Santander’s US Lending Unit Under SEC Microscope

Banco Santander SA, with an eye on its units based in the United States, is taking a $4.8 billion goodwill impairment charge tied to its consumer lending unit.

The Wall Street Journal reported that the goodwill charge (which is non-cash) came in the wake of that unit’s share price sliding in the fourth quarter of the past year, when it was off by about 25 percent on concerns of risky car loans.

And, in another bit of not-so-good news, the bank said that executives at the consumer lending unit have delayed filing the annual report mandated by the Securities and Exchange Commission, due to lingering concerns on how Santander Consumer USA Holdings Inc. accounts for and makes provisions for risky loans.

Santander CFO José García Cantera said in an interview with the publication: “It is just a clarification we are working on with the SEC.” The aim remains to get those SEC filings in by the middle of this month. The executive added that his company “cannot predict what the SEC will do.”

In years past, the Santander holding company failed the Federal Reserve’s annual exams in both 2014 and 2015 and was cited for “widespread and critical deficiencies” in corporate governance and risk control. Then, this past July, the Fed stated the company had not been up to snuff on basic business practices and executives at the bank had been stating that stress tests may be failed this year. The company told WSJ that the discussions that have been ongoing with the SEC have been focused on how the company treats provisions for the riskiest loans on the books, with an accounting change having come in the third quarter of last year.