Card Issuer Profile: Grupo Santander

Published by: Datamonitor

Published: Feb. 26, 2009 - 129 Pages

Table of Contents

Overview

Catalyst

Summary

Table of Contents

Table of Figures

Table of Tables

Grupo Santander

Key findings

Grupo Santander company overview

Company history and background

Ownership, staffing and management

Grupo Santander is led by Emilio Botin and Alfredo Saenz

The group had 133,000 employees globally at the end of Q3 2008

Management values

Company structure and the position of the cards business

Santander is structured along geographic lines

Several core businesses are directed at the global level

Group key financials

Profit and loss account

Customer lending balances

Balance sheet

Grupo Santander's cards business

Geographic coverage of Santander's cards business

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

In more general terms, Santander has a long history in the banking markets across Latin America and Europe

M&A and the impact on geographic expansion on the group and cards business

Between 2004 and 2008, Santander made three acquisitions that made it a major player in UK retail banking

The 2007 ABN Amro deal has played an important role in Santander's development

In 2008, Santander exchanged Interbanca for several of GE Money's European assets

Santander also acquired consumer finance assets from RBS in 2008

The 2008 acquisition of the remaining stake in Sovereign provides a strong platform for growth in the US

Card issuing strategy

Santander's strategy is driven at a national level under the guidance of the global cards unit, Santander Cards

Santander Consumer Finance has traditionally existed outside of this structure, but integration began in late 2008

In terms of distribution, Santander's primary channel is its branch network

Statistics on Santander's card portfolio

Grupo Santander had over 60 million cards in issue at the end of 2007

Card product offering

Spain: the Santander retail bank cards offer largely focuses on added value through insurance benefits

Spain: the Banesto product range is benefit heavy but explicitly targeted at particular customer groups

UK: the Abbey Zero Card is a very straightforward offer

Outlook for the cards business

Santander's focus on 'old fashioned' banking positions it well to cope with current challenges

The focus on retail banking and growing a strong branch network are now key assets

The structure of Santander Cards is a strength, but it remains small compared to other global issuers

A strong operation in Latin America will be central to its overall performance

The integration of Banco Real is therefore an important step in growing its activity in the region

However, generating growth in Europe will be far more challenging due to recession and saturation

Growing in this environment will require higher margins and taking share from competitors

It is unclear at this stage whether Santander will move further into issuing in the US

Datamonitor Competitor Benchmark

Appendix

Definitions

AAGR

CAGR

Charge card

Credit card

Debit card

Supplementary data

Methodology

Primary research

Secondary research

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Grupo Santander's board of directors, 2008

Table 2: Grupo Santander employees by region, 2004-Q3 2008

Table 3: Grupo Santander non-performing loans by division, 2005-Q3 2008

Table 4: Global coverage of Grupo Santander's card issuing operations, 2009

Table 5: Key Grupo Santander mergers and acquisitions, 1999-2008

Table 6: Metrics on Santander's UK businesses, December 2008

Table 7: Grupo Santander cards in issue by country, 2005-07

Table 8: Details of the Santander retail bank card offering in Spain, 2009

Table 9: Details of the Banesto card offering in Spain, 2009

Table 10: Pricing on the Abbey Zero Credit Card, 2009

Table 11: Scorecard logic, part one

Table 12: Scorecard logic, part two

Table 13: Grupo Santander employees, 2005-Q3 2008

Table 14: Grupo Santander branch numbers, 2004-Q3 2008

Table 15: Santander Cards balances outstanding, 2005-07

Table 16: Grupo Santander total net revenue, non-interest expenses, and operating margin, 2003-07

Table 17: Grupo Santander revenues by division, 2004-08

Table 18: Retail Banking gross operating income by region and country, 2007

Table 19: Grupo Santander liabilities and equity, 2003-07

Table 20: Net card fees and commissions and total commissions for services across the group, 2005-Q3 2008

Table 21: Grupo Santander customer lending balances by geography, 2005-07

Table 22: Current relevant publications

Table 23: Future relevant publications

List of Figures

Figure 1: Brazil and Mexico are the Grupo Santander Latin America divisions with the largest workforce, 2007

Figure 2: Grupo Santander is primarily segmented along geographic lines with core businesses direct at a global level

Figure 3: Grupo Santander has enjoyed strong growth in revenue and operating margins over the period 2003-07

Figure 4: Santander's Retail Banking division generated over 86% of the group's annual gross revenue in 2007

Figure 5: Led by the businesses in Spain, Continental Europe accounts for the majority of Santander's overall retail banking revenues, 2007

Figure 6: Santander's card business has accounted for a growing share of total fees and commissions for services, 2004-Q3 2008

Figure 7: Continental Europe accounts for the majority of customer loan balances, 2007

Figure 8: Germany, Spain, and Italy account for 76% of Santander Consumer Finance's loan balances, 2007

Figure 9: Grupo Santander has experienced a spike in the proportion of loans that are non-performing, 2004-Q3 2008

Figure 10: Grupo Santander's balance sheet has grown rapidly from 2003-07

Figure 11: Grupo Santander issues credit cards in 19 markets, across its retail banking brands and through Santander Consumer Finance, 2009

Figure 12: The acquisition of Banco Real has significantly expanded Santander's presence and network in Brazil

Figure 13: Sovereign has a large network spread across eight northeastern states

Figure 14: Sovereign Bank holds 3% of the market across the eight states in which it operates, Q2 2008

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

Figure 16: The majority of Grupo Santander's card portfolio is debit, 2007

Figure 17: Santander Cards has enjoyed strong growth in credit card balances outstanding, 2005-07

Figure 18: The Turyocio multi-retailer loyalty program allows Santander to earn reward points for card use

Figure 19: Santander cardholders benefit from exclusive rates at a leading online retailer

Figure 20: The Banesto Tarjeta Diez en Una product offers a permanent 5% discount at 10 major retailers

Figure 21: Abbey offers rebates on supermarket shopping and fuel purchases, 2009

Figure 22: Santander has one of the largest branch networks in the industry, 2008

Figure 23: The European pay later card space is becoming saturated, 2007

Figure 24: Datamonitor Competitor Benchmark - Grupo Santander

Abstract

• Gain a detailed understanding of Grupo Santander's strategy and approach in the card market, and apply the lessons from this to your business
• Learn how the structure of Santander Cards and the group's presence in Latin America positions it well to continue growing in the global downturn
• Compare Grupo Santander against other leading global issuers using Datamonitor's unique Competitor Benchmark

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