Major step forward for bank's North American strategy
Banco Santander SA is inching closer to offering full banking services in Canada after receiving a crucial regulatory approval, Bloomberg reported.
The Spanish banking giant recently received letters patent from Canada’s Minister of Finance to incorporate Santander Consumer Bank as a federally regulated financial institution, as announced in a June publication of the government’s official newspaper.
This development is a big step for Santander, which has been working towards obtaining a Canadian banking license for the past five years. The bank initially entered the Canadian market nearly a decade ago by acquiring Carfinco Financial Group, a company specializing in auto finance.
Now, Santander aims to broaden its services, with the ability to accept deposits being a pivotal step that could enable it to expand its credit portfolio.
However, Santander isn’t fully operational just yet. The bank still needs to secure an order to commence and carry on business from the Office of the Superintendent of Financial Institutions (OSFI). The regulatory body has up to a year from the issuance of the letters patent to grant this final approval.
As part of the evaluation process, OSFI will conduct an on-site review and assess whether the bank has the required capital, management structures, and compliance systems.
While the timeline remains uncertain, the stakes are high. Gaining the ability to accept deposits would allow Santander to fund loans and other financial products directly through Canadian sources, potentially lowering costs and increasing its competitive edge in the market.
Neither OSFI nor the Canadian Department of Finance provided comments on the ongoing process. A spokesperson for Santander also refrained from making any statements.
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Santander’s Canadian arm, based in Edmonton, Alberta, reported revenue of €73 million (CA$109.2 million) last year and employs around 275 people. The bank plans to keep its Canadian headquarters in Edmonton as it expands its presence in the country.
This move aligns with Santander’s broader strategy of growing its digital banking services in North America. The bank plans to introduce its Openbank brand in the United States and Mexico later this year, leveraging these operations to boost its consumer finance offerings.
North American operations contributed approximately one-fifth of Santander’s profit in the first half of 2024, with Mexico accounting for the majority of this share.
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