(Bloomberg) -- Banco Santander SA won a key approval in its yearslong effort to expand in Canada, where the Spanish lender already has a foothold in auto finance.
Canada’s Minister of Finance has issued letters patent incorporating Santander Consumer Bank as a federally regulated financial institution, according to a notice published in the government’s official newspaper in June.
It’s a significant step forward since Santander five years ago started the process of securing a bank license in Canada, a heavily regulated market that’s proven difficult for foreign lenders to penetrate. The Spanish firm had a presence in Canada since it agreed to buy car-financing company Carfinco Financial Group about a decade ago. Being able to accept deposits could help finance its credit portfolio.
Spain’s biggest bank still faces a second major hurdle, securing an order to commence and carry on business from the Office of the Superintendent of Financial Institutions. That decision is likely not imminent, because the bank regulator has up to one year from the time the letters patent were issued to make that order.
OSFI’s review process will include an on-site visit, according to a guide to bank approvals on the regulator’s website. And before issuing the order, it must be satisfied that the bank has adequate capital as well as “the necessary systems, management structure, control processes and regulatory compliance management systems in place.”
The regulator can’t comment on the Santander process, a representative said by email on Wednesday. Canada’s department of finance didn’t comment on Wednesday. A Santander representative also declined to comment.
Santander’s Canadian subsidiary, based in Edmonton, Alberta, had about 275 employees and revenue of €73 million last year. Santander also plans to maintain the head office of its new bank in Edmonton, according to notices filed in the government newspaper.
The Spanish bank has been pursuing a digital banking strategy in the U.S. and Mexico and announced in April that it plans to launch its Openbank brand in both countries later this year. Santander’s goal is to use the relatively cheap financing provided by Openbank deposits to extend its consumer finance business.
North American operations accounted for about a fifth of Santander’s profit in first half of 2024, with most of that coming from Mexico.
©2024 Bloomberg L.P.
