REG - Banco Santander S.A. - Santander aligns several models to its strategy

Banco Santander SAAnnouncement

19/09/2023 07:00

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RNS Number : 8336M  Banco Santander S.A.  19 September 2023

Santander aligns retail & commercial and consumer operating model to its
strategy

 

 

·      Going forward all the bank's activities across all markets will
be consolidated under five global areas: Payments, Corporate & Investment
Banking, and Wealth Management & Insurance, and the two new global
businesses, Retail & Commercial, and Digital Consumer Bank.

 

·      This will allow the bank to improve its customer service and
simplify its business further, while helping achieve the strategic goals
outlined at its Investor Day in February, which remain unchanged.

 

·    These five areas will become the bank's primary reporting segments
from January 2024.

 

 

Madrid, 18 September 2023 - PRESS RELEASE

Banco Santander is consolidating its retail & commercial and consumer
activities across all markets under two new global businesses: Retail &
Commercial and Digital Consumer Bank. The changes align these businesses with
Santander's current, global model in Corporate & Investment Banking,
Wealth Management & Insurance and Payments, helping the bank achieve the
strategic goals outlined at its Investor Day in February, including: adding 40
million customers by 2025, increasing return on tangible equity to 15-17%, and
achieving double-digit average annual growth in tangible net asset value per
share plus dividend per share through the cycle.

 

Following the changes, all of the bank's activities will be aligned under five
global business areas 1  (#_ftn1) :

-       Retail & Commercial: a new business area which combines all
the bank's retail and business banking globally, to be led by Daniel Barriuso.

-       Digital Consumer Bank: all consumer finance activities
worldwide, to be led by José Luis de Mora.

-       Payments: PagoNxt (led by Javier San Félix) and Global Cards
(led by Matías Sánchez).

-       Corporate & Investment Banking: already a global business,
led by José M. Linares.

-       Wealth Management & Insurance: already a global business,
led by Víctor Matarranz.

 

Santander's executive chair, Ana Botín, said: "Today we are announcing a
crucial step in aligning our operating model in retail & commercial and
consumer banking to our strategy. We know from our progress since we first
defined our strategy in 2015 that leveraging our unique combination of global
scale and local leadership allows us to serve customers better, while
delivering profitable growth. We are confident this is the right thing for our
customers and will allow us to progress faster, delivering on all targets set
out at Investor Day this year, including double digit average annual growth in
tangible net asset value plus dividend per share through the cycle."

 

In this new model, global heads will define the common business and operating
model, which will be based on global platforms; country heads continue to be
responsible for managing the business, and regional heads will drive the
implementation of the model and convergence across the markets.

 

The group plans to align the way it reports its financial results to this new
model from January 2024, as it becomes implemented, with the five global
businesses becoming the new primary segments for the group. To facilitate
year-on-year comparisons and analysis, the bank will publish information
adapted to the new segments ahead of 2023 full-year results announcement,
which will take place on 31 January 2024. The group will continue to report
all country and region-specific data, although they will become secondary
segments.

 

The group's financial targets outlined in February remain unchanged, including
achieving a return on tangible equity (RoTE) of 15-17% in 2023-2025 and an
efficiency ratio of c.42% by 2025; maintaining a fully-loaded CET1 above 12%;
delivering double-digit average annual growth in tangible net asset value
(TNAV) per share plus dividend per share through the cycle. The bank remains
on track to meet its 2023 targets, including double-digit revenue growth; RoTE
above 15%; cost-to-income ratio of 44-45%; fully-loaded CET1 above 12%, and
cost of risk below 1.2%.

 

 

Bios of global heads(1)

Daniel Barriuso (Retail & Commercial) is senior executive vice president,
global head of Retail & Commercial Banking and group chief transformation
officer at Banco Santander. Before that, he was chief information security
officer (CISO) and head of Cyber & Banking Fraud Prevention for nearly
seven years at the bank. Daniel has over 29 years' experience across banking,
energy and tech industries. Prior to joining Santander, he held various
executive positions at BP, Credit Suisse and ABN AMRO.

 

José Luis de Mora (Digital Consumer Bank) is senior executive vice president,
global head of Digital Consumer Bank and group head of Corporate Development
and Financial Planning at Banco Santander. He joined the bank in 2003 and has
taken part in the group's major acquisitions of financial institutions in
Europe and the Americas. Before joining the group, Mr De Mora worked in London
at Kleinwort Benson and Merrill Lynch.

 

Javier San Félix (Payments - PagoNxt) is senior executive vice president at
Banco Santander and chief executive officer at PagoNxt. Prior to that, Mr San
Félix had been head of Global Payment Services, deputy CEO for Santander UK
and responsible for the group's Retail and Commercial Banking division.
Previously, he was CEO of Banesto after joining Santander Consumer Finance in
2004. Before Santander, Javier was a senior partner of McKinsey & Company.

