challenges including high operational costs, competition from banks like Barclays and Lloyds, and tax burdens. A 2022 approach from Barclays regarding a potential acquisition of Santander’s UK business did not progress due to price disagreements. The review follows cost-cutting measures, including 1,400 job cuts, and rising compliance costs, highlighting Santander’s frustrations with the UK banking environment.

Key take aways:

• Strategic Review: Santander is reassessing its UK retail banking presence, considering options from scaling back to exiting the market, while potentially increasing focus on growth regions like the US.
• Challenges in the UK Market: High costs, competitive pressures, and unique tax burdens have made the UK a challenging market, prompting frustration among Santander executives.
• Barclays' Interest: A 2022 approach by Barclays to acquire Santander’s UK business fell through over pricing disagreements, with no immediate indications of renewed interest.

What is the state of Santander in the UK?

As of the third quarter of 2024, Santander UK serves approximately 14 million active customers and operates 444 branches across the country. The bank's mortgage portfolio stands at ￡169.7 billion, with customer deposits totaling ￡187.4 billion. In the same period, Santander UK reported a profit before tax of ￡143 million and maintained a Common Equity Tier 1 (CET1) capital ratio of 15.4%. The bank employs around 19,500 full-time equivalent staff. (Santander)

In 2022, Santander UK's operating income was ￡4.956 billion, with a net income of ￡1.394 billion and total assets amounting to ￡285.2 billion (Wikipedia – Santander UK). Globally, Banco Santander's top markets by revenue in 2023 included Brazil (21.6%), Spain (17.4%), the US (12.3%), and the UK (11.2%) (Wikipedia – Banco Santander)