Santander bank is facing a potential customer backlash and exodus following reports that there may be plans to exit the UK. Industry insiders have cautioned that this threat to leave, perceived as an attempt to pressure the government into easing financial rules and regulations, could backfire.
The Spanish-owned bank issued a memo to senior managers outlining how to address concerns from customers and staff questioning the news.There has been previous frustration with British rules, including the ring fencing regulations, which force bigger banks to separate and protect their consumer deposits from the rest of their investment banking operations.
Regulators have pledged to relax some of these restrictions in a bid by Chancellor Rachel Reeves to stimulate growth. In a separate issue, Santander is among several banks struggling to cope with the fallout of a growing car finance commission scandal, which analysts at RBC Capital say could cost the bank up to £1.9bn in compensation.
The internal note to senior managers, which was signed off and approved by the executive chair of the Madrid-based parent company Banco Santander, Ana Botín, said anyone asking about the news should be told the bank reviews its priorities every year and “this is part of business as usual”.
In response to being asked if the bank is “planning to exit the UK”, bosses are instructed to say: “The UK is a core market for Santander. This has not changed. We remain focused on delivering our strategic priorities and continuing to serve our 14 million customers in the UK.”
The document further clarifies: “I trust that this is helpful and reinforces the bank’s position, should you be asked.”, reports Lancs Live.
Craig Fish from Lodestone Mortgages and Protection said the move by Santander appeared to be part of a bigger strategy designed to twist the arms of ministers to slim down regulations. He cautioned: “If this is a tactical shot that’s been fired to speed up government plans, it could backfire. The public may just desert them and use alternative suppliers for their needs.”
Riz Malik, Independent Financial Adviser at R3 Wealth, told Newspage: “Santander is firing a warning shot against a weak government that is in deep trouble. Even if they don’t leave, they could always redeploy their resources, like other firms could, if their faith in UK plc continues to diminish. That would certainly be disastrous for the economy and households across the country.”
“On the other hand, Santander could be playing a dangerous game if their current and future customer think they are not committed to the UK and no longer offer stability.”
Rohit Kohli, Director at The Mortgage Stop, added: “Santander’s suggestion of leaving the UK is likely part of a broader strategy to influence discussions around the recent de-regulation discussions. However, we cannot entirely rule out that they may be evaluating a longer-term exit strategy. If this is the case, it would not be a quick process.”
He also mentioned: “For borrowers, there’s no need for concern—UK regulations ensure agreements remain secure, even if their mortgage book is sold to another provider.”
Justin Moy, Managing Director at EHF Mortgages, noted: “A move by Santander to leave the UK market could create significant unease, making it harder to justify their products in the short term if there is a likelihood of their mortgage book being sold on. Borrowers may end up with an unknown lender and potentially more expensive products on renewal.”
Simon Bridgland, Director at Release Freedom, cautioned: “It’s near impossible to imagine a banking and mortgage landscape without Santander featuring in it. In the unlikely event of such a tectonic banking shift, market worry and faded public confidence would hit like a tidal wave, causing chaos.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, commented on the issue saying: “This feels more like a shot across the boughs than an actual intention to leave the UK market. While Santander may have smaller margins in the UK due to heavy regulation, the top 6 bank still achieve decent profits and market share. There is potential threat financially from forthcoming court rulings around mis-selling of car financing loans, so this could be an act of protest. Ultimately in the unlikely event of a UK market exit, the mortgage loan book would be sold, meaning at most the name on the direct debit would change for borrowers. Those with deposits and savings would swiftly look to move them elsewhere.”
A representative for Santander stated: “The UK is a core market for Santander and this has not changed.”
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