Investment bank to receive $250M injection from Santander

Santander Steps Up Investment Banking Efforts Amid Industry Disruption

In a move to position itself closer to its stated goals, Santander has announced a restructuring that includes a focus on growing its investment bank. This restructuring, outlined in an investor day in February, comes amidst a wave of cost-cutting measures by banks across the globe.

September saw Santander consolidate its retail and commercial business into a new global unit and create a global digital consumer banking division. The bank's focus in growing its investment bank is on areas where it is strong, such as renewables and infrastructure.

Santander has allocated $250 million to grow its corporate and investment bank over the next two years. This growth strategy is in stark contrast to some other large banks, who have made cuts to their investment banking businesses this summer.

The banking industry is experiencing significant disruption, with as many schools of thought on how to navigate the space as there are disruptors. Despite this, Santander's business model in the investment bank remains distinct, being mostly a corporate bank with a focus on the fee business.

To support this growth, Santander has hired over 100 bankers this year, with more than half coming from Credit Suisse. Héctor Grisi, Santander's CEO, previously spent 18 years at Credit Suisse and has recommended many of the bankers brought over from the collapsed Swiss lender.

PNC and Ally Financial, as well as BMO Capital Markets in Canada, have also made broader job cuts as part of their cost-cutting measures. Goldman Sachs, JPMorgan Chase, TD's Cowen, and unspecified other banks have followed suit this summer.

Santander's aim is to add 40 million customers, increase its return on tangible equity to 15%-17%, and achieve double-digit annual growth in tangible net asset value per share plus dividend per share by 2025. The bank also plans to acquire licensing rights in its restructuring efforts, although specific information about who advised Santander in the licensing rights process for retail has not been provided.

The restructuring includes a focus on the retail sector, aligning with earlier reports that Santander was focusing on hiring managing directors. The banking giant aims to leverage its position to capitalise on the opportunity to grow in the US, a logical choice according to Ana Botín, Santander's Executive Chair.

In conclusion, Santander's strategic restructuring and investment in its investment bank demonstrate a commitment to growth and innovation in the face of industry disruption. The bank's focus on renewables, infrastructure, and the US market, as well as its distinct business model, position it well for the future.