Staff at Santander UK are braced for a brand new wave of redundancies, following a 38% drop in full-year earnings and the financial institution’s resolution to press forward with cost-cutting measures.
The British division was certainly one of solely two models inside Madrid-based Banco Santander to report decrease earnings final yr, partly on account of a £295m provision for the motor finance fee scandal, which hit the financial institution in November.
The financial institution’s concentrate on “simplification and automation” is anticipated to drive additional headcount reductions in 2025. Santander quietly started chopping jobs in its UK enterprise all through 2024, surpassing authentic targets by shedding 1,800 roles, decreasing its British workforce from 19,800 to 18,000. It stays unclear whether or not recent cuts will match these ranges this yr.
Santander’s high brass in Madrid have reportedly voiced considerations over regulatory hurdles and rising prices within the UK, fuelling hypothesis that the financial institution would possibly search a purchaser for its British arm. Government chair Ana Botín has publicly dismissed rumours of a sale, insisting the UK stays a “core market”, however these denials have been overshadowed by the sudden resignation of UK chair William Vereker.
On the centre of Santander’s difficulties is the looming motor finance fee scandal, which may price an estimated £44bn throughout a number of banks, together with Lloyds and Shut Brothers, if not overturned by the supreme court docket in April. The scandal includes undisclosed “secret” commissions paid to automotive sellers, a authorized improvement that has unnerved buyers and risked overshadowing the financial institution’s latest pledges to slim down its UK operations.
The disaster has added to Madrid’s frustrations with Britain’s ring-fencing rules, which require main banks to defend client deposits from funding banking actions. Whereas regulators have indicated they could calm down a few of these guidelines, any adjustments would primarily profit smaller lenders with fewer deposits, leaving Santander UK nonetheless grappling with stringent oversight.
