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Santander is reconsidering its presence in the UK two decades after its acquisition of Abbey National 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 exiting the UK market, the people said. They added that no deal or announcement was imminent and that the review was at an early stage.
The move comes as the Spanish lender grapples with lower returns on its hedged business in the UK relative to other markets, and its exposure to a British court ruling over the mis-selling of car loans. In November, that is set aside £295mn to cover the potential costs of the judgment.
Santander UK – which includes its sales and marketing activities in the UK – has caused confusion among the wider group in recent years, said one former director.
This was due to its constant cost base, the UK ring fence, its independent board, and the fact that it has not benefited from rising interest rates in recent years like its other markets such as Spain, they added.
The former executive said it was “always a possibility” that Ana Botín, Santander's executive chairman, would decide to sell the beleaguered bank because of the crisis. Two people familiar with the matter said it is not yet clear who will be interested in buying the unit.
Sander may decide to keep the business.
Santander entered the UK retail banking market in 2004 with its purchase of the former Abbey National building society and emerged from the financial crisis as one of Britain's largest lenders through the merger of Abbey and Alliance & Leicester and part of Bradford & Bingley. It rebranded as Santander UK in 2010.
At the time, Santander's entry into the UK was seen as a major 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 economy.
The Abbey deal helped transform Santander from a family-run mortgage lender into an international giant. Botín, whose family has controlled Banco Santander since the early 20th century, ran the UK business from 2010 until he was promoted to group chairman in 2014 following the death of his father.
Some investors in the Spanish group have questioned Santander's rationale for maintaining a presence in the different markets where it operates. Santander's shares have fallen about 30 percent since Botín became chairman.
The bank is already reducing its workforce in the UK and in October announced plans to cut 1,400 jobs in the country as part of a cost-cutting plan called “Project Nike”. It employs around 21,000 staff in the UK and has 14mn customers.
The bank is considering exiting the UK in part because it wants to focus on bigger growth areas such as the US, people familiar with the matter said.
It recently launched an aggressive expansion of its corporate and investment banking, hiring heavily from the ranks of former Credit Suisse bankers.
Even if Santander has decided 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, maintaining a London location for that business.
Santander UK reported a pre-tax profit of £947mn for the first nine months of 2024, down from £1.73bn in the same period a year earlier, as net interest income fell and it set aside a regulatory provision for auto financing. It had total assets of £275bn at the end of September.
Sander said: “The UK is Santander's main market and that hasn't changed.”
Additional reporting by Barney Jopson in London