Move boosts reports that the giant mortgage lender may quit the UK
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Once upon a time Great Britain had a golden age of finance. Yuppies quaffed champagne in towering office blocks. Europe bowed at London’s great temple of wealth and understood this was the epicentre of all that was worthy in the financial sector. But like any great rise, there is always a great fall – and it looks like the exodus of bankers after Brexit may well still be rolling on.
Back in London’s hey-day there was one set of rules to rule them all, but then – Brexit – and the Truss budget – and then the Reeves budget - you get the idea. Just yesterday we broke the news that one giant global bank was about to slash jobs and close departments in the UK and now it looks like the rumours we told you about predicting an exit by a major mortgage lender have just been given some serious credence.
Santander UK chairman William Vereker has announced he will step down later this year, a move that has intensified speculation about the Spanish banking giant’s long-term commitment to the British market. His decision comes amid persistent rumours regarding Santander’s review of its UK operations, despite reassurances from senior executives that the country remains a core market – for now.
Vereker, 58, has led the UK board since November 2020 and will remain in position until a suitable successor is appointed. Dismissing rumours of discord within the bank’s leadership, he told The Times: “There is no substance to any suggestion of a rift between myself and Ana Botín. This is the right time to step down and I’ll remain in post as we find a strong successor and work towards an orderly succession.”
Read more: Is this British bank about to buy Santander’s UK business?
Santander Group’s executive chair, Ana Botín, expressed gratitude for Vereker’s leadership, stating in a stock exchange filing: “The bank is very grateful for the invaluable role he has played.” However, industry observers have raised eyebrows over the timing of his departure, given the mounting concerns about Santander’s future in the UK.
Challenges for Santander UK
Santander’s presence in Britain has been under scrutiny due to several challenges affecting its profitability. The bank recently found itself embroiled in a car finance commission scandal, setting aside £295 million to cover potential customer compensation. Analysts at Moody’s have warned that redress costs for affected lenders could climb as high as £30 billion, further complicating Santander’s position in the market.
In addition, the lender has struggled with declining mortgage lending. Recent figures show its mortgage portfolio fell to £172.7 billion in early 2024, down from £183 billion the previous year. This drop echoes past struggles in 2013, when the bank saw a significant decrease in its mortgage lending business.
Operational challenges have also contributed to questions about Santander’s future strategy. The UK banking unit has been generating lower returns compared to other markets, leading to reported frustrations among senior leadership. Regulatory constraints, particularly the UK’s ring-fencing rules, have added complexity to its operations. A former Santander executive told The Financial Times that selling the UK retail division has “always been a possibility,” though no immediate decisions have been made.
Potential strategic shift
Santander’s entry into the UK market dates back to its £9 billion acquisition of Abbey National in 2004. It subsequently expanded by integrating Alliance & Leicester and parts of Bradford & Bingley during the 2008 financial crisis. The bank has since become a major player in Britain’s retail banking sector, serving 14 million customers and employing around 21,000 staff.
Read more: Santander in shock move to delay results, shares plummet
However, recent cost-cutting measures signal a shift in priorities. Last October, Santander announced it would cut 1,400 jobs as part of a restructuring initiative called “Project Nike”. The bank has also faced pressure to bring call centres back to the UK from Asia following customer complaints.
While there is no official confirmation of a UK exit, sources suggest that Santander may focus on expanding its corporate and investment banking operations in high-growth regions, particularly the United States. If it does decide to scale back its UK retail and commercial banking presence, the bank is expected to maintain a London-based corporate and investment banking office.
Despite speculation, a Santander spokesperson reaffirmed its position in Britain, telling The Financial Times: “The UK is a core market for Santander, and this remains unchanged.”