1 00:00:02,360 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. 2 00:00:06,920 --> 00:00:09,320 Speaker 2: One of the major topics of conversation at the IMF 3 00:00:09,320 --> 00:00:12,080 Speaker 2: and World Bank meetings is the state of the banking environment, 4 00:00:12,160 --> 00:00:15,160 Speaker 2: specifically for European lenders. Joining us now for more on 5 00:00:15,200 --> 00:00:19,799 Speaker 2: this is on a Boutein, Santander Executive Chairman, ANDIIF Chair. 6 00:00:20,120 --> 00:00:22,680 Speaker 2: She is the first woman to chair THEIF board in 7 00:00:22,720 --> 00:00:25,360 Speaker 2: its history, and she is joined by Bloomberg's Lisa Bromwoods, 8 00:00:25,400 --> 00:00:26,840 Speaker 2: who was with her in Washington. 9 00:00:26,960 --> 00:00:30,640 Speaker 1: Lisa Scarlette, great to see you, Thank you so much. 10 00:00:30,680 --> 00:00:33,239 Speaker 1: And yes, she is the chair of the Institute of 11 00:00:33,320 --> 00:00:38,239 Speaker 1: International Finance. Anna Botein also the chair of Santander. And 12 00:00:38,479 --> 00:00:41,360 Speaker 1: when we talk about all of the different discussions that 13 00:00:41,400 --> 00:00:43,959 Speaker 1: people are having here, obviously it's the election, Obviously it's 14 00:00:43,960 --> 00:00:46,560 Speaker 1: what's going on with the global economy. But how much 15 00:00:46,720 --> 00:00:49,360 Speaker 1: is it the divergence between the situation right now in 16 00:00:49,400 --> 00:00:52,240 Speaker 1: Europe versus a situation in the United States. 17 00:00:52,920 --> 00:00:55,920 Speaker 3: Well, it's been a very busy day, but I'd say 18 00:00:55,960 --> 00:00:58,360 Speaker 3: that the topics are not very different from what they 19 00:00:58,360 --> 00:01:01,040 Speaker 3: were a year ago. So we're still about how do 20 00:01:01,120 --> 00:01:05,280 Speaker 3: we get growth to accelerate, And yes, Europe is growing less, 21 00:01:05,440 --> 00:01:08,320 Speaker 3: but actually on a relative basis, Europe should do better 22 00:01:08,720 --> 00:01:10,920 Speaker 3: next year than this year. In the US we're seeing 23 00:01:10,920 --> 00:01:14,520 Speaker 3: a slowdown. So it's about world growth. How do we 24 00:01:14,560 --> 00:01:17,240 Speaker 3: get growth going again in an economy that we're very 25 00:01:17,240 --> 00:01:20,760 Speaker 3: happy that it's still growing and it's soft landing it seems, 26 00:01:21,360 --> 00:01:23,319 Speaker 3: but we need to get growth to be faster. 27 00:01:23,600 --> 00:01:26,880 Speaker 1: How much are people talking about the necessity of scale, 28 00:01:27,319 --> 00:01:29,680 Speaker 1: of size of scope at a time of we're talking 29 00:01:29,720 --> 00:01:32,800 Speaker 1: about UniCredit possibly taking over Commerce Bank, We're talking about 30 00:01:33,080 --> 00:01:35,679 Speaker 1: the fact that the behemoths in the US are getting bigger. 31 00:01:36,000 --> 00:01:38,280 Speaker 1: Is that something that's expected to continue now? 32 00:01:38,400 --> 00:01:40,360 Speaker 3: Absolutely, and you know sometime that is one of the 33 00:01:40,360 --> 00:01:42,600 Speaker 3: biggest banks in the world by number of customers, which 34 00:01:42,640 --> 00:01:44,440 Speaker 3: is what matters. We have one hundred and sixty eight 35 00:01:44,440 --> 00:01:48,160 Speaker 3: million customers across Europe and Americas, so we have a scale. 36 00:01:48,280 --> 00:01:50,560 Speaker 3: We have the global scale, we have the in market scale, 37 00:01:50,600 --> 00:01:53,560 Speaker 3: and that is a unique combination. That's what matters. We 38 00:01:53,640 --> 00:01:56,520 Speaker 3: have investments in technology that are in the billions. We 39 00:01:56,560 --> 00:02:00,000 Speaker 3: are rolling out global platforms. We set today that will 40 00:02:00,120 --> 00:02:02,800 Speaker 3: have a fully digital bank by the end of twenty 41 00:02:02,800 --> 00:02:05,400 Speaker 3: five in the United States we launched a few weeks ago. 42 00:02:05,840 --> 00:02:07,040 Speaker 3: So yes, scale matters. 