According to sources familiar with the matter cited by the Financial Times, the Spanish banking group is exploring various strategic options, including the possibility of exiting the UK market. However, the review is at an early stage, and no formal decisions or announcements have been made at the time of writing.
The consideration comes as Santander faces challenges in its UK business, where returns have lagged behind those of its other markets. The bank is also dealing with potential financial exposure stemming from a British court ruling on the alleged mis-selling of car loans, which led to a USD 295 million provision in November.
Santander UK, which oversees the bank's retail and commercial banking operations in the region, has been a source of internal frustration within the group, according to a former executive. Factors contributing to this sentiment include its high operational costs, the UK's regulatory requirements, and its independent governance structure. Additionally, the UK business has not benefited as much from rising interest rates in recent years compared to other Santander markets like Spain.
Santander entered the UK market in 2004 with the acquisition of Abbey National and later expanded through the mergers with Alliance & Leicester and parts of Bradford & Bingley. The combined entity was rebranded as Santander UK in 2010. The Abbey acquisition was seen as a major international investment at the time, transforming Santander into a global banking powerhouse.
Despite this, the bank has faced investor scrutiny over its broad geographical footprint. Some investors have questioned the strategic rationale for maintaining operations across such a diverse range of markets.
In recent years, Santander has undertaken cost-cutting measures in the UK, including the announcement in October 2024 of plans to reduce its workforce by 1,400 jobs as part of an efficiency program known as ‘Project Nike.’ The bank employs approximately 21,000 people in the UK and serves 14 million customers according to the Financial Times.
Sources suggest that Santander is assessing a potential UK exit as part of a shift in focus toward regions with stronger growth potential, such as the United States.
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