Dive Brief:
- Spanish bank Santander wants to boost its presence in the U.S. next year with a "nationwide deposit gathering platform" offering better money market rates than other banks, said Scott Powell, the bank’s U.S. chief executive, according to Financial Times.
- The move appears similar to Goldman Sachs’s Marcus initiative, rolled out in 2016, which offers deposit rates of 1.9%, compared to 0.05% for other Wall Street banks. Goldman has since captured $55 billion in deposits in the U.S. and U.K., Financial Times reported.
- Santander currently has physical branches in only nine states, which limits its potential to attract deposits. But the bank's car loans are offered through dealerships across the country.
Dive Insight:
With $145 billion in U.S. assets, Santander is one of the biggest European banks on this side of the Atlantic.
Santander's proposed online portal for deposits aims to curb the bank's reliance on more expensive wholesale funding. The bank's loans and leases account for $107 billion, compared with $64 billion in U.S. deposits, according to Financial Times.
Unlike Goldman Sachs's Marcus, Santander wouldn't be an online lender. Powell, a former CEO of consumer banking at JPMorgan Chase, said he thinks loan losses tend to be higher when borrowers don't have a deep relationship with the underlying lender, according to Financial Times.In the long term, however, Santander wants to bring its full-service digital bank, dubbed Open Bank, to the U.S.
Santander has taken its share of reputational and financial hits over the past few years. Its "broad and substantial weaknesses” in capital planning led it to fail the Federal Reserve’s stress tests three years in a row before passing in 2017.
The bank’s U.S. presence appears to be a bright spot. Santander reported 9% year-over-year loan growth in the U.S. in its most recent earnings call. Overall, however, net profit fell 18% from last year due to restructuring costs stemming from Santander’s acquisition of Banco Popular, according to CNBC.
Santander last month also said it would take a $1.65 billion impairment charge on its U.K. business in the third quarter related to Brexit.
