Santander emphasises commitment to UK despite €1.5bn writedown
Santander’s boss Ana Botin has insisted that Britain remains a “critically important market” to the bank despite its writedown of €1.5 billion.
The Times reports that the Spanish bank has blamed the new rules designed to make banks safer after the financial crisis and Brexit’s impact on the British economy for the financial hit, which will affect its third-quarter profits.
The writedown is the latest sign of the difficulties facing Santander in Britain, which it entered 15 years ago when it bought Abbey National for £9bn. The bank followed up that deal with the acquisitions of Alliance & Leicester and the savings business of Bradford & Bingley during the financial crisis in 2008 and is now the UK’s fifth-largest bank.
In July this year, Santander UK reported a 36% decrease in first-half pre-tax profits to £575 million after it was knocked by a price war that is being waged in the British mortgage market as well as costs associated with branch closures.
Ana Botín was in charge of Santander’s UK arm for four years until she succeeded her late father, Emilio, as boss of the group in 2014. Nathan Bostock replaced her at Santander UK.
Santander said the €1.5bn impairment was mainly due to the UK’s “challenging regulatory environment” including the “various negative impacts” of the ringfencing rules that came into force at the start of the year. These rules forced the UK’s biggest banks to hive off their high-street businesses from their investment banking arms.
Such regulations led Santander to move some revenue-generating assets out of its UK arm and has led to what the bank called “an increase in costs due to the duplication of some functions, resulting in a decrease in the capacity to generate profits”.
Santander added: “The impairment also reflects the increase in competitive pressure in the country and the impact that uncertainty relating to Brexit has had on UK economic growth.”