Banco Santander will no longer be breaking up operations due to Brexit, according to unnamed sources.
Reports by Bloomberg on Monday (Nov. 28) said the Spanish bank will no longer pursue previous plans to separate its consumer lending operations from its corporate and institutional banking units. The move would have been an effort to adhere to the Bank of England’s requirement that top banks separate commercial services, like corporate lending — often more risky — from retail services, according to reports.
The requirement is called ringfencing, and according to reports, Santander would have had to ringfence $215 billion worth of retail and small business banking operations, led by U.K. CEO Nathan Bostock’s deputy, Javier San Felix. Now, the bank is considering operating its global corporate banking operations from its London branch and operating its retail operations under its U.K. subsidiary.
The Bank of England’s requirements mean lenders must meet adhere to the new rules by 2019. Reports said Santander had been preparing the split for several years, though backtracking from the plan could mean Santander will be able to move some of its operations outside the U.K. to meet BoE regulations.
Bloomberg Intelligence Analyst Jonathan Tyce said that Santander’s change in plans may make it easier for the bank to continue servicing cross-border clients.
“Brexit has created a dilemma for Santander with respect to its need to ringfence U.K. retail operations,” Tyce explained, referencing the BoE’s requirements. “Should the bank shift its non-ringfenced operations out of the U.K., any disruption in dealing with large cross-border corporate clients post-Brexit would likely be limited.”
“A strength for Santander is having many options, due to our unique model,” a spokesperson for the bank told Bloomberg. “Santander is the only scale challenger to the big four banks in the U.K. We are committed to supporting our customers in the U.K. and growing our business presence here.”
Santander is currently the U.K.’s fifth-largest bank.