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00:00This conversation is happening off the heels of President Trump directing Secretary Scott Bessent to cut off all trade with
00:07Spain over issues of use with air bases when it comes to the attack on Iran.
00:12I would love to just get your initial reaction to that.
00:15So it's great to be here. Extraordinary times. You know, extraordinary times you have to look to the medium term.
00:23Spain and the United States have had an amazing relationship forever, you know, centuries, and I'm sure that's going to
00:30happen again very soon.
00:31So Santander, on the other side, we are a big investor in the United States.
00:35We see ourselves as a bridge between the United States and Latin America and Europe and the United States.
00:40So we all focus on serving our customers. We have close to five million Americans that we serve every day.
00:47So, you know, this is a great country and we're investing more.
00:51Are you concerned about any greater impact when it comes to either Spain or Santander itself?
00:56If this is what happens, if there is trade cut off, how big of a ramification could that have?
01:02So at the end, we're here to serve our customers. And if our customers need our support, you know, that's
01:07what we're here for.
01:08So, you know, we are a great connector. Trade is one of our big activities.
01:13We're one of the big trade finance banks in the world.
01:15And again, what we see is that the trade continues and it's very strong and that's the number.
01:21So there is still a lot of connection, increasing connection between our countries.
01:26So you're confident on the relationship between the U.S. and Spain, between Santander and the U.S., regardless of
01:31what the headlines are.
01:32Is that fair to say?
01:32Yes. You know, the long term relationship is strong.
01:35And I think that's where you go back to. Again, we're living very extraordinary times.
01:39Can I ask, because you also did a deal recently, announced you were buying Webster in the U.S., given
01:46some of the political volatility, how do you think about your regulatory outlook?
01:50Are you concerned that that might come under greater scrutiny if there are relationships fraying?
01:55So at the end of the day, our business model is perfect for what's going on in terms of fragmentation.
02:00So we invest in the countries where we operate. We have subsidiaries. We bring a lot of capital.
02:06That is exactly what, you know, countries are looking for right now.
02:10So we don't operate from one country into another.
02:12We actually invest and we have physical presence with employing thousands of people.
02:18So our model is very well suited for today's more fragmented world.
02:21Just one one final point on sort of some of this dislocation we're seeing, because a lot of this obviously
02:26came up after war broke out in Iran.
02:31How are you thinking about your Middle Eastern presence and how that might affect Santander?
02:37We have a very limited Middle Eastern presence.
02:39We're basically one of the largest banks in the world by number of customers, 180 million in Europe and the
02:44Americas.
02:45And as we see the situation today, clearly there's a risk that growth will slow down if this goes on
02:51for, you know, months.
02:53But our presence right now across the Americas will be, I think, least affected than almost any other part of
02:59the world.
03:00So, again, slower growth potentially.
03:03But for Santander, actually, our footprint is in the least affected regions.
03:08Are you thinking about inflation at all as a potential risk?
03:10Absolutely. Yes. I think inflation is a risk. Stagflation at the end is the risk we're facing if this lasts.
03:17But it's very early days. We don't know.
03:19It is very early days. So let's talk about what we do know.
03:21Yes.
03:21And what we do know is that you've been very active on the deals front.
03:26I mentioned Webster again, an American bank.
03:29For that deal, can I just ask what the thinking behind it was?
03:33Why that bank and why do it now?
03:35So Webster was the third step in a very, you know, well-planned process of refocusing Santander's footprint.
03:44So we sold Poland about a year ago.
03:48You know, we reallocated that capital partly to shareholders, then partly to the UK and then the US.
03:56Webster is a great bank.
03:57It's in a footprint. It has a team that is very, you know, experienced, one of the best managed banks
04:05in the regional space.
04:07And strategically and financially, it's a perfect fit for Santander.
04:12Strategic front, they work. They are a commercial bank.
04:15We're more consumer. It gives a scale in the Northeast.
04:19So we become one of the top players in the Northeast with 8 percent market share.
04:23It gives us also the opportunity actually to improve our funding.
04:28So all of that with very strong financial returns.
04:32You know, we take the Santander U.S. from currently 10 percent to 18 percent return on tangible equity.
04:38Ultimately, our goal is to be one of the more profitable banks.
