Santander plans to end home lending in the United States and review its presence in certain segments of commercial and industrial lending, the bank said in an investor presentation on Wednesday.
The Spanish bank instead wants to focus on more profitable silos – with the aim of creating more auto loans in the United States and using its retail deposits to fund auto loans for borrowers with prime credit ratings. , she said.
Tim Wennes, CEO of the U.S. arm of the Spanish bank, said Santander would stop issuing mortgages and home equity loans this month because those portfolios lack scale.
“We didn’t see a clear path to returns above the cost of capital and made the decision to stop new creations,” he told American Banker. “We are simplifying our business to focus on areas where we can be successful with clients and deliver strong returns.”
Net income from Santander’s U.S. footprint more than doubled to $2.6 billion in 2021, the bank said Wednesday. Its U.S. operations accounted for 22% of the bank’s overall profit, more than triple the 7% it accounted for in 2019, executive chairman Ana Botín said in a call on Wednesday.
The bank also said it wants to increase its efforts with middle-market US companies and woo large corporate clients that do business in Spain, Chile and other countries where Santander has an existing presence.
Santander’s move to “simplify” its U.S. business is the next phase of a multi-year effort that has spurred retail banking exit in Puerto Rico.
In addition, Santander Holdings USA’s plan to buy the remaining shares of its US consumer unit for $2.5 billion, announced in August, was completed on Monday, according to a filing by the bank with Securities. and Exchange Commission.
Existing mortgage customers shouldn’t feel an immediate impact from the exit, Wennes said.