Santander, a global banking giant, is taking a significant step in realigning its retail and commercial banking activities with its strategic vision. The bank has decided to consolidate its retail & commercial and consumer operations across all markets under two new global businesses: Retail & Commercial and Digital Consumer Bank. These changes are aimed at harmonizing these segments with Santander's existing global model in Corporate & Investment Banking, Wealth Management & Insurance, and Payments. The objective is to help the bank achieve the strategic goals outlined at its Investor Day in February, which include adding 40 million customers by 2025, increasing return on tangible equity (RoTE) to 15-17%, and achieving double-digit average annual growth in tangible net asset value (TNAV) per share plus dividend per share through the cycle.
Balancing human and digital: Are banks losing touch with customers?
Starting in January 2024, all of Santander's activities will fall under five primary global business areas:
• Retail & Commercial: This new business area will encompass all of the bank's retail and business banking operations globally and will be led by Daniel Barriuso.
• Digital Consumer Bank: This segment will handle all consumer finance activities worldwide and will be under the leadership of José Luis de Mora.
• Payments: The Payments division will include PagoNxt, led by Javier San Félix, and Global Cards, led by Matías Sánchez.
• Corporate & Investment Banking: This global business will continue to be led by José M. Linares.
• Wealth Management & Insurance: Another existing global business, it will continue to be led by Víctor Matarranz.
Santander's Executive Chair, Ana Botín, stated, "Today we are announcing a crucial step in aligning our operating model in retail & commercial and consumer banking to our strategy. We know from our progress since we first defined our strategy in 2015 that leveraging our unique combination of global scale and local leadership allows us to serve customers better while delivering profitable growth."
In this revamped model, global heads will define the common business and operating model, based on global platforms, while country heads remain responsible for managing the business. Regional heads will drive the implementation of the model and convergence across the markets.
Santander plans to align its financial reporting to this new model from January 2024. The five global businesses will become the primary segments for the group, simplifying the reporting structure. However, the bank will continue to report all country and region-specific data, albeit as secondary segments.
The bank's financial targets, outlined in February, remain unchanged. These targets include achieving a RoTE of 15-17% in 2023-2025, maintaining a fully-loaded CET1 above 12%, delivering double-digit average annual growth in TNAV per share plus dividend per share through the cycle, and maintaining an efficiency ratio of approximately 42% by 2025. Santander is on track to meet its 2023 targets, which include double-digit revenue growth, RoTE above 15%, cost-to-income ratio of 44-45%, fully-loaded CET1 above 12%, and a cost of risk below 1.2%.
