MADRID (Reuters) – Britain’s exit from the European Union will seemingly set off a interval of excessive uncertainty which will considerably influence Banco Santander’s business, the Spanish lender stated in a submitting to the U.S. Securities and Exchange Commission.
FILE PHOTO: A Santander brand is seen in Rio de Janeiro, Brazil, September 6, 2017. REUTERS/Sergio Moraes
The doc, which particulars Brexit’s potential influence on Santander’s UK operations together with its working outcomes and its capability to rent and retain workers, was probably the most particular assertion to this point from the euro zone’s largest financial institution by market worth.
“There remains significant uncertainty as to the respective legal and regulatory environments in which we and our subsidiaries will operate when the UK is no longer a member of the EU,” the financial institution stated in a submitting on Friday to the SEC.
“This uncertainty, and any actions taken as a result of this uncertainty, as well as new or amended rules, may have a significant impact on our operating results, financial condition and prospects,” it stated as a part of threat evaluation.
In Britain, Santander’s web revenue fell eight.eight % year-on-year within the second quarter, partly resulting from ongoing aggressive strain on revenue and prices associated to regulation and digital initiatives.
Banco Santander additionally stated in its submitting it was finalising the implementation of restructuring and strategic initiatives, such because the ring-fencing of retail banking actions within the UK, its third-largest market.
The financial institution has already transferred 22.9 billion kilos ($29.9 billion) of property and 20.7 billion kilos of liabilities to its Madrid-based mum or dad group in a transfer to adjust to new guidelines that come into power subsequent yr.
Banks working in Britain should separate deposit-taking operations from riskier funding banking actions earlier than January 2019. Personal and small business banking companies will have to be offered by a ‘ring-fenced bank’.
Britain’s looming exit from the EU and political uncertainty in Brazil are anticipated to check the administration abilities of Santander’s new chief government Andrea Orcel.
So far this yr, Santander has lost round 20 % of its worth as lenders face strain from low rates of interest, particularly in Spain, its second-biggest market, whereas attempting to shift from conventional industrial banking in the direction of extra digital-oriented lending to compete with fintech startups.
Reporting by Jesús Aguado; enhancing by Julien Toyer and Jan Harvey