43 00:02:07,480 --> 00:02:08,160 Speaker 1: Scale matters. 44 00:02:08,160 --> 00:02:11,320 Speaker 2: But I'm curious because Lantaer hasn't made a big acquisition 45 00:02:11,320 --> 00:02:13,640 Speaker 2: in years, what you're thinking about in terms of arge scale, 46 00:02:13,800 --> 00:02:17,840 Speaker 2: M and A in the current environment in the near term. 47 00:02:18,600 --> 00:02:20,880 Speaker 3: We haven't made a major acquisition because we don't need it. 48 00:02:20,919 --> 00:02:23,640 Speaker 3: We are growing profitably. As of June, we were growing 49 00:02:23,639 --> 00:02:26,720 Speaker 3: our top line at ten percent. We have grown sixty 50 00:02:26,760 --> 00:02:29,639 Speaker 3: million customers in the last ten years. But very important, 51 00:02:29,680 --> 00:02:32,680 Speaker 3: we're growing profitably, and we're rolling out our global platforms 52 00:02:32,720 --> 00:02:35,720 Speaker 3: now in retail and consumer with our own tech stack, 53 00:02:35,840 --> 00:02:39,000 Speaker 3: and so we're able to compete, you know, with our 54 00:02:39,040 --> 00:02:41,840 Speaker 3: current size, and we're going to continue to invest in 55 00:02:41,840 --> 00:02:45,760 Speaker 3: technology and people on different skills and making sure we're 56 00:02:45,800 --> 00:02:48,359 Speaker 3: there where our customers want us to be. We is 57 00:02:48,440 --> 00:02:52,960 Speaker 3: launched in Germany with Apple and Amazon our digital merchant Xenia, 58 00:02:53,600 --> 00:02:55,840 Speaker 3: so we feel we have what it takes to be 59 00:02:55,919 --> 00:02:57,440 Speaker 3: competitive in today's. 60 00:02:57,040 --> 00:02:59,160 Speaker 2: World and in the US, sant and There is pushing 61 00:02:59,320 --> 00:03:02,000 Speaker 2: really hard to grow towards corporate and investment banking unit 62 00:03:02,040 --> 00:03:04,680 Speaker 2: as well as the launch of open Bank. I'm curious 63 00:03:04,720 --> 00:03:08,040 Speaker 2: to hear what you think your competitive advantage is as 64 00:03:08,040 --> 00:03:11,200 Speaker 2: you look to compete against the existent big investment banks 65 00:03:11,200 --> 00:03:11,880 Speaker 2: and retail giants. 66 00:03:11,880 --> 00:03:17,000 Speaker 3: Here in the US, we're mostly retail commercial consumer bank, 67 00:03:17,120 --> 00:03:20,040 Speaker 3: so we are at scale auto lender in the United 68 00:03:20,080 --> 00:03:24,040 Speaker 3: States well, number five here nationwide, with the number one 69 00:03:24,080 --> 00:03:26,720 Speaker 3: auto lender in Europe and Latin So we have the scale, 70 00:03:26,760 --> 00:03:30,040 Speaker 3: we've proven that for many years. We have a retail 71 00:03:30,080 --> 00:03:32,800 Speaker 3: bank that we have said a year ago we're going 72 00:03:32,880 --> 00:03:35,880 Speaker 3: to make digital through the global platform, and that's what 73 00:03:35,880 --> 00:03:38,560 Speaker 3: we've done a few weeks ago. So we are bringing 74 00:03:38,600 --> 00:03:41,040 Speaker 3: our global scale to benefit our regional banks so we 75 00:03:41,080 --> 00:03:44,120 Speaker 3: can accelerate the past taking in the United States, and 76 00:03:44,440 --> 00:03:45,600 Speaker 3: this is really unique. 