WEBVTT - Santander's Ana Botin on Talks US Consumer, Europe and Stablecoins

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Speaking of banks, it's

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<v Speaker 1>a beautiful day to talk about banking. In recent months,

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<v Speaker 1>Santander has overtaken UBS to become the largest bank in

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<v Speaker 1>continental Europe, but it's also doubling down in the United

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<v Speaker 1>States as well, where it has a huge presence with

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<v Speaker 1>open Bank joining us now on abouteen, Executive chair of

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<v Speaker 1>Santander open Bank. What an interesting moment to talk about

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<v Speaker 1>interest rates in banking as well, because you're offering north

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<v Speaker 1>to four percent and it's among the most attractive rates

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<v Speaker 1>in the industry. What does this mean in terms of

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<v Speaker 1>your ambition to pull more money in after you've crossed

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<v Speaker 1>the five billion dollar.

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<v Speaker 2>Threshold expected to be here. Thanks for inviting me. And

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<v Speaker 2>by the way, I try to open a few open

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<v Speaker 2>Bank accounts in the makeup room, so I'll come back

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<v Speaker 2>and check soon. So open Bank is a major step

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<v Speaker 2>in our US strategy. Is the perfect example of our

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<v Speaker 2>platform goals where we're building once across the group and

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<v Speaker 2>it's had a fantastic customer reception. You know, we're one

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<v Speaker 2>hundred and fifty thousand customers, over five billion in deposits.

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<v Speaker 2>And what matter is is that this is great for

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<v Speaker 2>our shareholders too, because it's lowering our cost of funds

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<v Speaker 2>allows us to grow faster in our auto landing business.

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<v Speaker 2>So it's you know, great for our customers, great for

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<v Speaker 2>our shareholders.

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<v Speaker 1>What does it mean for your broader strategy in the

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<v Speaker 1>United States and the ambition that is here today?

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<v Speaker 2>So US is a core strategic market for Santander. We

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<v Speaker 2>see a huge opportunity for profitable organic growth and this

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<v Speaker 2>is really important. It has been top three in value

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<v Speaker 2>creation over the last decade for our shareholders and euros

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<v Speaker 2>and very importantly, we are focusing on the businesses where

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<v Speaker 2>we have a competitive advantage and that bring network effects.

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<v Speaker 2>So we see again tremendous opportunity in the United States.

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<v Speaker 1>Can any of that be accomplished through M and A

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<v Speaker 1>or do you think that mostly will be accomplished through

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<v Speaker 1>organic growth.

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<v Speaker 2>Our aim, as as we have said to shareholders, is

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<v Speaker 2>to achieve fifteen percent our OT adjusted at twelve percent

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<v Speaker 2>in the United States this year. We will get there

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<v Speaker 2>and very importantly, Santan that as a group this year

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<v Speaker 2>will deliver return on tangible equity or just mentioning that

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<v Speaker 2>of sixteen and a half close to seventeen percent, which

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<v Speaker 2>is in gold in well, you know, it would be

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<v Speaker 2>the third of the major banks. The big banks in

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<v Speaker 2>the US would be number two or three, I believe.

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<v Speaker 1>So what does this mean in terms of how you

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<v Speaker 1>want to get there? What do you think are going

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<v Speaker 1>to be the biggest profitability lines? And does any of

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<v Speaker 1>the US broader strategy from the Trump administration get in

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<v Speaker 1>the way given the concerns about the macro environment.

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<v Speaker 2>Those are like five questions FINALI so let me just

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<v Speaker 2>first start how we will do it? So for us,

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<v Speaker 2>you know, we set out in twenty nineteen to become

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<v Speaker 2>an open financial services platform and very importantly to do

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<v Speaker 2>things in a way that is simple, personal, unfair for

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<v Speaker 2>our customers. And that is what we now have embodied

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<v Speaker 2>in transformation, which is a structural shift in how we operate,

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<v Speaker 2>so much lower cost to serve, which benefits customers and

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<v Speaker 2>delivers great returns. A great example is our cost income.

