How Santander plans to grow in the U.S.

These days, in the United States, the Spanish banking giant Banco Santander is an outlier.

While other European banks have largely retreated from the ultra-competitive U.S. retail market, Santander appears to be firmly staying put. Twenty years after entering the U.S., the company is doubling down on its commitment to invest in and expand its stateside operations.

Much of its growth plan is pinned on Openbank, the digital deposit-gathering platform it rolled out in the U.S. last fall in conjunction with a company-wide focus on being a “digital bank with branches.” Openbank, which has been available in parts of Europe for years, offers Santander a way to attract low-cost deposits nationwide to help fund the bank’s sizable auto loan book.

Overseeing the evolution of Openbank into a fully transactional online bank is the top priority for Christiana Riley, who took over as CEO of Santander’s U.S. operations in early February. A former top executive at Deutsche Bank, Riley is also charged with unifying Santander’s previously disconnected U.S. business units to increase the company’s revenue and profitability.

The years that her predecessors spent laying the groundwork mean that Santander can now grow quickly, Riley told American Banker in her first media interview since being named CEO.

“I think if you ask my team, what have the last couple of months been like and how it’s been different, it has been around the focus and pace of execution,” Riley said. “If we know this is the right strategy, and it’s showing us results, let’s move faster.”

Early results are promising. Openbank, whose high-yield savings account attracts customers with a premium interest rate, has reeled in nearly $4 billion of deposits since its launch in late October, Riley said. That’s “well in excess” of what management had expected, she noted.

Plus, the company is “on track” to achieve its goal of achieving a 15% return on tangible common equity in the U.S. this year, Riley said. Banco Santander executives shared that target publicly during the company’s investor day in 2023.

“Unequivocally, today in 2025, the opportunity for Santander in the U.S. is so clear,” Riley added.

The pace at which Santander grows may depend on how the U.S. economy fares in the coming months. If the Trump administration imposes global tariffs as planned, and a trade war ensues, the economy could fall into a recession, some economists have warned.

Any headwinds the Spanish company faces “will be related to the U.S. economy,” said Arnaud Journois, an analyst at Morningstar DBRS who covers European banks. In addition, it will take time to see if Santander’s deposit-gathering strategy leads to cheaper funding for its auto loans, he said.

“I think they need a track record to see how it will unfold,” Journois said.

Banco Santander arrived in the U.S. in 2005 by acquiring a 19.8% equity stake in Sovereign Bancorp in Philadelphia. The Spanish company acquired Sovereign in full a few years later.

JAVIER VAZQUEZ

In 2021, Santander Holdings USA, the parent company for U.S. operations, took full ownership of Dallas-based Santander Consumer USA Holdings, a subprime auto lending affiliate in which it previously held a partial stake. Santander has since focused on drawing more customers with prime or near-prime credit scores, as part of an effort to better align with the retail bank.

Over the years, Santander’s physical footprint has mostly been concentrated in the Northeast. It currently operates 401 branches across nine states, with 354 of them in New York, Massachusetts, New Jersey and Pennsylvania. The lone Santander branch outside the Northeast is in Florida.

The company has taken a different pathway from its overseas peers, Journois said.

Around the time of the pandemic, numerous foreign-owned banks pulled back on their U.S. operations. In 2020, Banco Bilbao Vizcaya Argentaria in Spain sold much of its U.S. presence to PNC Financial Services Group in Pittsburgh. The following year, HSBC Holdings in London sold most of its U.S. retail business to Citizens Financial Group in Providence, Rhode Island.

BNP Paribas in Paris sold its U.S. subsidiary to Bank of Montreal. Outside of Europe, Mitsubishi UFJ Financial Group in Japan sold its U.S. retail banking arm to U.S. Bancorp in Minneapolis, while Israel’s Bank Leumi sold its U.S. operations in the New York City area.

Santander, meanwhile, has held steady. At the company’s 2023 investor day, executives laid out plans for higher growth and profitability, largely by leveraging the firm’s global scale and business diversification. The U.S. market factored heavily into the overall strategy, with a focus on reducing funding costs and driving up fee income in corporate and investment banking as well as wealth management.

“For Santander, the U.S. has been better performing than [it has been for] competitors,” Journois said.

The $172 billion-asset Santander Holdings USA currently has four main subsidiaries, according to the company’s first-quarter earnings presentation — auto loan originator Santander Consumer; the retail-focused Santander Bank, which includes OpenBank and has $81 billion of deposits; Santander Capital Markets, which includes an investment banking business; and a Miami-based wealth management unit.

As part of its initiative to expand its scale and attract more deposits, Santander recently announced a multiyear partnership with Verizon that allows eligible Verizon customers to open a high-yield savings account through Openbank. The deal provides the bank with a new pipeline of deposits and rewards Verizon customers with credits toward Verizon mobile and 5G home internet bills.

Securing similar partnerships is something that Santander is “absolutely looking to do,” Riley said.

The development of Openbank is a chief focus for Riley, a Connecticut native who said she was drawn to the opportunity to join Santander after watching the 2023 investor day. Already in talks with Santander’s executive chair, Ana Botín, and CEO Héctor Grisi, Riley came on board later that year as the regional head of North America, which put her in charge of businesses in both the U.S. and Mexico.

Santander has since moved away from regional leaders, leading to Riley’s new role. She succeeded Tim Wennes, who had been Santander’s U.S. CEO.

As part of Openbank’s evolution, the digital platform is expected to offer checking accounts and certificates of deposits to customers by the end of the year, Riley said.

The first Openbank-branded branch is scheduled to open later this month at Miami Worldcenter, a new retail and entertainment hub. Other sites may eventually follow in certain high-growth, high-density areas such as Southeast Florida, across the Sun Belt and into California, she said.

Openbank, which requires a minimum deposit of $500 to open a savings account, is currently paying an interest rate of 4.4%. That’s down from the 5.25% rate paid in October. Riley said the company is set on maintaining a “top quartile rate position” in order to draw deposits.

“That’s been a key feature … since launch and it’s one we stand fully behind,” she said, noting that Openbank deposits are “replacing vastly more expensive sources of funding” in the bank’s consumer lending business. “We’ve got, probably relative to many others who are operating in this high-yield savings space, a significantly better opportunity to manage that spread margin.”

For a bank that’s so focused on its digital bank, questions have arisen about the future of Santander’s physical branches. Last week, Santander notified the Office of the Comptroller of the Currency that it plans to close 18 branches, or 4.5% of the total branch network, this summer.

News of the U.S. closures came about seven weeks after Santander said it would shut down 95 of its 444 branches in the United Kingdom this summer, or about one-fifth of its total U.K. branch network. The bank also said it would reduce operating hours at 36 other U.K. offices.

Riley insisted there’s still a place for branches in Santander’s future.

“You need to be strategic in how you think about the value of the branch and what the branch is for, and how you maximize the utility and efficiency of the branch,” she said. “But the branch is a very important part of the psychological safety for the consumer, knowing my branch is there for me.”