77 00:03:45,800 --> 00:03:49,720 Speaker 1: Centendre has a reputation of providing consumer loans, like you say, 78 00:03:50,360 --> 00:03:52,320 Speaker 1: and right now there's such a big question about what 79 00:03:52,360 --> 00:03:54,800 Speaker 1: the consumer health really is, how able people are going 80 00:03:54,840 --> 00:03:57,000 Speaker 1: to be to pay things back at a time where 81 00:03:57,160 --> 00:03:59,440 Speaker 1: a lot of policy roomakers are saying we're reaching it, 82 00:03:59,480 --> 00:04:01,920 Speaker 1: this is the off landing nirvana, and all the consumers 83 00:04:01,920 --> 00:04:03,400 Speaker 1: are saying, we just don't feel it. How do you 84 00:04:03,560 --> 00:04:06,360 Speaker 1: see the performance of these loans? Are you're seeing signs 85 00:04:06,680 --> 00:04:10,640 Speaker 1: of the sentiment that's more negative seeping into those loan performances. 86 00:04:10,760 --> 00:04:13,720 Speaker 3: So we're not seeing an increase in non performing loans 87 00:04:14,240 --> 00:04:18,520 Speaker 3: beyond the seasonal trends. There's always seasonal trends in the 88 00:04:18,600 --> 00:04:21,560 Speaker 3: consumer And so you know, if you ask me this 89 00:04:21,720 --> 00:04:25,119 Speaker 3: question a year ago, beginning of this year, we actually 90 00:04:25,160 --> 00:04:28,440 Speaker 3: better than we thought would be. So nothing out of 91 00:04:28,480 --> 00:04:31,960 Speaker 3: the ordree absolutely in line with what we expected, even 92 00:04:32,040 --> 00:04:33,719 Speaker 3: marginally better than we expected. 93 00:04:34,120 --> 00:04:37,279 Speaker 1: So if there's nothing really wrong with consumer credit, the 94 00:04:37,320 --> 00:04:42,120 Speaker 1: economy is not going wild, but it's not terrible. Is 95 00:04:42,160 --> 00:04:44,880 Speaker 1: it really just the concern about the election in the 96 00:04:45,000 --> 00:04:48,080 Speaker 1: US that's kind of holding people back from being overly 97 00:04:48,120 --> 00:04:50,839 Speaker 1: ebulliant or coming up with big plans. 98 00:04:51,120 --> 00:04:54,720 Speaker 3: So yes, inflation is hitting a lot of the consumers 99 00:04:54,760 --> 00:04:57,720 Speaker 3: across the United States has been hitting. It's cumulative, right, 100 00:04:57,760 --> 00:04:59,920 Speaker 3: so it's been going on even though it's coming down. 101 00:05:00,040 --> 00:05:03,120 Speaker 3: It's better. But yes, we you know, we feel that 102 00:05:03,200 --> 00:05:05,480 Speaker 3: both on the talking about the US now, so we 103 00:05:05,520 --> 00:05:08,039 Speaker 3: feel there is pent up consumer demand. So we think 104 00:05:08,040 --> 00:05:10,520 Speaker 3: there will be a pickup for example, in cop purchases. 105 00:05:10,600 --> 00:05:13,680 Speaker 3: We get the feeling consumers holding back a bit, and 106 00:05:13,800 --> 00:05:16,760 Speaker 3: businesses too. I believe that you could see a pickup 107 00:05:16,839 --> 00:05:19,640 Speaker 3: in investment after the election. 108 00:05:20,520 --> 00:05:22,720 Speaker 2: And I want to ask you about private credit as well, 109 00:05:22,760 --> 00:05:26,000 Speaker 2: because a lot of banks are partnering with investment firms 110 00:05:26,000 --> 00:05:29,080 Speaker 2: to set up private credit partnerships and thinking about City 111 00:05:29,080 --> 00:05:32,160 Speaker 2: Group and Apollo for instance. What is sometimes there thinking 112 00:05:32,279 --> 00:05:35,520 Speaker 2: about these kinds of tie ups and the opportunities that 113 00:05:35,560 --> 00:05:38,080 Speaker 2: they may present. Are you doing anything similar or thinking. 114 00:05:37,880 --> 00:05:41,440 Speaker 3: About it now? Absolutely? We've been a leader in the 115 00:05:41,480 --> 00:05:44,560 Speaker 3: originator to distribute model because banks are no longer the 116 00:05:44,560 --> 00:05:46,719 Speaker 3: best holders of many of these loans because we have 117 00:05:46,800 --> 00:05:50,200 Speaker 3: increased capital requirements. We have the distribution as I said, 118 00:05:50,200 --> 00:05:53,160 Speaker 3: one hundred and sixty eight million customers full million corporates 119 00:05:53,160 --> 00:05:55,919 Speaker 3: across the world. So we are originating a lot of 120 00:05:56,240 --> 00:05:58,839 Speaker 3: loans that we are then placing with the private equities. 