Conquistador Banking

Colonialism isn’t as easy as it once was, but its legacy lingers.

 I’m a sucker for good marketing and I quite like the simplicity and difference of Santander’s 1 2 3 campaign. Of course the Spanish bank isn’t in the same league as HSBC – “the world’s local bank” – as HSBC is, to my mind at least, the best positioned major banking brand in the world. HSBC is the second largest public company in the world and Santander is the thirteenth. Both are global players.

Santander’s international reach has been largely shaped by language. Spanish is one of the three or four most widely spoken languages in the world. And while there are a lot of big American banks, Santander leads the Spanish-speaking pack.

In 2010, Santander did a lot better than many of its European rivals; battling with the Eurozone debacle and an imploding Spanish property market. When you add in the new capital provision rules, the whole sector has a lot to contend with at the moment. So, it’s perhaps not surprising that Santander’s 2010 profits fell by 35 per cent and it barely made a profit in the last quarter. Latin America accounted for more than half of group profits that year. Isn’t it fortunate that someone taught them to speak Spanish there?

Colonialism, whether political or banking, is a brutal affair and the history of the acquisitive growth of Santander over the past couple of decades is pretty impressive. It entered the UK market with the acquisition of Abbey National in 2004. Since then, it has also bought Alliance and Leicester and the savings and branch network of Bradford and Bingley. It wasn’t alone in chasing growth by acquisition: HSBC acquired the Midland Bank in the early 1990s and with RBS this sector imperative reached its apogee, with rather disastrous results.

At the time the attraction of scale seemed universal, but making money out of it requires a degree of finesse and is somewhat dependent on having a plan to benefit from scale. Whilst HSBC’s plan is self-evident from its marketing, I’m not too clear what Santander’s is. The language thing has been both an opportunity and a barrier to entry to others; and that may have given the bank a degree of protection, but in more competitive times it will not do quite so well unless it focuses more on its strengths.

As we Brits know only too well, it is one thing to conquer or colonise a market and quite another to retain it over time. Santander has benefited from the legacy of the Conquistadors in more ways than one and it has grown by acquisition, conquering new territory just like its fellow countrymen in another age. I personally think it, like others in the sector, has overreached itself and it is now operating outside its “sweet spot” defined by shared language and cultural connections.

Unlike RBS, Santander has so far survived its conquest of foreign lands but I think that it would do better if it now realised that its main competitive advantages are language and culture, not just scale.


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