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<v Speaker 2>You know, again, the top three banks in this country

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<v Speaker 2>are around I believe sixty percent. The comparable cost income

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<v Speaker 2>for US is forty four percent. So we are as

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<v Speaker 2>competitive or better than most of the banks in the

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<v Speaker 2>United States. And this is great for our customers. And

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<v Speaker 2>one transformation is the way we get there.

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<v Speaker 1>And the second part of the question was really about

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<v Speaker 1>the broader landscape here. With so much focus on the

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<v Speaker 1>US consumer, there is a lot of concern of whether

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<v Speaker 1>the US consumer is going to feel the pressure of

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<v Speaker 1>the terror strategy. Do you share those concerns.

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<v Speaker 2>So we serve about five million consumers in the United

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<v Speaker 2>States and the headline is very clear. The US consumer

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<v Speaker 2>is resilient and the behavior is as good as we

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<v Speaker 2>expected this year. So there is a normalization of cost

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<v Speaker 2>of credit vis a VI twenty nineteen, but more or

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<v Speaker 2>less aligned with twenty nineteen, and what we are seeing

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<v Speaker 2>is pretty good. Now, if you think about sentiment, that's

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<v Speaker 2>another thing. And of course tariffs brings greater uncertainty, and

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<v Speaker 2>so there is a high probability that you will see

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<v Speaker 2>consumers and businesses, you know, getting weaker in the next

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<v Speaker 2>few months. But as of today, US consumer very resilient.

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<v Speaker 1>Over and over we hear about investors starting to get

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<v Speaker 1>somewhat worried about US exceptionalism. Do you think that the

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<v Speaker 1>US is going to still be the place where capital

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<v Speaker 1>flows to the most.

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<v Speaker 2>So, you know, I'd like to answer that question in

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<v Speaker 2>two levels. You know, one is US has grown much

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<v Speaker 2>more than the rest of the world, especially Europe, over

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<v Speaker 2>the last decade. What happens from here onwards, it's a

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<v Speaker 2>relative some game, right markets, you measure one against the other.

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<v Speaker 2>I think the opportunity in Europe today is greater. However,

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<v Speaker 2>we SANTANDERA deeply committed and we will continue to allocate

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<v Speaker 2>more organic capital to the United States.

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<v Speaker 1>Now, I want to read you a quote recently from

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<v Speaker 1>Jamie Diamond, who spoke in Ireland saying that the EU

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<v Speaker 1>in particular has a huge problem at the moment. He

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<v Speaker 1>says that Europe has gone from ninety percent US GDP

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<v Speaker 1>to sixty five percent over the last ten to five years,

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<v Speaker 1>ten to fifteen years. That's not good. He said, you're losing.

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<v Speaker 1>What do you have to say to Jamie Diamond.

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<v Speaker 2>So most of the time I agree with Jamie, he's

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<v Speaker 2>done a great job. But in this case I don't agree,

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<v Speaker 2>and I think in Europe the opportunity is huge and

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<v Speaker 2>there's only upside right now. Europe has strong fundamentals. You

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<v Speaker 2>know that to GDP is better strong institutions, so strong fundamentals. Second,

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<v Speaker 2>not all of Europe is the same same way that

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<v Speaker 2>Texas is not the same as California or Montana. Right,

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<v Speaker 2>Southern Europe today has higher growth than most of the

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<v Speaker 2>United States, with very great opportunities to grow, but last

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<v Speaker 2>and not least. You know, in terms of relative valuation,

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<v Speaker 2>if you look at banks, you know we have an

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<v Speaker 2>rot year as a return of close to seventeen percent.

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<v Speaker 2>We're treading at eight times earnings, whereas the top three

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<v Speaker 2>banks in the United States are trading with similar average

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<v Speaker 2>returns at twelve to fourteen. So I think this shows

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<v Speaker 2>why there is a big opportunity to invest in Europe,

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<v Speaker 2>and I believe that is something which you know, it's

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<v Speaker 2>not just the banking sector, it's in other sectors. Just

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<v Speaker 2>need to choose your country, your sector, and your company

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<v Speaker 2>the right one.

