Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: It's the latest this morning. The ECB and Federal Reserve
Speaker 2: on diverging past. The ECB looking to count rates as
Speaker 2: soon as this summer in the United States. Fed officials
Speaker 2: are warning cuts may not come at all this year
Speaker 2: and about saying it's looking to navigate these challenges and more
Speaker 2: as share of Bank of Santander and theif ANA joint
Speaker 2: us in Washington this morning, and a good morning to you,
Speaker 2: Good morning, thank you so much for being with us today.
Speaker 2: We had a guest with us about five minutes ago.
Speaker 2: It was pretty depressing, very down beyond cooperation in Washington,
Speaker 2: the future for growth outside of the United States, how
Speaker 2: down beating you and your team about the same things.
Speaker 1: Well, you know, first of all, we are at war.
Speaker 1: We have two wars, which is a human tragedy, and
Speaker 1: our thoughts of with all the people that are suffering.
Speaker 1: But aside from those very important issues which obviously we
Speaker 1: must deal with first, the economy does not look bad.
Speaker 1: So you know, we have managed to bring down inflation.
Speaker 1: Remember we were around nine ten percent, were around three
Speaker 1: to four in most countries. Really important. That's the one
Speaker 1: thing we cannot allow to get out of control. We
Speaker 1: have growth, yes, lower growth, but growth overall. And third,
Speaker 1: we have very high employment levels. If I think about
Speaker 1: sometimes there's Europe and America's footprint. Every single one of
Speaker 1: our countries is at historically high levels of employment. So
Speaker 1: you know this is not bad. A year ago you
Speaker 1: had asked many people where are we going to be?
Speaker 1: Anybody that said soft landing, you would say, oh, you're
Speaker 1: being too optimistic. We have a super soft landing. So far,
Speaker 1: so far, so good.
Speaker 2: The growth profile is certainly much better than we thought
Speaker 2: it would be, not just twelve months ago, but maybe
Speaker 2: even three months ago. Though we still have two wars.
Speaker 2: We also have increased protectionism. It's but a key feature
Speaker 2: of the meetings this week, as you well know, a
Speaker 2: backslide towards industrial policy in places like the United States.
Speaker 2: Can I ask you, as someone who leads a bank,
Speaker 2: does that make it more difficult to be an international
Speaker 2: bank against that backdrop?
Speaker 1: The key thing we're all looking to, and this is
Speaker 1: not different from what everybody is saying, is that the
Speaker 1: most difficult and you know the key risks now are geopolitical.
Speaker 1: As I said, the macro looks much better at least
Speaker 1: for now. So as we think about what is happening
Speaker 1: and what these geopolitics mean for supply chains for our business,
Speaker 1: understanding that this is going to mean more structural inflation
Speaker 1: because you know you're going to have higher cost Understanding
Speaker 1: that you need to prioritize the defense or national security
Speaker 1: or in the case of companies, you know, diversification, which
Speaker 1: again is a key asset at least for us, and
Speaker 1: this is really very valuable. So these are the things
Speaker 1: you need to think about. How do I protect my
Speaker 1: business at the time when the world is increasingly volatile
Speaker 1: where you're having a big shift in terms of we
Speaker 1: want secure supply chain. Yes, we want it to be affordable,
Speaker 1: good prices, but security is paramount. And of course we
Speaker 1: also want to ensure that we can manage the green
Speaker 1: under climate transition.
Speaker 3: If geopolitical rests are in number one concern and I
Speaker 3: can potentially meet as spike in inflation, do you expect
Speaker 3: the EASYB to then what's been pretty much forecasted by everyone,
Speaker 3: go ahead of the fad and have this rate cut
Speaker 3: in June.
Speaker 1: So you know, what we are thinking about is what
Speaker 1: is the terminal rate? Where does this end up? That
Speaker 1: is the key question and of view and as an
Speaker 1: institution is that that terminal rate is not going to
Speaker 1: be the same in Europe as in the US. It's
Speaker 1: probably be around if you top the most economist four
Speaker 1: percent in the US around three percent in Europe. What
Speaker 1: it means is that let's say rates will end up
Speaker 1: around those levels, around three percent four percent, And that
Speaker 1: is really what we That is what allows us to plan. Again,
Speaker 1: that is not a bad thing for commercial banks for
Speaker 1: the sector. Negative rates were unsustainable risky for the system.
Speaker 1: Very high rates kill the economy. You know, low rates,
Speaker 1: maybe we are going to have too low growth. And
Speaker 1: that is the one thing we need to focus on.
Speaker 1: How do we manage an economy where terminal rates are
Speaker 1: a bit higher because all the structural factors not just
Speaker 1: defends demographics, the carbonization, so you have structural trends that
Speaker 1: are more inflamation than before slow growth. What do we
Speaker 1: do about it?
Speaker 2: So I know that you're in a quied period, so
Speaker 2: you can't talk directly about the financials, but can you
Speaker 2: help me understand how do you plan for things like
Speaker 2: net interesting income when you're across so many different regions,
Speaker 2: with so many different policies and so many different so
Speaker 2: called terminal rates. How do you plan for that kind
Speaker 2: of thing? What does that look like?
Speaker 1: Look sometimes that is a global bank, but basically it's
Speaker 1: Europe and the Americans. We have one hundred and sixty
Speaker 1: six million customers. First thing is the versification is key,
Speaker 1: not just for us, for anybody. And we have the
Speaker 1: versification by businesses five global businesses, and by regions and countries.
Speaker 1: So that means that if something doesn't go well in
Speaker 1: one country, usually it gets compensated by another. And so
Speaker 1: what you try is to really have a context for
Speaker 1: risk appetite. Do we take more risk? Less risk? We
Speaker 1: don't manage interest rates right? As I said, the context
Speaker 1: is really good for financial institutions, especially commercial banks like ours.
Speaker 1: Why because negative rates meant that with a big retail base,
Speaker 1: you're not charged. But you were being charged by the
Speaker 1: central banks for twenty percent of our deposits and we
Speaker 1: couldn't charge. So positive rates, low growth, high and employment
Speaker 1: is a not a bad scenario for commercial banks.
Speaker 2: So some other banks have pulled bank from the United States.
Speaker 2: International banks I'm thinking specifically of HSBC being preparable are
Speaker 2: still there. They still have a presence. You've been leaning
Speaker 2: in a little bit more. Could you develop that for
Speaker 2: us this morning? What are you planning in the United States?
Speaker 2: How big is your presence going to be going forward
Speaker 2: from here.
Speaker 1: We're very excited about the opportunities in the United States.
Speaker 1: We're very confident we'll reach the fifteen percent return on
Speaker 1: tangible equity, and we're keeping it simple. Play to our strengths.
Speaker 1: Where do we have global scale that helps us in
Speaker 1: this market, make sure that we're leveraging our network. And
Speaker 1: so in the biggest business, which is the consumer, we
Speaker 1: have something none of the other foreign banks have or had,
Speaker 1: which is at scale auto business. We're number five in
Speaker 1: the US, we're number one in Europe. We bring our
Speaker 1: OEMs here and second, we have scale to invest in
Speaker 1: our own technology. So we're going to deploy our own
Speaker 1: technology to launch a digital bank to make sure we
Speaker 1: can fund the auto business competitively.
Speaker 2: Simple and this was brilliant. I know you've got a
Speaker 2: super busy morning, so we appreciate you carving out some
Speaker 2: time for us here at Bloomberg. Thank you so much.
Speaker 2: Great to be here. And what's in there? The bankos
Speaker 2: Santander Chairman