 

Matías Sánchez (Payments - Global Cards) is senior executive vice president
and head of Global Cards at Banco Santander since 2022. Prior to that, Mr
Sánchez was head of Retail Products Europe and Spain, and spent over eight
years in Chile as head of Retail and Digital Banking after a first period as
head of Middle Market. Before, he had worked in Banesto for 15 years.

 

José M. Linares (Corporate & Investment Banking) is senior executive
vice president of Banco Santander and global head of Santander Corporate &
Investment Banking (Santander CIB) since 2017. Prior to joining Santander, Mr
Linares spent more than 17 years at J.P. Morgan in a number of senior roles in
New York, Hong Kong and London. His final position there, starting in 2011,
was head of Global Corporate Banking in Europe, the Middle East and Africa
(EMEA).

 

Víctor Matarranz (Wealth Management & Insurance) is senior executive vice
president and global head of Wealth Management & Insurance at Banco
Santander since 2017, leading Santander Private Banking, Santander Asset
Management and Santander Insurance globally. Between 2014 and 2017, he was the
head of Group Strategy and of the Executive Chairman's Office and, prior to
that, he was the director of Strategy and chief of staff to the CEO in
Santander UK. Before joining Santander in early 2012, Mr Matarranz was a
partner at McKinsey & Company.

 

Banco Santander (SAN SM, STD US, BNC LN) is a leading commercial bank, founded
in 1857 and headquartered in Spain. It has a meaningful presence in 10 core
markets in the Europe, North America and South America regions, and is one of
the largest banks in the world by market capitalization. Santander aims to be
the best open financial services platform providing services to individuals,
SMEs, corporates, financial institutions and governments. The bank's purpose
is to help people and businesses prosper in a simple, personal and fair way.
Santander is building a more responsible bank and has made a number of
commitments to support this objective, including raising €220 billion in
green financing between 2019 and 2030. In the first half of 2023, Banco
Santander had €1.25 trillion in total funds, 164 million customers, 9,000
branches and 212,000 employees.

Important information

Non-IFRS and alternative performance measures

This document contains financial information prepared according to
International Financial Reporting Standards (IFRS) and taken from our
consolidated financial statements, as well as alternative performance measures
(APMs) as defined in the Guidelines on Alternative Performance Measures issued
by the European Securities and Markets Authority (ESMA) on 5 October 2015, and
other non-IFRS measures. The APMs and non-IFRS measures were calculated with
information from Grupo Santander; however, they are neither defined or
detailed in the applicable financial reporting framework nor audited or
reviewed by our auditors. We use these APMs and non-IFRS measures when
planning, monitoring and evaluating our performance. We consider them to be
useful metrics for our management and investors to compare operating
performance between periods. Nonetheless, the APMs and non-IFRS measures are
supplemental information; their purpose is not to substitute IFRS measures.
Furthermore, companies in our industry and others may calculate or use APMs
and non-IFRS measures differently, thus making them less useful for comparison
purposes. For further details on APMs and Non-IFRS Measures, including their
definition or a reconciliation between any applicable management indicators
and the financial data presented in the consolidated financial statements
prepared under IFRS, please see the 2022 Annual Report on Form 20-F filed with
the U.S. Securities and Exchange Commission (the SEC) on 1 March 2023
(https://www.santander.com/content/dam/santander-com/en/documentos/informacion-sobre-resultados-semestrales-y-anuales-suministrada-a-la-sec/2023/sec-2022-annual-20-f-2022-en.pdf
(https://www.santander.com/content/dam/santander-com/en/documentos/informacion-sobre-resultados-semestrales-y-anuales-suministrada-a-la-sec/2023/sec-2022-annual-20-f-2022-en.pdf)
), as well as the section "Alternative performance measures" of this Banco
Santander, S.A. (Santander) Q2 2023 Financial Report, published on 26 July
2023
(https://www.santander.com/en/shareholders-and-investors/financial-and-economic-information#quarterly-results
(https://www.santander.com/en/shareholders-and-investors/financial-and-economic-information#quarterly-results)
). Underlying measures, which are included in this document, are non-IFRS
measures.

The businesses included in each of our geographic segments and the accounting
principles under which their results are presented here may differ from the
businesses included and local applicable accounting principles of our public
subsidiaries in such geographies. Accordingly, the results of operations and
trends shown for our geographic segments may differ materially from those of
such subsidiaries.

Non-financial information

This document contains, in addition to financial information, non-financial
information (NFI), including environmental, social and governance-related
metrics, statements, goals, commitments and opinions.

