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Santander's Leaner Future: Digital Drive Promises Big Savings
24 Feb
Summary
- Santander aims for a leaner structure with digital expansion.
- The bank acquired Webster for $12.2 billion, boosting US presence.
- Profitability target set to exceed 20% by 2028 from 16.3%.
Santander's CEO Ana Botin is set to outline a strategic vision for a more efficient lender, emphasizing cost savings driven by digital initiatives. The bank recently completed a $12.2 billion acquisition of U.S. bank Webster, reinforcing its focus on the United States as a key growth market alongside Spain and Britain.
This acquisition, following the purchase of Britain's TSB, aligns with Botin's objective to simplify the bank's structure. Santander also intends to significantly improve its profitability ratio, targeting over 20% by 2028, a notable increase from the current 16.3%.
The bank's strategy involves creating a unified IT platform and operating model to reduce service costs, with initial savings from the Webster deal projected at $800 million annually. Santander aims to cut its cost-to-income ratio, currently higher than Spanish rival BBVA, into the 30%-39% range.
Santander's increased investment in developed markets, particularly the U.S. and UK, aims to provide the necessary scale for improved profitability. These acquisitions have boosted the share of gross operating profit from developed markets to nearly two-thirds.