04:4118 percent in the U.S. puts it at the top of the largest banks in the United States.
04:46And for shareholders, a return on invested capital of 15 percent.
04:50So, again, very attractive strategically, financially, a great bank, great leadership team.
04:57We're very happy.
04:58It's interesting you talk about how this expands your profitability footprint.
05:03Because a lot of people look at banking consolidation, say it's always a play for scale.
05:07You just need to be big. You need to be another J.P. Morgan to plant your flag in the
05:11ground.
05:11How do you view this issue of scale? And if that's the important, if that should be the driving factor
05:16between M&A when it comes to financials?
05:19Scale matters. That's why I always say we bring our global scale to benefit our in-market scale.
05:25You need a certain in-market scale. United States is a big country.
05:29We're playing in the Northeast. That's an economy as big as the United Kingdom.
05:33In that part of the United States, we will be a strong competitor.
05:38We, you know, 8 percent market share matters.
05:41When you add our global scale, our global platforms, that is what takes you to the 18 percent profitability.
05:47And this is really important.
05:48Today's technology, and we're now using more and more AI and our global platforms, is a unique advantage.
05:55Again, we're at scale. Our investment in tech would be the third or fourth largest among U.S. banks.
06:03So, you know, we have a global scale.
06:05That is what allows us to bring that to benefit our regional bank.
06:10How are you thinking about next steps on this deal?
06:11For example, would you merge Webster into Santander?
06:15Would you put the Santander branding on that?
06:17How do you think about the combination?
06:19So one thing is the legal merger. Yes, absolutely.
06:21It would be a single bank.
06:22So we're merging our auto operation Santander Bank and Webster.
06:28That would be a single business.
06:29In terms of brand, we're going to keep the Webster brand for now.
06:32We think it's very strong in its community.
06:35And so we're going to wait until we have done the integration.
06:38We will keep a large office in Stanford, Connecticut.
06:43And John Ciula will be part of our board and will be leading the integration.
06:50I should note, it's not just this.
06:51You've been active elsewhere, TSB, a Polish deal as well.
06:56There's been a lot of talk about banking M&A.
06:59You're not talking.
07:00You're actually doing it.
07:02What's happening that's different at Santander that's allowing you to execute on some of this?
07:06So as I said, Webster was the third step in a very planned focus to really redo our footprint.
07:14With a very clear aim, today we have 80% of all our loans are in hard currency, dollars, sterling
07:21and euros.
07:22And importantly, this gets us to the over 20% ROT at the group level.
07:27That is among the most profitable banks in the world.
07:30So, again, a very planned strategy.
07:32Once you have that, then you say, OK, what do I want to do?
07:36And so I always say you sell when somebody wants to buy and you buy when somebody wants to sell.
07:41I believe in relationships.
07:43And so, again, our Polish bank was sold in a one-to-one negotiation to a much better owner than
07:49us.
07:49They have more network effects.
07:52TSB was the consequence of something else happening and being there ready at the time.
07:57And Webster, regional banks were looking to, you know, do M&A.
08:01We had a relationship with John Seula for some years.
08:05And we were there when they decided they wanted to, you know, sell.
08:10What about M&A more broadly, Anna?
08:13Because at this moment, we came into 2025 saying this was the year of M&A.
08:18And then April 2nd happens.
08:19We come into 2026 and say this is the year of M&A.
08:23And then we get war, AI, credit fears, trade disruptions.
08:27Is 2026 still more broadly the year of M&A?
08:32So it depends how you think about M&A.
08:35So what we've done is what we call Bolton acquisitions.
08:38So it's not big for us.
08:41So if you think of Webster, that's 4% of our group assets, you know, 7% of our market
08:46cap.
08:46So it's strategically important, but it allows us to continue with our financial commitments and shareholder buybacks and so on.
08:53So that M&A, I think, is very value accretive.
08:58Again, Webster will add 9% to our earnings per share.
09:00And it's very different from transformational M&A.
09:03That is what I think is going to be harder, you know, because of regulation,
09:07because you have certain requirements in terms of capital when you do big transactions that make it less interesting.
09:14And to be honest, that's how we started the conversation.
09:17There's also, you know, a my country comes first.
