Santander slashing UK costs amid group drive to save £1bn

Banking giant Santander has revealed plans for further cost-cutting in the UK as part of a wider group target to save another 1.2 billion euros (£1.02 billion) a year.

Spanish owner Banco Santander is set to cut around 1 billion euros (£854 million) in costs across its European operation and around a 10th of that, or 100 million euros (£85 million), in its UK arm.

It comes after Santander UK announced in January that it is to close 140 branches in the UK, putting more than 1,200 jobs at risk.

But the high street lender sought to assure that the new cost savings will not lead to more UK branch closures or job losses.

The savings targets come as European banks look at ways to offset a profit squeeze due to low interest rates.

At Banco Santander’s investor day in London, the group outlined aims to make group-wide efficiencies across IT and operations and shared services across regions, including the UK.

In Britain and across Europe, it is also looking to make savings through boosting its digital capability and automating the bank, while also switching to cloud-based IT systems.

It is hoping to make the savings over the next three to four years.

The firm is also slashing the number of executives on its management committee from 24 to 11 to “simplify management and reporting”.

The move means UK boss Nathan Bostock will no longer sit on the committee, with Gerry Byrne representing Europe as head of the region.

Ana Botin
Ana Botin (Anthony Devlin/PA)

Ana Botin, executive chairman of Banco Santander, said: “Technology is changing banking as we know it and we are positioning the company to capitalise on the world class assets we have across the group, including our technology, talent and scale.”

In the UK, Santander’s recent branch closures will leave it with a network of 614 branches.

It came in response to a 23% fall in the number of transactions at Santander branches over the past three years, while transactions online and on mobile phones soared by 99%.

Santander also announced that it will spend £55 million refurbishing 100 branches over the next two years.

The UK business recently reported a 14% fall in pre-tax profits to £1.6 billion for 2018, while net interest income fell 4% to £3.1 billion due to pressures on new mortgage lending margins.

But its annual report in February revealed that Mr Bostock picked up a £6.4 million pay package for 2018.

He was awarded a £2.3 million annual bonus on top of his £1.68 million salary, with a further £638,000 in pensions and benefits.

His £4.6 million total pay was boosted further by £1.8 million to compensate him for share bonuses he gave up when he left Royal Bank of Scotland at the end of 2013 – the final such annual payment.

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