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<v Speaker 1>I want to get your view on something large that's

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<v Speaker 1>happening in the United States right now, because I know

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<v Speaker 1>you've been thinking about how technology is going to change

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<v Speaker 1>the business. It's the stable coin legislation that is close

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<v Speaker 1>to passing. How is something there thinking about stable coins

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<v Speaker 1>and how you might adopt it in the future if

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<v Speaker 1>you will adopt it.

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<v Speaker 2>So, we don't see stable gone as a revolution. We

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<v Speaker 2>see it more as an evolution, and we believe that

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<v Speaker 2>it's critically important that you have responsible players and that

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<v Speaker 2>it's regulated the right way, as I believe it will

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<v Speaker 2>happen here in it United States. You need responsible actors

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<v Speaker 2>like banks that bring compliance, trust and scale, and so

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<v Speaker 2>I do think it has benefits in terms of being

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<v Speaker 2>globally interoperable, you know, fast efficient, you know, bank rails

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<v Speaker 2>actually can get you there. Also, like if you use

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<v Speaker 2>how Global Payments API, but it's only now sunkander countries.

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<v Speaker 2>This is global, So I do think it's you know,

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<v Speaker 2>there is an opportunity. However, it is in new currency,

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<v Speaker 2>and so you have to make sure that you understand

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<v Speaker 2>the risks. It is in new currency and has the

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<v Speaker 2>risks of a currency.

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<v Speaker 1>What are the biggest risks? We hear time and time

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<v Speaker 1>again that because stable coins have the potential to hold

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<v Speaker 1>so much by way of you as treasuries, that there

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<v Speaker 1>is a potential as as market grows over time that

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<v Speaker 1>it could create some sort of systemic risk. Do you

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<v Speaker 1>worry about that?

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<v Speaker 2>Well, right now it's pretty small, so I don't think

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<v Speaker 2>that's a systemic risk at this time. I do think

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<v Speaker 2>if it grows, it's important that you're in the hands

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<v Speaker 2>of again trusted institutions that are compliant under standard risks

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<v Speaker 2>unmanage the risks appropriately.

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<v Speaker 1>Now before I let you go, Also, I want to

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<v Speaker 1>get an update because you made a lot of news,

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<v Speaker 1>A lot of attention was drawn when you had hired

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<v Speaker 1>teams over from Credit Suite to build up your investment

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<v Speaker 1>banking franchise as well. Where does this fit into the

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<v Speaker 1>broader strategy of Santander.

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<v Speaker 2>Well, as I was saying before, one transformation is the

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<v Speaker 2>way that Santander is delivering on the open financial services platform,

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<v Speaker 2>and the corporate bank was one of the first that

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<v Speaker 2>we started to transform. The corporate bank at Santander has

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<v Speaker 2>twenty percent returns. It is serving our customers in our footprint,

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<v Speaker 2>and the team that we have brought in New York

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<v Speaker 2>is helping us actually take advantage of those corporate relationships

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<v Speaker 2>and give them access to the deepest market in the world,

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<v Speaker 2>which is the US capital market. So it's a win win,

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<v Speaker 2>It leverages our network and it's delivering great profitability.

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<v Speaker 1>How can US clients expect you to be using technology

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<v Speaker 1>more as you grow the bank in the United States?

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<v Speaker 2>So again, part of the one transformation is open bank.

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<v Speaker 2>Open bank is built on our own tech, our own platform.

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<v Speaker 2>It's scales. We have the biggest Open Bank is today

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<v Speaker 2>the biggest digital bank in Europe. It's up and running

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<v Speaker 2>in Germany, in Iberia, in Mexico and the United States,

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<v Speaker 2>and we believe that this will again be a big

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<v Speaker 2>value add to US consumers. And it's only the first step.

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<v Speaker 2>We have more products coming in the next twelve months.

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<v Speaker 2>You will be able to bank with open Bank all

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<v Speaker 2>your basic banking needs.

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<v Speaker 1>Anna Bottein, Executive Chair of san Tandeerra, thank you so

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<v Speaker 1>much for joining us while you are here in town.

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<v Speaker 1>Of course, a lot of changes happening and new products

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<v Speaker 1>being launched. We will keep an eye on all of that.