09:21And it's important that, you know, whatever happens is directly benefiting my consumers.
09:27And again, our type of M&A takes all those boxes, right?
09:31And so that's why I think it's happening.
09:32And it's also our way of doing business.
09:35One of the kind of greater fears that maybe is holding back M&A is also credit markets, too.
09:39I would love to give you a chance also just to respond some fears over M&S, MFS, rather.
09:45What exactly does Santander's exposure look like?
09:47How are you thinking about that situation?
09:49So, you know, Jamie mentioned cockroaches.
09:54I think of this as jellyfish on a beach.
09:57I come from northern Spain.
09:59And every summer when the jellyfish, you see the jellyfish on the beach, you know, you still go in the
10:05water.
10:05You're just very careful.
10:07And we have been very careful for years, right?
10:09We have been on a risk off for the last couple of years.
10:13We're very careful.
10:14Obviously, there's going to be sometimes you get stung a bit.
10:18But when you're careful, it doesn't matter.
10:21You can still swim, right?
10:22And so, you know, that's how I feel about what's going on.
10:25I love that metaphor.
10:26If I can torture it a little bit.
10:28Yes.
10:29Do you put on some life rafts?
10:32Do you swim more carefully?
10:34Does any of your behavior change?
10:35Of course.
10:36Absolutely.
10:37It changes.
10:37So, again, you know, if you're going to the beach in the summer, you want to swim, right?
10:41Like, if I have a business, I have to continue doing mortgages.
10:44Sometimes I'm going to give a loan that doesn't work out.
10:46The question is how much and how you address and how, again, you don't go out and just, like, go
10:52in the sea, like, wherever.
10:54No, you're very careful.
10:55You do put some protection sometimes.
10:57And that is what we do.
10:58And that is how we think about the current situation.
11:00So, due diligence ramped up a little bit then?
11:02Totally.
11:03And, you know, I always say you have a range of, you know, operating range, right?
11:07And so, for example, on capital, we said 12 to 13.
11:09We're at the 13.
11:10So, we're operating at a higher level of capital than if the world were not so complicated, right?
11:15And so, there will be things happening.
11:18What can I say about what's going on?
11:20And so, that's why, you know, that's how we've been managing the bank for the last couple of years.
11:25If you look at our investor day, it's all about changing the model and being more efficient.
11:30We have told the market we're going to go to a cost income of 36%, reducing absolute cost on a
11:38three-year basis from $28.5 billion to $27.
11:41So, we're very focused on what we can control.
11:44In an environment that is so uncertain, focusing on what you can control is essential.
11:49And that's why the market liked our plan because, you know, it's not a – we are going to grow.
11:54By the way, we're going to grow 30 million customers, but we're not growing our balance sheet or our risk
11:59in a significant way.
12:00One of the reasons I loved your investor day is you yourself are a technophile.
12:05I love it, yes.
12:06I set up a tech company in the year 2000, and my thing is tech and AI, and I think
12:12that is the way to go for any company in any sector.
12:15How big of a transformation are we talking about?
12:17Maybe not even just Santander, but the world with AI.
12:20How are you thinking about this opportunity set right now?
12:23It's huge.
12:24It's huge.
12:24You know, the way I think of it at Santander is responsible AI by design, right?
12:31So, trust is everything in banking.
12:33And, you know, the accountability, the transparency, the governance, that's what we've been working on for the last couple of
12:39years.
12:40Now, AI is embedded in our operating model.
12:43That is why we went at Invested Day and said we're going to deliver $1 billion in the next three
12:48years, 700 in efficiencies and 300 in revenues.
12:52You know, we measure how many tokens we power, right?
12:56And so, in the next year, the next 12 months, we're going to multiply by five.
13:00We'll be at six, seven trillion tokens.
13:02That is a significant number.
13:05But what matters most is what you're doing with that AI.
13:08And, again, we have put numbers behind that.
13:10And I would say 2026 is the year when we scale all the AI initiatives across a group.
13:17Just quickly, does that change headcount at all, or does that stay steady or grow?
13:22You know, when you reduce cost, obviously, headcount is affected.
13:26But there's a lot of, you know, different skills.
13:29And so, we're still hiring.
13:31But, obviously, you know, on a net basis, yes, there will be less people.
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