The Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, issued an order authorising Santander Consumer Bank to commence operations early in March 2025.
Banco Santander has been actively expanding in North America, with recent hiring efforts in the US and the launch of a new digital bank in both the US and Mexico. This regional expansion aligns with the company’s strategic focus on growth in the Americas.
Santander has had a presence in Canada for over a decade, initially entering the market through the acquisition of Carfinco Financial Group, a car-financing company. In July 2019, the bank applied for a Schedule II banking licence, a designation that allows subsidiaries of foreign banks to offer a full suite of financial services, including deposit-taking, lending, wealth management, and credit card issuance.
The approval of Santander’s banking licence comes amid discussions about foreign financial institutions operating in Canada. Despite claims of restrictions on US banks entering the market, more than a dozen US financial institutions currently operate in the country, with three holding the same type of licence as Santander. OSFI data indicates that there are currently 15 Schedule II banks operating in Canada.
The latest US foreign trade barriers report does not list any Canadian restrictions on foreign banks. However, it does highlight barriers in other global banking markets, underscoring the varying levels of accessibility for international financial institutions.
With OSFI’s approval secured, Santander Consumer Bank is set to expand its operations in Canada, leveraging its expertise in digital banking and consumer finance. The move aligns with the bank’s broader strategy to increase its market share across North America, reinforcing its presence in a competitive financial landscape.
Canada’s banking sector is heavily concentrated, with the five largest banks – Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Scotiabank, Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC) – holding approximately 85% of total banking assets. This dominance has historically made it difficult for foreign banks to establish a significant foothold. HSBC, previously one of the largest international banks operating in Canada, accounted for only about 2% of the country’s total banking assets before its acquisition by RBC in 2023. Santander’s entry into this landscape suggests a strategic effort to carve out a niche, likely through specialised financial services rather than direct competition with the Big Five in traditional retail banking. Its consumer finance expertise, particularly in auto lending, could give it an edge in Canada’s highly leveraged credit market, where household debt sits at 170% of disposable income, one of the highest levels among G7 nations.
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