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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: It's the latest this morning. The ECB and Federal Reserve

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Speaker 2: on diverging past. The ECB looking to count rates as

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Speaker 2: soon as this summer in the United States. Fed officials

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Speaker 2: are warning cuts may not come at all this year

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Speaker 2: and about saying it's looking to navigate these challenges and more

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Speaker 2: as share of Bank of Santander and theif ANA joint

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Speaker 2: us in Washington this morning, and a good morning to you,

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Speaker 2: Good morning, thank you so much for being with us today.

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Speaker 2: We had a guest with us about five minutes ago.

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Speaker 2: It was pretty depressing, very down beyond cooperation in Washington,

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Speaker 2: the future for growth outside of the United States, how

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Speaker 2: down beating you and your team about the same things.

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Speaker 1: Well, you know, first of all, we are at war.

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Speaker 1: We have two wars, which is a human tragedy, and

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Speaker 1: our thoughts of with all the people that are suffering.

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Speaker 1: But aside from those very important issues which obviously we

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Speaker 1: must deal with first, the economy does not look bad.

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Speaker 1: So you know, we have managed to bring down inflation.

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Speaker 1: Remember we were around nine ten percent, were around three

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Speaker 1: to four in most countries. Really important. That's the one

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Speaker 1: thing we cannot allow to get out of control. We

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Speaker 1: have growth, yes, lower growth, but growth overall. And third,

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Speaker 1: we have very high employment levels. If I think about

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Speaker 1: sometimes there's Europe and America's footprint. Every single one of

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Speaker 1: our countries is at historically high levels of employment. So

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Speaker 1: you know this is not bad. A year ago you

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Speaker 1: had asked many people where are we going to be?

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Speaker 1: Anybody that said soft landing, you would say, oh, you're

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Speaker 1: being too optimistic. We have a super soft landing. So far,

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Speaker 1: so far, so good.

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Speaker 2: The growth profile is certainly much better than we thought

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Speaker 2: it would be, not just twelve months ago, but maybe

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Speaker 2: even three months ago. Though we still have two wars.

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Speaker 2: We also have increased protectionism. It's but a key feature

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Speaker 2: of the meetings this week, as you well know, a

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Speaker 2: backslide towards industrial policy in places like the United States.

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Speaker 2: Can I ask you, as someone who leads a bank,

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Speaker 2: does that make it more difficult to be an international

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Speaker 2: bank against that backdrop?

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Speaker 1: The key thing we're all looking to, and this is

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Speaker 1: not different from what everybody is saying, is that the

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Speaker 1: most difficult and you know the key risks now are geopolitical.

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Speaker 1: As I said, the macro looks much better at least

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Speaker 1: for now. So as we think about what is happening

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Speaker 1: and what these geopolitics mean for supply chains for our business,

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Speaker 1: understanding that this is going to mean more structural inflation

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Speaker 1: because you know you're going to have higher cost Understanding

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Speaker 1: that you need to prioritize the defense or national security

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Speaker 1: or in the case of companies, you know, diversification, which

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Speaker 1: again is a key asset at least for us, and

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Speaker 1: this is really very valuable. So these are the things

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Speaker 1: you need to think about. How do I protect my

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Speaker 1: business at the time when the world is increasingly volatile

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Speaker 1: where you're having a big shift in terms of we

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Speaker 1: want secure supply chain. Yes, we want it to be affordable,

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Speaker 1: good prices, but security is paramount. And of course we

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Speaker 1: also want to ensure that we can manage the green

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Speaker 1: under climate transition.

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Speaker 3: If geopolitical rests are in number one concern and I

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Speaker 3: can potentially meet as spike in inflation, do you expect

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Speaker 3: the EASYB to then what's been pretty much forecasted by everyone,

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Speaker 3: go ahead of the fad and have this rate cut

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Speaker 3: in June.