NFI is included to comply with Spanish Act 11/2018 on non-financial
information and diversity and to provide a broader view of our impact. NFI is
not audited nor reviewed by an external auditor. NFI is prepared following
various external and internal frameworks, reporting guidelines and
measurement, collection and verification methods and practices, which are
materially different from those applicable to financial information and are in
many cases emerging and evolving. NFI is based on various materiality
thresholds, estimates, assumptions, judgments and underlying data derived
internally and from third parties. NFI is thus subject to significant
measurement uncertainties, may not be comparable to NFI of other companies or
over time or across periods and its inclusion is not meant to imply that the
information is fit for any particular purpose or that it is material to us
under mandatory reporting standards. NFI is for informational purposes only
and without any liability being accepted in connection with it except where
such liability cannot be limited under overriding provisions of applicable
law.

Forward-looking statements

Santander hereby warns that this document contains "forward-looking
statements" as per the meaning of the U.S. Private Securities Litigation
Reform Act of 1995. Such statements can be understood through words and
expressions like "expect", "project", "anticipate", "should", "intend",
"probability", "risk", "VaR", "RoRAC", "RoRWA", "TNAV", "target", "goal",
"objective", "estimate", "future", "commitment", "commit", "focus", "pledge"
and similar expressions. They include (but are not limited to) statements on
future business development, shareholder remuneration policy and NFI. However,
risks, uncertainties and other important factors may lead to developments and
results to differ materially from those anticipated, expected, projected or
assumed in forward-looking statements. The following important factors (and
others described elsewhere in this document and other risk factors,
uncertainties or contingencies detailed in our most recent Form 20-F and
subsequent 6-Ks filed with, or furnished to, the SEC), as well as other
unknown or unpredictable factors, could affect our future development and
results and could lead to outcomes materially different from what our
forward-looking statements anticipate, expect, project or assume: (1) general
economic or industry conditions (e.g., an economic downturn; higher volatility
in the capital markets; inflation; deflation; changes in demographics,
consumer spending, investment or saving habits; and the effects of the war in
Ukraine or the COVID-19 pandemic in the global economy) in areas where we have
significant operations or investments; (2) climate-related conditions,
regulations, policies, targets and weather events; (3) exposure to various
market risks (e.g., risks from interest rates, foreign exchange rates, equity
prices and new benchmark indices); (4) potential losses from early loan
repayment, collateral depreciation or counterparty risk; (5) political
instability in Spain, the UK, other European countries, Latin America and the
US; (6) legislative, regulatory or tax changes (including regulatory capital
and liquidity requirements), especially in view of the UK´s exit from the
European Union and increased regulation prompted by financial crises; (7)
acquisition integration challenges arising from deviating management's
resources and attention from other strategic opportunities and operational
matters; (8) our own decisions and actions including those affecting or
changing our practices, operations, priorities, strategies, policies or
procedures; (9) uncertainty over the scope of actions that may be required by
us, governments and others to achieve goals relating to climate, environmental
and social matters, as well as the evolving nature of underlying science and
industry and governmental standards and regulations; and (10) changes
affecting our access to liquidity and funding on acceptable terms, especially
due to credit spread shifts or credit rating downgrades for the entire group
or core subsidiaries.

Forward looking statements are based on current expectations and future
estimates about Santander's and third-parties' operations and businesses and
address matters that are uncertain to varying degrees, including, but not
limited to developing standards that may change in the future; plans,
projections, expectations, targets, objectives, strategies and goals relating
to environmental, social, safety and governance performance, including
expectations regarding future execution of Santander's and third-parties'
energy and climate strategies, and the underlying assumptions and estimated
impacts on Santander's and third-parties' businesses related thereto;
Santander's and third-parties' approach, plans and expectations in relation to
carbon use and targeted reductions of emissions; changes in operations or
investments under existing or future environmental laws and regulations; and
changes in government regulations, regulatory requirements and internal
policies, including those related to climate-related initiatives.

Forward-looking statements are aspirational, should be regarded as indicative,
preliminary and for illustrative purposes only, speak only as of the date of
this document, are informed by the knowledge, information and views available
on such date and are subject to change without notice. Santander is not
required to update or revise any forward-looking statements, regardless of new
information, future events or otherwise, except as required by applicable law.

Not a securities offer

This document and the information it contains does not constitute an offer to
sell nor the solicitation of an offer to buy any securities.

Past performance does not indicate future outcomes

Statements about historical performance or growth rates must not be construed
as suggesting that future performance, share price or results (including
earnings per share) will necessarily be the same or higher than in a previous
period. Nothing in this document should be taken as a profit and loss
forecast.

 

 1  (#_ftnref1) Appointments subject to regulatory approvals where applicable.

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