Bankinter | Banco Santander (SAN) is reviewing the strategic positioning of its UK franchise. According to the British press, Santander could sell its subsidiary and points to Barclays as a possible interested party.
Opinion of Bankinter’s analysis team: Positive impact. It is normal for Banco Santander to explore alternatives to improve the profitability and/or risk profile of its UK franchise, but we see a corporate transaction as unlikely. Santander UK has a lower profitability/RoTE than the group (11.1% vs 16.2% in 9M 2024) due to pressure on spreads and a high efficiency ratio (costs/revenues) (56.0% vs 41.7% SAN group). Despite this, the outlook for 2025 is not bad with higher rates for longer and an easing of regulatory requirements by the BoE. In short, Santander will most likely try to move faster on its efficiency plans (cost savings) and/or risk reduction/APRs to improve profitability/RoTE.
