Santander expanding investment bank in US and UK, sources say

MADRID/LONDON, (Reuters) – Santander (SAN.MC) is accelerating growth of its investment bank by hiring at least 50 bankers primarily in the United States, two people with knowledge of the matter told Reuters.

Spain’s biggest bank is best-known as a retail lender in Europe and Latin America, but wants to become a bigger player in investment banking under chair and former JPMorgan banker Ana Botin.

The expansion will involve hiring at least 50 bankers – many from stricken Credit Suisse, the sources said.

More than 20 bankers have already been recruited, chiefly in the United States, the first source said, adding the announcement on the overall hiring spree could come within weeks. New recruits could start in August, that person said.

The recruitment is being overseen by the head of Santander Corporate and Investment Banking, Jose M. Linares, also a former JPMorgan banker.

Santander is currently a minnow in U.S. investment banking. But it wants to become a ‘tier two’ player over time, behind Wall Street giants like Goldman Sachs, the second source said.

The hires will be focused in areas including leveraged finance and corporate services for multinational companies with a presence in Europe and Latin America, the people said.

As well as the United States, some new investment bankers will join Santander in Britain and Spain.

In the U.S., the number of staff employed at its corporate and investment banking business has climbed from around 500 at the end of 2019 to around 900, helped by the acquisition of U.S. fixed-income broker Amherst Pierpont.

In Britain, staff count has risen from 350 to around 700 in the same period.

Redburn analyst Gonzalo Lopez said investors may be wary of a strategy that in the long term could erode Santander’s capital buffer – which stood at 12.2% at the end of March, below the level of many European rivals.

“One of the main concerns is about Santander’s tight capital ratios,” Lopez said. “This typically has been one of the main issues for growing an investment banking business, given that the capital consumption … is bigger.”

‘RISKY BUSINESS’

Earlier this year, Santander outlined plans to grow its investment banking in the United States by an accumulated rate of 20% between 2023 and 2025, according to a strategy update.

In 2022, this business booked revenues of $779 million in the United States. Santander recently appointed Christiana Riley from Deutsche Bank (DBKGn.DE) as its regional head.

The move is seen as a way to boost income from companies as it cuts subprime car lending, still its biggest U.S. business. First-quarter results there almost halved as provisions for bad loans rose.

The contribution from the overall investment bank to Santander’s group’s earnings rose to 32% in the first quarter of 2023, from around 20% in 2019.

Overall, profits at Santander’s corporate and investment bank have risen since 2019 by around 60% to 2.8 billion euros ($3.2 billion) at the end of 2022.

In the past, Santander has relied on Latin America for growth to offset the tough conditions for banks in Europe.

Image: REUTERS/Jon Nazca

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