Santander Meets Challenges with Increased Lending
Increased regulation has cost Santander an estimated 100 million pounds in profits for the first quarter of the year, prompting the Spanish bank to make a rash decision by the end of this year. It more than likely will be floating its UK business by the end of 2011.
The bank claims bank levies and additional Financial Services Compensation contributions have been the most harmful and placed the most strain on their ability to make substantial profits. They posted a 3% increase in earnings for the first quarter of this year over 2010. Overall, Santander reported a profit of 1.9 billion pounds, which is down 5% on last year. Its presence in the UK has grown with the most recent acquisitions of two UK based banks. Business of lending to small and medium sized companies is up almost 30% year on year. Under the Project Merlin agreement, Santander is expected to meet its obligations of increasing gross lending by four billion pounds. The additional lending will make this possible. Chief executive of UK Santander, Ana Botin, commented on the first quarter, saying: "Santander UK has delivered a solid first quarter performance, with all business areas performing well and further progress made in improving customer service. "In line with our commitments to the UK Government under Project Merlin, we have increased lending to SMEs by around 30% over the last 12 months and we continue to be a consistent lender to homeowners, despite weaker demand and a reduction in the overall mortgage market."