Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: One of the major topics of conversation at the IMF
Speaker 2: and World Bank meetings is the state of the banking environment,
Speaker 2: specifically for European lenders. Joining us now for more on
Speaker 2: this is on a Boutein, Santander Executive Chairman, ANDIIF Chair.
Speaker 2: She is the first woman to chair THEIF board in
Speaker 2: its history, and she is joined by Bloomberg's Lisa Bromwoods,
Speaker 2: who was with her in Washington.
Speaker 1: Lisa Scarlette, great to see you, Thank you so much.
Speaker 1: And yes, she is the chair of the Institute of
Speaker 1: International Finance. Anna Botein also the chair of Santander. And
Speaker 1: when we talk about all of the different discussions that
Speaker 1: people are having here, obviously it's the election, Obviously it's
Speaker 1: what's going on with the global economy. But how much
Speaker 1: is it the divergence between the situation right now in
Speaker 1: Europe versus a situation in the United States.
Speaker 3: Well, it's been a very busy day, but I'd say
Speaker 3: that the topics are not very different from what they
Speaker 3: were a year ago. So we're still about how do
Speaker 3: we get growth to accelerate, And yes, Europe is growing less,
Speaker 3: but actually on a relative basis, Europe should do better
Speaker 3: next year than this year. In the US we're seeing
Speaker 3: a slowdown. So it's about world growth. How do we
Speaker 3: get growth going again in an economy that we're very
Speaker 3: happy that it's still growing and it's soft landing it seems,
Speaker 3: but we need to get growth to be faster.
Speaker 1: How much are people talking about the necessity of scale,
Speaker 1: of size of scope at a time of we're talking
Speaker 1: about UniCredit possibly taking over Commerce Bank, We're talking about
Speaker 1: the fact that the behemoths in the US are getting bigger.
Speaker 1: Is that something that's expected to continue now?
Speaker 3: Absolutely, and you know sometime that is one of the
Speaker 3: biggest banks in the world by number of customers, which
Speaker 3: is what matters. We have one hundred and sixty eight
Speaker 3: million customers across Europe and Americas, so we have a scale.
Speaker 3: We have the global scale, we have the in market scale,
Speaker 3: and that is a unique combination. That's what matters. We
Speaker 3: have investments in technology that are in the billions. We
Speaker 3: are rolling out global platforms. We set today that will
Speaker 3: have a fully digital bank by the end of twenty
Speaker 3: five in the United States we launched a few weeks ago.
Speaker 3: So yes, scale matters.
Speaker 1: Scale matters.
Speaker 2: But I'm curious because Lantaer hasn't made a big acquisition
Speaker 2: in years, what you're thinking about in terms of arge scale,
Speaker 2: M and A in the current environment in the near term.
Speaker 3: We haven't made a major acquisition because we don't need it.
Speaker 3: We are growing profitably. As of June, we were growing
Speaker 3: our top line at ten percent. We have grown sixty
Speaker 3: million customers in the last ten years. But very important,
Speaker 3: we're growing profitably, and we're rolling out our global platforms
Speaker 3: now in retail and consumer with our own tech stack,
Speaker 3: and so we're able to compete, you know, with our
Speaker 3: current size, and we're going to continue to invest in
Speaker 3: technology and people on different skills and making sure we're
Speaker 3: there where our customers want us to be. We is
Speaker 3: launched in Germany with Apple and Amazon our digital merchant Xenia,
Speaker 3: so we feel we have what it takes to be
Speaker 3: competitive in today's.
Speaker 2: World and in the US, sant and There is pushing
Speaker 2: really hard to grow towards corporate and investment banking unit
Speaker 2: as well as the launch of open Bank. I'm curious
Speaker 2: to hear what you think your competitive advantage is as
Speaker 2: you look to compete against the existent big investment banks
Speaker 2: and retail giants.
Speaker 3: Here in the US, we're mostly retail commercial consumer bank,
Speaker 3: so we are at scale auto lender in the United
Speaker 3: States well, number five here nationwide, with the number one
Speaker 3: auto lender in Europe and Latin So we have the scale,
Speaker 3: we've proven that for many years. We have a retail
Speaker 3: bank that we have said a year ago we're going
Speaker 3: to make digital through the global platform, and that's what
Speaker 3: we've done a few weeks ago. So we are bringing
Speaker 3: our global scale to benefit our regional banks so we
Speaker 3: can accelerate the past taking in the United States, and
Speaker 3: this is really unique.
