Spain’s Santander (SAN.MC) launched its digital bank in the United States on Monday. This move aims to help fund over $30 billion in auto lending assets and expand its retail business in the country, according to U.S. CEO Tim Wennes in an interview with Reuters.
As the third-largest lender in the euro zone by market value, Santander is among the few European banks with a retail presence in the U.S. market, following the exits of rivals BBVA and BNP Paribas.
The bank has more than $45 billion in retail deposits across its 409 branches, mainly located in nine northeastern states. Additionally, it holds over $60 billion in auto lending assets. “We have over $30 billion in auto assets that are currently funded through wholesale channels,” Wennes noted in an online interview late Friday. He mentioned that funding through the wholesale market is more expensive than direct funding, but did not specify how much the bank would save by switching to a cheaper funding structure.
The launch of Openbank, currently the largest digital bank in Europe with deposits exceeding 18.5 billion euros, is part of Santander’s global strategy to evolve into a digital bank that also maintains brick-and-mortar branches. To attract U.S. customers, Santander initially offers a savings account with a yield of 5.25%, which is higher than Goldman Sachs’ (GS.N) Marcus, which provides 4.1%, or CIT Bank’s platinum savings account, offering up to 4.7%.
U.S. stock markets rose on Friday, with the S&P 500 and Dow reaching record highs, driven by a surge in Netflix shares.
In the U.S., banks such as JPMorgan and Bank of America dominate the market share of bank deposits. A successful launch of a fully digital offering is crucial for Santander, as its U.S. operations have been generating subpar returns. A decline in net profit of 0.4% year-on-year in the first half was attributed to hiring expenses and increased provisions.
Wennes stated that the bank would analyze how to best grow its digital platform and would “certainly evaluate if partnership opportunities make sense.” He also expressed that Santander is “comfortable” with the current resources allocated to its corporate investment bank in the U.S. following recent expansions, which included hiring former executives from the collapsed Credit Suisse.