Banco Santander Central Hispano: company profile

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History | Business areas | Santander's business model

i. History

Founded in 1857, Grupo Santander is the result of four Spanish banks which played a key role in the country's financial and economic history: Banco Santander, Banco Central, Banco Hispano Americano and Banco Español de Crédito. These four banks, in turn, were built up over time by absorbing and acquiring other smaller institutions. The merger of Banco Santander and BCH created the third European Bank by market capitalization in January 1999. Since then, Banco Santander Central Hispano has undergone profound changes, including the integration and modernization of the different areas of the merged banks, strengthening the alliances and expansion through the acquisition of new banks.

Banco Santander is now a leading financial services group both in Spain and internationally. Grupo Santander’s 2004 net attributable income was €3,136 million, 20.1% higher than in 2003. As of December 31, 2004, Grupo Santander was the ninth largest bank in the world, the fourth in Europe and the first in the Euro zone by market capitalization, which stood at of EUR 57.1 billion. The company has more than 126,000 employees, 63 million customers, 10,000 branches and 2.6 million shareholders.

ii. Business Areas

Santander’s main business focus is retail banking, contributing 82% of the Group’s profit. It is the most developed of the business lines and the one that contributes the most recurrent revenues; its relative share is much higher than that of its main international competitors. Retail banking is conducted via a network of 10,000 branches, with 63 million customers in three large geographic zones: Continental Europe, the United Kingdom (after Abbey acquisition) and Latin America. The remaining 18% of the Group's net attributable income comes from Asset Management and Private Banking, as well as Global Wholesale Banking. Grupo Santander operates in a potential market of 800 million people in Europe and Latin America. Its presence in both developed and emerging markets provides the Group with geographic, currency (euro, dollar and sterling) and risk diversification.

European Retail Banking

Grupo Santander's main presence in Continental Europe is in Spain and Portugal, mainly through retail banking, and in consumer finance in eleven countries including Spain, Portugal, Germany, Italy and Norway. Retail Banking in Spain is represented by two fully independent brands, Santander Central Hispano and Banesto, which between them have more than 4,200 branches and 15 million customers. The Group also owns the third largest financial group in Portugal with an 11% market share through Santander Totta and it is currently expanding in consumer credit in Europe through Banco Santander Consumer, a large consumer finance franchise in Germany, Italy and other European countries. European Retail Banking is split into five units:

  • Santander Central Hispano (Spain)
  • Banesto (Spain)
  • Totta (Portugal)
  • Santander Consumer Finance
  • Online banking

Latin American Retail Banking

Grupo Santander is Latin America's leader in retail banking. It operates in 10 countries with more than 18 million customers, 8 million participants in pension plans and has 4,010 branches. The Group's banks are among the leaders in Brazil, Mexico and Chile. It also operates, among other countries, in Puerto Rico, Venezuela, Argentina and Colombia. Latin American Retail Banking has five main units: Santander Banespa (Brazil), Santander Serfin (Mexico), Santander Chile, Banco Santander Puerto Rico and Banco de Venezuela.

Asset Management and Private Banking 

It includes the following activities:

  • Management of mutual funds.
  • Private Banking, conducted in Spain through Banif, and abroad via International Private Banking.
  • Insurance, via Santander Seguros which, together with Banesto Seguros, makes the Group the leader in life-risk products in the Spanish bank insurance sector.

Global Wholesale Banking

It includes the Group’s corporate banking operations in Spain, the rest of Europe and New York, the treasury units in Madrid and New York and the investment banking business worldwide.

iii. Santander’s Business Model

Grupo Santander’s business model has been a key to its sustainable growth and success. Its solid foundations as well as its flexibility have allowed Santander to engage in many strategic alliances and acquisitions of other banks throughout its history with success. By implementing its business model in the banks bought, Santander has added value to this banks and thus to its shareholders.

The Santander business model is based on five basic pillars:

  1. Customer-focused management: Santander gives a high importance to improving customer service. It focuses on closer relationships and better customer retention, backed by better quality service. In addition, a Corporate Unit of Quality Service has been created, reporting directly to the Chief Executive Officer. 
  2. Efficiency: Efficiency is closely linked to continuous restructuring and can be achieved by permanently improving technology. IT platforms are both, a key factor in improving efficiency and a way to ensure a better customer service. Santander uses the IT platform Altair in its banks in Latin America and Partenón in Europe.
  3. Credit risk quality: IT systems are also a useful tool for developing credit risk models. Santander’s internally developed risk models try to combine global parameters with “multilocal” management which has enabled the bank to have a low and predictable level of risk.
  4. Capital discipline: Santander’s scale and its high capital ratios and cash flows have allowed it to allocate capital to the businesses with the highest potential profitability, thus ensuring the Group’s capacity to grow.
  5. “Multilocal” management with global vision: Santander’s businesses operate under a common brand - Santander – and enjoy strong backing from the Group’s global areas such as risk modeling and auditing. Nevertheless, local teams who know the special features of each zone are ultimately responsible for managing each business.

One of the advantages of the Santander Model is that it was created on very solid foundations and that it has the flexibility needed to anticipate opportunities. Santander has a long experience in acquisitions: the Group's global vision, solid capital and technology have enabled its growth and the creation of value.


“Shareholder’s Annual Review 2004”, p.8 Grupo Santander.

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