- Key insight: Banco Santander, which is awaiting regulators’ approval to buy regional bank Webster Financial, is showing improvement in its stateside operations.
- Supporting data: As of March 31, Santander’s digital bank had reeled in $11 billion of deposits since its launch in the fall of 2024.
- Forward look: The Madrid-based banking giant expects to complete the acquisition in the second half of this year.
Banco Santander continues to make progress on its effort to gather more deposits stateside and improve its U.S. performance, as it awaits approval to buy a deposit-rich bank in the Northeast.
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The Spanish banking giant, which expects to acquire Webster Financial during the second half of the year, said Wednesday that its U.S. digital deposit-gathering platform, Openbank, has reeled in $11 billion of deposits since launching in 2024. It also said first-quarter loans in the U.S. rose 5% year over year, and that its return on tangible equity was 11.6%, up from 10.6% in the prior quarter.
The Madrid-based banking giant laid out new financial targets in February, including a return on tangible equity goal in the U.S. of 18% by 2028. Folding in Webster is expected to provide a lift, but the bank is already seeing positive results in its U.S. business, José García Cantera, Santander’s chief financial officer, told analysts during the bank’s first-quarter earnings call.
“Importantly, our performance in these countries is not dependent on integration execution alone,” he said, referring to the U.S. and the United Kingdom, where Santander is in the midst of acquiring TSB Banking Group. “Our transformation plans are already delivering tangible improvements.”
During the first quarter, Banco Santander’s revenue totaled €15.1 billion, up 4% year over year. Its net interest income rose by 4% from the year-ago period, and its fee income climbed by 6%.
Banco Santander is an outlier among most foreign banks. Unlike those that have retreated from the U.S. in recent years due to the highly competitive environment, Santander has invested in its stateside operations, which today include its retail and commercial bank, a consumer finance unit focused primarily on auto lending and a private banking and investment services unit.
Historically, Santander has funded its sizable auto loan portfolio with higher-cost deposits.
Openbank attracts deposits by offering an online savings account with premium rates. It will eventually offer checking accounts and certificates of deposit, executives have said.
The acquisition of Webster, an $85.6 billion-asset regional bank with low-cost deposits and an attractive retail branch network, is poised to be a transformative step in the Spanish company’s U.S. journey. The combined entity will have $327 billion of assets, making it one of the largest regional banks in the nation, along with approximately $185 billion of loans and $172 billion of deposits.
The launch of Openbank has helped Santander lower its cost of funds. The deposits that the digital bank gathered between its October 2024 launch and March 31, 2026, have resulted in annual savings of about $150 million in net funding costs, Santander CEO Héctor Grisi told analysts during the earnings call.
“Given that Openbank has helped us with $11 billion of new deposits, all of our portfolio is now not dependent on wholesale funding,” Grisi said. “That has basically given us an extra margin, and that basically will help us to get to the [return on tangible equity] that we promised you in the U.S., towards the 18% when we have Webster … The US, all in all, basically is going well.”
About three weeks ago, the pending acquisition of Webster took a step forward when Santander U.S. announced that certain executives have been tapped to run specific business lines post-deal closure. The announcement followed questions about whether the tie-up would face challenges following President Trump’s threat in March to halt trade with Spain.
Spain had refused to allow the U.S. military to use its bases to launch bombing raids against Iran. To date, a trade embargo against Spain has not been established.
If the Webster deal is approved by U.S. and European regulators, Santander is positioned to become the 13th largest bank in the U.S. based on asset size.
The two banks have previously said that John Ciulla, Webster’s chairman and CEO, will become CEO of Santander Bank N.A. Luis Massiani, Webster’s president and chief operating officer, is set to become chief operating officer of Santander Bank N.A. and Santander Holdings USA.
Christiana Riley, who has been Santander’s U.S. country head for the past year, will remain in that role.
Webster released its first-quarter earnings report Tuesday afternoon. The company reported net income of $246.2 million for the three-month period, up 8.5% year over year.
Earnings per share totaled $1.50, missing analysts’ consensus estimate of $1.54, according to S&P Capital IQ. Adjusted earnings per share were $1.57, excluding $9.1 million of expenses related to the Santander acquisition as well as $3.6 million of strategic restructuring charges and a $700,000 benefit related to a Federal Deposit Insurance Corp. special assessment, the company said.
