Santander expands investment bank in US and UK, sources

Santander is accelerating the growth of its investment bank by hiring at least 50 bankers, mostly in the United States, two experts told Reuters.

Spain’s biggest bank is best known as a retail lender in Europe and Latin America, but aims to become a bigger player in investment banking under chairman and former JPMorgan banker Ana Bott.

At least 50 bankers will be hired for the expansion — many from successful Credit Suisse, the sources said.

More than 20 bankers have already been hired, mostly in the United States, the first source said, and an announcement of the overall hiring wave could come within weeks. The new hires could start in August, the person said.

The hiring is being overseen by José Manuel Linares, head of Santander Corporate and Investment Banking.

Santander is currently the bottom door in US investment banking. But it aims to become a “tier two” player over time behind Wall Street giants such as Goldman Sachs, a second source said.

The hires will focus on areas such as foreign finance and business services for multinationals with presence in Europe and Latin America, the people said.

Apart from the US, some new investment bankers will join Santander in the UK and Spain.

In the US, headcount in corporate and investment banking operations increased from around 500 to around 900 at the end of 2019, helped by the acquisition of US fixed income broker Amherst Pierpont.

In Great Britain, the number of employees rose from 350 to around 700 over the same period.

Redburn analyst Gonzalo Lopez said investors could be wary of a strategy that could erode Santander’s long-term capital buffer – which stood at 12.2% at the end of March, below the levels of many European rivals.

“One of the biggest concerns is Santander’s tight capital ratios,” Lopez said. “This is usually one of the biggest problems for the growth of an investment banking firm because the capital consumption … is high.”

Risk Undertaking

Earlier this year, Santander outlined plans to grow its investment banking business in the US by a combined 20% between 2023 and 2025.

In 2022, these activities in the US will record sales of $779 million. Santander recently appointed Deutsche Bank’s Christiana Riley as regional head.

The move is seen as a way to boost corporate earnings as the company spins back its largest U.S. business, subprime auto lending. Its first-quarter results almost halved as provisions for bad loans rose.

Total investment banking’s contribution to Santander’s group profits rose from 20% in 2019 to 32% in the first quarter of 2023.

Overall, Santander’s commercial and investment banking profits will grow 60% from 2019 to reach 2.8 billion euros ($3.2 billion) by the end of 2022.

In the past, Santander has relied on Latin America for growth to offset difficult conditions for banks in Europe.

($1 = 0.8900 euros) (Reporting by Jesús Aguado Editing by John O’Donnell and Mark Potter)