121 00:05:58,839 --> 00:06:01,679 Speaker 3: We work with all the major firms and we believe 122 00:06:01,720 --> 00:06:04,600 Speaker 3: that is something which is you know, good for our shareholders, 123 00:06:04,640 --> 00:06:08,400 Speaker 3: and we believe, you know, this is something we will continue. 124 00:06:09,880 --> 00:06:11,360 Speaker 1: Before I let you go, I do want to say, 125 00:06:11,360 --> 00:06:13,800 Speaker 1: looking forward, what do you think is going to be 126 00:06:14,320 --> 00:06:16,960 Speaker 1: the most important development in this next year for the 127 00:06:16,960 --> 00:06:19,480 Speaker 1: banking sector. We talk about regulation, People don't want to 128 00:06:19,480 --> 00:06:21,920 Speaker 1: talk about regulation like that's boring, but we talk about 129 00:06:21,920 --> 00:06:25,600 Speaker 1: the geopolitical sphere and that could be something or is 130 00:06:25,680 --> 00:06:27,800 Speaker 1: it the path of interest rates? And just how much 131 00:06:27,839 --> 00:06:30,120 Speaker 1: they actually can go down in the divergence to the 132 00:06:30,200 --> 00:06:31,760 Speaker 1: US and Europe. 133 00:06:32,240 --> 00:06:35,640 Speaker 3: So the big question is, you know, the structural trends 134 00:06:35,640 --> 00:06:38,800 Speaker 3: that are inflationary, right, so if you think about demographics, 135 00:06:38,800 --> 00:06:42,280 Speaker 3: you think about defence spending, you think about climate transition, 136 00:06:42,360 --> 00:06:46,919 Speaker 3: those are all informationary trends. So the big question is 137 00:06:46,960 --> 00:06:50,240 Speaker 3: what is the terminal or neutual interest rate that is 138 00:06:50,320 --> 00:06:54,679 Speaker 3: going to you know, let's say, be more consistent going forward. 139 00:06:55,320 --> 00:06:58,520 Speaker 3: Probably the US as a higher one than in Europe. 140 00:06:59,279 --> 00:07:02,400 Speaker 3: Four percent is three percent. The question is can the 141 00:07:02,440 --> 00:07:05,000 Speaker 3: economy continue to grow with that level of rates? And 142 00:07:05,040 --> 00:07:07,480 Speaker 3: the answer it seems yes. What we've seen in the 143 00:07:07,520 --> 00:07:11,280 Speaker 3: last couple of years with relative high rates, companies have 144 00:07:11,320 --> 00:07:13,840 Speaker 3: continued to invest and the economies have continued to grow, 145 00:07:13,880 --> 00:07:16,480 Speaker 3: maybe not as much as we'd like. So you know, 146 00:07:17,000 --> 00:07:19,320 Speaker 3: for a bank like Hours, interest rates in Europe of 147 00:07:19,360 --> 00:07:22,920 Speaker 3: tour two and a half percent, high employment levels. That's 148 00:07:22,920 --> 00:07:26,680 Speaker 3: why you know, our non performing loans are doing well. 149 00:07:26,920 --> 00:07:30,080 Speaker 3: We're growing, we have a very large amount of very 150 00:07:30,080 --> 00:07:32,520 Speaker 3: small accounts, and so as long as interest rates are 151 00:07:32,560 --> 00:07:35,200 Speaker 3: two two and a half, we're going to do pretty 152 00:07:35,200 --> 00:07:37,920 Speaker 3: well on our margins and we're going to do pretty 153 00:07:37,920 --> 00:07:40,440 Speaker 3: well on provisions, so it's not a bad place for banks. 154 00:07:40,720 --> 00:07:42,640 Speaker 1: Annabot it. Thank you so much for being with us 155 00:07:42,640 --> 00:07:44,960 Speaker 1: an about in a bank of Santander.