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Speaker 1: So you know, what we are thinking about is what

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Speaker 1: is the terminal rate? Where does this end up? That

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Speaker 1: is the key question and of view and as an

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Speaker 1: institution is that that terminal rate is not going to

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Speaker 1: be the same in Europe as in the US. It's

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Speaker 1: probably be around if you top the most economist four

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Speaker 1: percent in the US around three percent in Europe. What

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Speaker 1: it means is that let's say rates will end up

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Speaker 1: around those levels, around three percent four percent, And that

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Speaker 1: is really what we That is what allows us to plan. Again,

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Speaker 1: that is not a bad thing for commercial banks for

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Speaker 1: the sector. Negative rates were unsustainable risky for the system.

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Speaker 1: Very high rates kill the economy. You know, low rates,

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Speaker 1: maybe we are going to have too low growth. And

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Speaker 1: that is the one thing we need to focus on.

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Speaker 1: How do we manage an economy where terminal rates are

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Speaker 1: a bit higher because all the structural factors not just

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Speaker 1: defends demographics, the carbonization, so you have structural trends that

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Speaker 1: are more inflamation than before slow growth. What do we

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Speaker 1: do about it?

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Speaker 2: So I know that you're in a quied period, so

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Speaker 2: you can't talk directly about the financials, but can you

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Speaker 2: help me understand how do you plan for things like

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Speaker 2: net interesting income when you're across so many different regions,

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Speaker 2: with so many different policies and so many different so

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Speaker 2: called terminal rates. How do you plan for that kind

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Speaker 2: of thing? What does that look like?

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Speaker 1: Look sometimes that is a global bank, but basically it's

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Speaker 1: Europe and the Americans. We have one hundred and sixty

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Speaker 1: six million customers. First thing is the versification is key,

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Speaker 1: not just for us, for anybody. And we have the

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Speaker 1: versification by businesses five global businesses, and by regions and countries.

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Speaker 1: So that means that if something doesn't go well in

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Speaker 1: one country, usually it gets compensated by another. And so

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Speaker 1: what you try is to really have a context for

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Speaker 1: risk appetite. Do we take more risk? Less risk? We

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Speaker 1: don't manage interest rates right? As I said, the context

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Speaker 1: is really good for financial institutions, especially commercial banks like ours.

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Speaker 1: Why because negative rates meant that with a big retail base,

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Speaker 1: you're not charged. But you were being charged by the

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Speaker 1: central banks for twenty percent of our deposits and we

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Speaker 1: couldn't charge. So positive rates, low growth, high and employment

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Speaker 1: is a not a bad scenario for commercial banks.

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Speaker 2: So some other banks have pulled bank from the United States.

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Speaker 2: International banks I'm thinking specifically of HSBC being preparable are

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Speaker 2: still there. They still have a presence. You've been leaning

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Speaker 2: in a little bit more. Could you develop that for

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Speaker 2: us this morning? What are you planning in the United States?

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Speaker 2: How big is your presence going to be going forward

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Speaker 2: from here.

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Speaker 1: We're very excited about the opportunities in the United States.

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Speaker 1: We're very confident we'll reach the fifteen percent return on

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Speaker 1: tangible equity, and we're keeping it simple. Play to our strengths.

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Speaker 1: Where do we have global scale that helps us in

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Speaker 1: this market, make sure that we're leveraging our network. And

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Speaker 1: so in the biggest business, which is the consumer, we

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Speaker 1: have something none of the other foreign banks have or had,

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Speaker 1: which is at scale auto business. We're number five in

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Speaker 1: the US, we're number one in Europe. We bring our

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Speaker 1: OEMs here and second, we have scale to invest in

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Speaker 1: our own technology. So we're going to deploy our own

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Speaker 1: technology to launch a digital bank to make sure we

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Speaker 1: can fund the auto business competitively.

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Speaker 2: Simple and this was brilliant. I know you've got a

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Speaker 2: super busy morning, so we appreciate you carving out some

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Speaker 2: time for us here at Bloomberg. Thank you so much.

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Speaker 2: Great to be here. And what's in there? The bankos

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Speaker 2: Santander Chairman