((Automatic translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Jesús Aguado and Saeed Azhar
Spanish bank Santander SAN.MC launched its digital bank in the United States on Monday, which will help it finance more than $30 billion in auto loan assets and expand its retail business in the country, U.S. Chief Executive Tim Wennes told Reuters.
The third-largest bank in the eurozone by market capitalization is one of the few European banks present in the U.S. market following the withdrawal of its rivals BBVA BBVA.MC and BNP Paribas BNPP.PA.
Santander has more than $45 billion in consumer deposits across its network of 409 U.S. branches, primarily in nine northeastern states, and more than $60 billion in auto loan assets.
“We have over $30 billion in auto assets that are not funded by the bank today that are funded by the wholesale market,” Wennes told Reuters in an online interview late Friday.
Funding through the wholesale market is more expensive than if the bank finances the assets directly, but Mr Wennes did not say how much the bank would save by switching to the cheaper funding structure.
The launch of Openbank, which is currently Europe’s largest digital bank with over €18.5 billion in deposits, is part of Santander’s overall strategy to become a digital bank with branches.
In a bid to gain market share on U.S. deposits, Santander is initially offering a 5.25% return on its savings account, higher than Goldman Sachs GS.N’s digital bank Marcus, which offers 4.1% on your online savings account, or CIT Bank platinum savings account that goes up to 4.7%.
U.S. banks such as JPMorgan JPM.N and Bank of America BAC.N have the largest share of bank deposits in the country.
A successful launch of a fully digital offering in the US, where Santander has 4.5 million customers, will be crucial as the bank’s US operations have generated below-average returns.
Rental costs and increased provisions led to a 0.4% year-over-year decline in US net income in the first half.
Wennes said the bank would analyze how best to develop this digital platform and “definitely assess whether any partnership opportunities would make sense”.
He also said Santander was “comfortable today” with the current resources deployed in its US investment bank following its recent expansion after hiring former executives from bankrupt Credit Suisse.
