Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of Figures 3
Table of Tables 4
Grupo Santander 5
Key findings 5
Grupo Santander company overview 5
Company history and background 5
Ownership, staffing and management 5
Grupo Santander is led by Emilio Botin and Alfredo Saenz 6
The group had 133,000 employees globally at the end of Q3 2008 6
Management values 8
Company structure and the position of the cards business 8
Santander is structured along geographic lines 8
Several core businesses are directed at the global level 9
Group key financials 10
Profit and loss account 10
Customer lending balances 13
Balance sheet 17
Grupo Santander's cards business 18
Geographic coverage of Santander's cards business 18
The majority of Santander's card issuing occurs through its retail banking activities, but Santander Consumer Finance also plays an important role in expanding the group's international reach 19
In more general terms, Santander has a long history in the banking markets across Latin America and Europe 20
M&A and the impact on geographic expansion on the group and cards business 21
Between 2004 and 2008, Santander made three acquisitions that made it a major player in UK retail banking 22
The 2007 ABN Amro deal has played an important role in Santander's development 23
In 2008, Santander exchanged Interbanca for several of GE Money's European assets 25
Santander also acquired consumer finance assets from RBS in 2008 26
The 2008 acquisition of the remaining stake in Sovereign provides a strong platform for growth in the US 26
Card issuing strategy 28
Santander's strategy is driven at a national level under the guidance of the global cards unit, Santander Cards 28
Santander Consumer Finance has traditionally existed outside of this structure, but integration began in late 2008 31
In terms of distribution, Santander's primary channel is its branch network 31
Statistics on Santander's card portfolio 31
Grupo Santander had over 60 million cards in issue at the end of 2007 31
Card product offering 34
Spain: the Santander retail bank cards offer largely focuses on added value through insurance benefits 34
Spain: the Banesto product range is benefit heavy but explicitly targeted at particular customer groups 37
UK: the Abbey Zero Card is a very straightforward offer 40
Outlook for the cards business 43
Santander's focus on 'old fashioned' banking positions it well to cope with current challenges 43
The focus on retail banking and growing a strong branch network are now key assets 43
The structure of Santander Cards is a strength, but it remains small compared to other global issuers 44
A strong operation in Latin America will be central to its overall performance 44
The integration of Banco Real is therefore an important step in growing its activity in the region 45
However, generating growth in Europe will be far more challenging due to recession and saturation 45
Growing in this environment will require higher margins and taking share from competitors 46
It is unclear at this stage whether Santander will move further into issuing in the US 48
Datamonitor Competitor Benchmark 49
Appendix 52
Definitions 52
AAGR 52
CAGR 52
Charge card 52
Credit card 52
Debit card 52
Supplementary data 53
Methodology 56
Primary research 56
Secondary research 57
Further reading 57
Ask the analyst 58
Datamonitor consulting 58
Disclaimer 58
List of Tables
Table 1: Grupo Santander's board of directors, 2008 6
Table 2: Grupo Santander employees by region, 2004-Q3 2008 7
Table 3: Grupo Santander non-performing loans by division, 2005-Q3 2008 17
Table 4: Global coverage of Grupo Santander's card issuing operations, 2009 20
Table 5: Key Grupo Santander mergers and acquisitions, 1999?2008 22
Table 6: Metrics on Santander's UK businesses, December 2008 23
Table 7: Grupo Santander cards in issue by country, 2005-07 33
Table 8: Details of the Santander retail bank card offering in Spain, 2009 35
Table 9: Details of the Banesto card offering in Spain, 2009 38
Table 10: Pricing on the Abbey Zero Credit Card, 2009 41
Table 11: Scorecard logic, part one 50
Table 12: Scorecard logic, part two 51
Table 13: Grupo Santander employees, 2005-Q3 2008 53
Table 14: Grupo Santander branch numbers, 2004-Q3 2008 54
Table 15: Santander Cards balances outstanding, 2005-07 54
Table 16: Grupo Santander total net revenue, non-interest expenses, and operating margin, 2003-07 54
Table 17: Grupo Santander revenues by division, 2004-08 55
Table 18: Retail Banking gross operating income by region and country, 2007 55
Table 19: Grupo Santander liabilities and equity, 2003-07 55
Table 20: Net card fees and commissions and total commissions for services across the group, 2005-Q3 2008 56
Table 21: Grupo Santander customer lending balances by geography, 2005-07 56
Table 22: Current relevant publications 57
Table 23: Future relevant publications 58
List of Figures
Figure 1: Brazil and Mexico are the Grupo Santander Latin America divisions with the largest workforce, 2007 7
Figure 2: Grupo Santander is primarily segmented along geographic lines with core businesses direct at a global level 8
Figure 3: Grupo Santander has enjoyed strong growth in revenue and operating margins over the period 2003-07 10
Figure 4: Santander's Retail Banking division generated over 86% of the group's annual gross revenue in 2007 11
Figure 5: Led by the businesses in Spain, Continental Europe accounts for the majority of Santander's overall retail banking revenues, 2007 12
Figure 6: Santander's card business has accounted for a growing share of total fees and commissions for services, 2004-Q3 2008 13
Figure 7: Continental Europe accounts for the majority of customer loan balances, 2007 14
Figure 8: Germany, Spain, and Italy account for 76% of Santander Consumer Finance's loan balances, 2007 15
Figure 9: Grupo Santander has experienced a spike in the proportion of loans that are non-performing, 2004-Q3 2008 16
Figure 10: Grupo Santander's balance sheet has grown rapidly from 2003?07 18
Figure 11: Grupo Santander issues credit cards in 19 markets, across its retail banking brands and through Santander Consumer Finance, 2009 19
Figure 12: The acquisition of Banco Real has significantly expanded Santander's presence and network in Brazil 25
Figure 13: Sovereign has a large network spread across eight northeastern states 27
Figure 14: Sovereign Bank holds 3% of the market across the eight states in which it operates, Q2 2008 27
Figure 15: Grupo Santander co-ordinates its activities in cards at a global level, working with national or regional retail banking activities and the Santander Consumer Finance division 29
Figure 16: The majority of Grupo Santander's card portfolio is debit, 2007 32
Figure 17: Santander Cards has enjoyed strong growth in credit card balances outstanding, 2005-07 34
Figure 18: The Turyocio multi-retailer loyalty program allows Santander to earn reward points for card use 36
Figure 19: Santander cardholders benefit from exclusive rates at a leading online retailer 37
Figure 20: The Banesto Tarjeta Diez en Una product offers a permanent 5% discount at 10 major retailers 40
Figure 21: Abbey offers rebates on supermarket shopping and fuel purchases, 2009 42
Figure 22: Santander has one of the largest branch networks in the industry, 2008 43
Figure 23: The European pay later card space is becoming saturated, 2007 46
Figure 24: Datamonitor Competitor Benchmark - Grupo Santander 49