(Bloomberg) -- Ana Botin is pushing into the US as she pursues fresh growth opportunities for Banco Santander SA after spending a decade at its top.
The lender has “very ambitious plans” for the country and will launch a digital bank there next month, she said in a company-commissioned interview published on the weekend to mark her 10-year anniversary as chairman. The potential for Santander to grow in the country “is enormous,” she said.
The move to expand in US retail banking follows a hiring spree by Santander for its investment bank including deals advice last year. The lender at the time unveiled plans to double the unit as it seized on job cuts at other firms to hire talent.
Botin’s bet on the US will pour money into a market that’s notoriously hard to crack for European banks. Santander currently has only about 4.5 million customers in the US — about 1.3% of the population — putting the size of the client base behind many of its other countries of operation.
Santander might find it “difficult to make the leap from being a regional bank to a major one” in the US, said German Lopez Espinosa, a professor at the University of Navarra and IESE. He described Botin’s tenure as positive for Santander.
Botin declined to comment for the story.
Botin, 63, was appointed as Santander’s chairman on September 10, 2014, becoming the fourth member of the Botin dynasty to hold the role. The family, which controls about 1.2% of the bank, has helped run the lender for over a century.
The first woman to head the bank since its creation in 1857, Botin has largely shunned the serial dealmaking that was the hallmark of her predecessor, and father, Emilio Botin, who had turned Santander into one of Europe’s most international banks by spending more than $70 billion on acquisitions across the globe. Instead, Ana Botin has been focused on expanding the lender’s digital capabilities, especially in consumer banking and payments.
A few months into her new role, Botin pulled off a capital increase to head off potential investor concerns that the bank was less strongly capitalized than some competitors. A second hike followed some two years later to fund the takeover of domestic rival Banco Popular after it was declared failing by the European Central Bank. The deal has remained the biggest purchase under Botin.
Since taking over, Botin has boosted Santander’s capital cushion, driven up profits, and increased investor payouts.
Still, the Spanish bank’s share price is down about 40% since her appointment, as Botin’s term largely coincided with negative interest rates set by the ECB, which hit financial stocks across the board. A rebound in Santander’s stock set in about four years ago, though it lags much of the competition.
While mostly avoiding big acquisitions, Botin has spent money to take control of various payments providers, including Ebury in the UK and a business in Germany. She also used a Brazilian firm, Getnet, to expand services across Latin America and later rolled them out in Europe.
A few years ago, Botin folded the payments units into a division known as Pagonxt. She has also separated the digital retail businesses from the rest of Santander’s retail and commercial operations and combined them into a division known as Digital Consumer Bank, led by Jose Luis de Mora.
The idea is to use the technology-based DCB to expand retail banking in various markets including the US and Mexico without the need for bricks-and-mortar branches. Santander also seeks to clinch agreements to serve as preferred consumer credit provider for companies with large online sales such as Apple and Amazon.
The ambitious growth plan means that Botin’s effort to expand Santander’s digital consumer offering, branded as Openbank, into the US is an important test case. Santander’s current US business, run by former Deutsche Bank AG executive Christiana Riley, is focused on auto finance and loans.
Santander said in July that the efforts to build out the US investment banking business resulted in “strong” revenue growth in the first half of this year. The strategy has also pushed up costs.
The bet on the US “is starting to pay off,” said Davide Serra, founder and CEO of Algebris Investments, which has invested in Santander.
Along the way, Botin has used Santander’s rising profitability to step up how much money she pays out to investors, with combined dividends and share buybacks set to exceed €6 billion ($6.6 billion) this year, according to an estimate compiled by Bloomberg News. That’s roughly triple the amount returned just three years ago.
The progress hasn’t shielded Botin from some governance issues. Her attempt in 2018 to hire former UBS dealmaker Andrea Orcel foundered over compensation talks. Years of legal proceedings with the current CEO of UniCredit SpA ensued and are ongoing.
Santander has also moved the reporting line of the group CEO from her to the board of directors after receiving a nudge from the ECB. Incumbent Hector Grisi used to run the US operations before his promotion.
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