Santander sees UK exit amid high street bank disappointment

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Santander is reconsidering its presence in the UK two decades after buying AB Nacional, people familiar with the matter said.

The bank is exploring several strategic options, one of which is exiting the UK market, the people said. He added that no agreement or announcement will be made and the review is still in its infancy.

The proceedings come as the Spanish lender grapples with low returns in its UK-backed business compared to other markets and a British court ruling on possible unfair selling of car loans. In November, he It allocated £295mn To cover the potential costs of the decision.

Santander UK – which includes its retail and commercial banking operations in the UK – has been frustrated by the wider group in recent years, a former executive said.

This is due to a persistently high cost base, the UK’s ring hedging system, an independent board and the fact that it has not benefited more than other markets such as Spain due to rising interest rates in recent years, he said.

Santander CEO Anna Bottin said a decision to sell the beleaguered bank was “always possible” amid these frustrations, the former executive said. Two people familiar with the matter said it was unclear who was interested in buying the unit.

Santander may still decide to keep the business.

Santander in 2010 It entered the UK retail banking market by buying former building society Abbey National in 2004 and emerged from the financial crisis as Britain’s largest lender by combining Abbey with Alliance & Leicester and the Bradford & Bingley Group. In the year In 2010 it rebranded the merged entity as Santander UK.

At the time, Santander’s entry into the UK was seen as a major investment in the country. The sale could be seen as a sign of falling confidence in Britain at a time when the Labor government is struggling to revive the country’s flagship economy.

The Abi deal helped transform Santander from a family-run regional mortgage lender into a multinational giant. Bottin, whose family has controlled Banco Santander since the early 20th century, has led the UK business since 2010, when she became group chairman following her father’s death in 2014.

Some investors in the Spanish group have questioned Santander’s logic in the various markets where it operates. Shares in Santander have fallen nearly 30 percent since Bottin became chairman.

The bank, which has already reduced its headcount in the UK, announced in October that it planned to cut 1,400 jobs in the country as part of a cost-cutting plan dubbed “Project Nike”. It employs around 21,000 staff in the UK and has 14 million customers.

The bank is considering an exit from the U.K. in part because it wants to focus on bigger growth regions like the U.S., people familiar with the matter said.

It recently launched an aggressive expansion of its corporate and investment bank, recruiting bankers from the former Credit Suisse.

While Santander has decided to pull back from retail and commercial banking in the UK, people familiar with the matter said it would continue to work in corporate and investment banking, maintaining a London outlet for that business.

Santander UK made a pre-tax profit of £947m in the first nine months of 2024, down from £1.73bn in the same period a year earlier, as net interest income fell and set aside a provision for an auto financing ruling. It had total assets of £275bn at the end of September.

“The UK is a key market for Santander and that hasn’t changed,” Santander said.

Additional report by Barney Jopson in London