Santander is reportedly considering leaving the UK after seeing lower returns from its British banks.
The Spanish bank is considering a “number of options” for its UK arm after two decades on the high street, according to the Financial Times.
Scaling back Santander’s business in Britain is one of several options, the FT’s sources said, but no deal or announcement was imminent.
Santander has since responded to the reports. It said: “The UK is a core market for Santander and this has not changed.”
It has since been reported that senior managers have been sent memos detailing how they should deal with concerned customers who have heard reports about the bank leaving the UK.
The chief executive of Santander’s UK corporate and commercial bank, John Baldwin, is understood to have sent out the memo outlining how to respond to clients and its 21,000 UK staff.
The internal note to senior managers said that if anyone asked “is it true that you are reviewing your presence in the UK?” bosses should respond by saying that Santander executives “review strategic priorities in all our markets annually. This is part of business as usual.”
If asked the question is Santander “planning to exit the UK”, bosses have been advised to reply: “The UK is a core market for Santander. This has not changed. We remain focused on delivering our strategic priorities and continuing to serve our 14 million customers in the UK.”
The memo adds: “I trust that this is helpful and reinforces the bank’s position, should you be asked.”
Why could Santander be leaving?
The Financial Times reported that bosses have “frustrations” with the cost of operating in the UK and the “high cost bases” of a high street presence, such as rents, as well as with the UK’s ring fencing regime.
Ring fencing came fully into force in January 2019 in response to the global financial crisis and required UK banks to have separated core retail banking services from their investment and international banking activities. The Bank of England said it was “designed to increase the stability of the UK financial system and prevent the costs of failing banks falling on taxpayers”.
These rules apply in the UK and not in other European countries.
Santander in the UK is exposed to British interest and banking rates, and Spanish-based bosses are said to be unhappy that UK branches have not benefited “from rising interest rates in recent years as much as its other markets like Spain”, according to a former executive quoted in the FT.
