Santander plans to discontinue home lending in the U.S. and review its presence in certain segments of commercial and industrial lending, the bank said Wednesday in a presentation to investors.
Rather, the Spanish bank wants to focus on more profitable silos — aiming to originate more auto loans in the U.S. and to use its retail deposits to fund auto loans for borrowers with prime credit scores, it said.
Tim Wennes, CEO of the Spanish bank’s U.S. arm, said Santander will stop originating mortgages and home equity loans this month because these portfolios lack scale.
“We didn’t see a clear path to above-cost-of-capital returns and made a decision to stop new originations,” he told American Banker. “We are simplifying our business to focus on those areas where we can be successful with clients and deliver solid 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. business accounted for 22% of the bank’s overall profit — more than triple the 7% proportion it comprised in 2019, Executive Chairman Ana Botín said on a call Wednesday.
The bank also said it wants to redouble its efforts toward U.S. middle-market companies and to court large corporate clients that do business in Spain, Chile and other nations where Santander has an existing footprint.
Santander’s move to “simplify” its U.S. business stands as the next phase of a multiyear effort that spurred an exit from retail banking in Puerto Rico.
In addition, Santander Holdings USA’s plan to purchase the remaining shares of its U.S. consumer unit for $2.5 billion, announced in August, was completed Monday, according to a document the bank filed with the Securities and Exchange Commission.
Existing mortgage customers should not feel an immediate impact from the exit, Wennes said.