Santander is reportedly considering leaving Britain over excessive red tape, in a blow that risks impacting tens of thousands of staff and some 14 million customers.
The Spanish banking giant is considering pulling out of the UK as part of a strategic review of its future, according to the Financial Times. If executives decide to leave, they would seek a buyer for the lender’s operations here.
The extraordinary proposal is said to have been partly triggered by frustration over costly UK rules introduced in the wake of the financial crisis, leading to lower returns than in other markets.
The bank has also been forced to set aside £295m to cover potential costs from the car finance scandal after a court ruling rattled the finance industry last year.
Santander’s departure would be an embarrassing defeat for the Government and its pitch to corporate Britain of offering greater stability and overhauling regulation.
It comes after Rachel Reeves earlier this week summoned the bosses of Britain’s regulators and told them they had to help revive Britain’s sluggish economy “by tearing down the regulatory barriers that hold back growth”.
Santander executives have for years been irked by lower returns in the UK than in other markets like Spain, which have been blamed on a higher cost base and so-called ringfencing rules.
After the financial crisis, UK regulators forced large banks to “ringfence” or separate their retail banking from other more risky investment and international activities.
The FT reported that one former Santander executive said it had “always been a possibility” that executive chair, Ana Botín, would sell the ringfenced bank as a result.
Insiders said the bank’s executives want to focus more on growth regions such as the US after share prices have fallen by a third in just over a decade.
The group would step away from retail and commercial banking in the UK under the plans, while retaining some corporate and investment activities.
The bank’s size means its exit would risk having widespread implications. It employs around 20,000 people, has 444 branches across the UK and holds £200bn in customer lending.
Santander took up retail banking in Britain after buying the former building society, Abbey National, in 2004.
It became one of the country’s largest lenders after also acquiring Alliance & Leicester and a portion of Bradford & Bingley in the wake of the Great Recession.
Santander has already been cutting staff numbers, and late last year said it would shed 1,400 jobs.
A spokesman for Santander UK said: “The UK is a core market for Santander and this has not changed.”
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