Speaker 1: Centendre has a reputation of providing consumer loans, like you say,
Speaker 1: and right now there's such a big question about what
Speaker 1: the consumer health really is, how able people are going
Speaker 1: to be to pay things back at a time where
Speaker 1: a lot of policy roomakers are saying we're reaching it,
Speaker 1: this is the off landing nirvana, and all the consumers
Speaker 1: are saying, we just don't feel it. How do you
Speaker 1: see the performance of these loans? Are you're seeing signs
Speaker 1: of the sentiment that's more negative seeping into those loan performances.
Speaker 3: So we're not seeing an increase in non performing loans
Speaker 3: beyond the seasonal trends. There's always seasonal trends in the
Speaker 3: consumer And so you know, if you ask me this
Speaker 3: question a year ago, beginning of this year, we actually
Speaker 3: better than we thought would be. So nothing out of
Speaker 3: the ordree absolutely in line with what we expected, even
Speaker 3: marginally better than we expected.
Speaker 1: So if there's nothing really wrong with consumer credit, the
Speaker 1: economy is not going wild, but it's not terrible. Is
Speaker 1: it really just the concern about the election in the
Speaker 1: US that's kind of holding people back from being overly
Speaker 1: ebulliant or coming up with big plans.
Speaker 3: So yes, inflation is hitting a lot of the consumers
Speaker 3: across the United States has been hitting. It's cumulative, right,
Speaker 3: so it's been going on even though it's coming down.
Speaker 3: It's better. But yes, we you know, we feel that
Speaker 3: both on the talking about the US now, so we
Speaker 3: feel there is pent up consumer demand. So we think
Speaker 3: there will be a pickup for example, in cop purchases.
Speaker 3: We get the feeling consumers holding back a bit, and
Speaker 3: businesses too. I believe that you could see a pickup
Speaker 3: in investment after the election.
Speaker 2: And I want to ask you about private credit as well,
Speaker 2: because a lot of banks are partnering with investment firms
Speaker 2: to set up private credit partnerships and thinking about City
Speaker 2: Group and Apollo for instance. What is sometimes there thinking
Speaker 2: about these kinds of tie ups and the opportunities that
Speaker 2: they may present. Are you doing anything similar or thinking.
Speaker 3: About it now? Absolutely? We've been a leader in the
Speaker 3: originator to distribute model because banks are no longer the
Speaker 3: best holders of many of these loans because we have
Speaker 3: increased capital requirements. We have the distribution as I said,
Speaker 3: one hundred and sixty eight million customers full million corporates
Speaker 3: across the world. So we are originating a lot of
Speaker 3: loans that we are then placing with the private equities.
Speaker 3: We work with all the major firms and we believe
Speaker 3: that is something which is you know, good for our shareholders,
Speaker 3: and we believe, you know, this is something we will continue.
Speaker 1: Before I let you go, I do want to say,
Speaker 1: looking forward, what do you think is going to be
Speaker 1: the most important development in this next year for the
Speaker 1: banking sector. We talk about regulation, People don't want to
Speaker 1: talk about regulation like that's boring, but we talk about
Speaker 1: the geopolitical sphere and that could be something or is
Speaker 1: it the path of interest rates? And just how much
Speaker 1: they actually can go down in the divergence to the
Speaker 1: US and Europe.
Speaker 3: So the big question is, you know, the structural trends
Speaker 3: that are inflationary, right, so if you think about demographics,
Speaker 3: you think about defence spending, you think about climate transition,
Speaker 3: those are all informationary trends. So the big question is
Speaker 3: what is the terminal or neutual interest rate that is
Speaker 3: going to you know, let's say, be more consistent going forward.
Speaker 3: Probably the US as a higher one than in Europe.
Speaker 3: Four percent is three percent. The question is can the
Speaker 3: economy continue to grow with that level of rates? And
Speaker 3: the answer it seems yes. What we've seen in the
Speaker 3: last couple of years with relative high rates, companies have
Speaker 3: continued to invest and the economies have continued to grow,
Speaker 3: maybe not as much as we'd like. So you know,
Speaker 3: for a bank like Hours, interest rates in Europe of
Speaker 3: tour two and a half percent, high employment levels. That's
Speaker 3: why you know, our non performing loans are doing well.
Speaker 3: We're growing, we have a very large amount of very
Speaker 3: small accounts, and so as long as interest rates are
Speaker 3: two two and a half, we're going to do pretty
Speaker 3: well on our margins and we're going to do pretty
Speaker 3: well on provisions, so it's not a bad place for banks.
Speaker 1: Annabot it. Thank you so much for being with us
Speaker 1: an about in a bank of Santander.