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Email this3:11 pm
December 12, 2009
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Spain's Banco Santander, S.A., which has one of the largest retail and consumer banking franchises in the United Kingdom, Spain, and Brazil, and which is also the fourth largest bank bank in Europe with nearly $1.5 trillion in assets (link: https://www.statista.com/statistics/383406/leading-europe-banks-by-total-assets/), has quietly filed (link: http://www.gazette.gc.ca/rp-pr.....g.html#ml6) with the OSFI Superintendent and the Minister of Finance to incorporate a Schedule II (foreign-controlled) federally-chartered bank under the name, in English form, Santander Consumer Bank. Officially, it's been effected through its subsidiary, Carfinco Financial Group, Inc., a non-prime and near-prime auto financing lender that Banco Santander had acquired about five years ago. However, a Banco Santander representative confirmed (link: https://business.financialpost.com/news/fp-street/spains-banco-santander-eyeing-canadian-banking-licence-as-more-european-lenders-cross-the-pond) to the Financial Post that the intent is to have Santander Consumer Bank roll up the assets (i.e., auto loan receivables) from Carfinco so, once launched, I fully expect Banco Santander to transfer Carfinco's assets to Santander Consumer Bank and re-organize the Canadian operations into Santander Consumer Bank. 
Since they're singularly focused on auto loans, I don't expect them to begin offering bank accounts, at least not in the short- to medium-term. I do, however, see them potentially using their consumer bank platform to potentially launch both prepaid credit cards and credit cards as well as likely entering the broker GIC space by using deposit broker- and discount brokerage-sourced GIC deposits to fund their auto loans. They may also launch a direct-to-consumer auto lending platform, allowing customers to potentially obtain pre-approval for a car loan before heading off to a dealership, since dealer financing is so competitive.
Santander Consumer Bank will be headquartered in Edmonton, Alberta, where Carfinco is currently based, which will mean it will be become the fourth Edmonton-based federally-chartered bank, joining the likes of Canadian Western Bank, Bridgewater Bank, and General Bank of Canada. Meanwhile, with Zag Bank's imminent dissolution (link: https://www.highinterestsavings.ca/forum/zag-bank/zag-bank-and-continental-bank-file-discontinuance-applications/), DirectCash Bank is set to become the sole Calgary, Alberta-based federally chartered bank.
Cheers,
Doug
8:59 pm
October 21, 2013
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Let's hope there's something in it for us!
8:49 am
January 9, 2011
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Loonie said
Let's hope there's something in it for us!
What better way to fund their increasing debt offerings than coming to us with new deposit savings and GIC offerings at special rates ?!
"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green
11:00 am
October 27, 2013
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dougjp said
What better way to fund their increasing debt offerings than coming to us with new deposit savings and GIC offerings at special rates ?!
As long as they primarily focus on GICs. They will need HISAs to attract initial deposits but relying too heavily on HISA liabilities to fund longer term loan assets is just about what killed Home Capital Group with a consumer run on HISA deposits.
11:23 am
December 12, 2009
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AltaRed said
As long as they primarily focus on GICs. They will need HISAs to attract initial deposits but relying too heavily on HISA liabilities to fund longer term loan assets is just about what killed Home Capital Group with a consumer run on HISA deposits.
Yeah, good points, AltaRed, but I'm just speculating on them potentially offering GICs. I wouldn't expect them to offer top-tier rates, but something comparable to the mid- to upper-tier of rates in the broker channel (say 2.15% for 1-year to 2.45% for a 5-year); however, they would only likely need HISAs if they were to offer GICs in the direct-to-consumer channel (which is why Omnia Direct isn't getting much traction, for which they also lowered their GIC rates). They can be purely in the deposit broker and discount brokerage channels and not offer HISAs. Many credit unions and banks have raised few billion in deposits this way.
So, that's what I think Santander Consumer Bank would most likely do, at least in the medium-term.
Cheers,
Doug
11:39 am
October 27, 2013
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I don't disagree. Competitive rates can raise a lot of capital in the broker channel from folks like me that generally eschew the retail offerings or limit it to 1-2 FIs.
3:51 am
March 17, 2018
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Doug said
Yeah, good points, AltaRed, but I'm just speculating on them potentially offering GICs. I wouldn't expect them to offer top-tier rates, but something comparable to the mid- to upper-tier of rates in the broker channel (say 2.15% for 1-year to 2.45% for a 5-year); however, they would only likely need HISAs if they were to offer GICs in the direct-to-consumer channel (which is why Omnia Direct isn't getting much traction, for which they also lowered their GIC rates). They can be purely in the deposit broker and discount brokerage channels and not offer HISAs. Many credit unions and banks have raised few billion in deposits this way.
So, that's what I think Santander Consumer Bank would most likely do, at least in the medium-term.
Cheers,
Doug
I've heard from UK person that Santander is one of the worse banks in UK to deal with for customer service.
6:52 am
December 12, 2009
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Briguy said
I've heard from UK person that Santander is one of the worse banks in UK to deal with for customer service.
To each his own, @Briguy, I think, as I've heard the opposite. I've heard far more reports from HSBC Bank plc being the worst bank in the UK in terms of customer service quality and access to money. This parallels with my own experience as an employee of their Canadian sister company, HSBC Bank Canada, both of which are wholly-owned (directly or indirectly) by HSBC Holdings plc, where HSBC consistently scores even lower than Laurentian Bank in terms of customer service quality (J.D. Power & Associates) and customer service excellence (Ipsos Canada).
Nevertheless, if they do come to the deposit broker channel, you won't have any dealings with Santander Consumer Bank in terms of GICs since they won't even be able to pull up your account because you won't have an account with them (at least in the discount brokerage channel) as your account would be beneficially held by The Canadian Depository for Securities, Limited, which, in turn, would beneficially hold your deposits for either of (a) your discount brokerage (non-registered accounts) or (b) your registered plan trustee (registered accounts) that would hold the deposits for you. They may be aware, through their reporting for CDIC purposes whereby your brokerage has to report to them the beneficial owners that collectively own the deposits in their custody, but you wouldn't be able to call them up and ask them a question because they wouldn't be able to look you up. 😉
Cheers,
Doug
4:19 pm
March 17, 2018
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I think they've improved over the last few years to average. Back in 2011 they were rated as one of the worst banks, and that's probably the last time my UK source dealt with them.
UK rating 2011: https://www.theguardian.com/money/2011/feb/26/santander-britains-worst-bank
5:45 pm
December 12, 2009
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Briguy said
I think they've improved over the last few years to average. Back in 2011 they were rated as one of the worst banks, and that's probably the last time my UK source dealt with them.UK rating 2011: https://www.theguardian.com/money/2011/feb/26/santander-britains-worst-bank
Yeah, they'd gone through some branch consolidations and trying to consolidate disparate legacy banking platforms of the various building societies and small- to mid-sized banks to which they'd acquired (Abbey National being one of the biggest), so those are some of the reasons were ill regarded. Since that time, HSBC has closed fully 500 branches (from 1,200 to between 700 and 750 today) in the UK, so that could also help to explain why HSBC is ill regarded.
I've also not heard great things about Barclays in the UK. Mind you, I've even heard people complain about Nationwide Building Society (the equivalent of Desjardins or Meridian Credit Union in Canada).
Still, given that the Carfinco Financial Group, a long-standing consumer and dealer auto financing company that is Canadian founded, will be rolled into Santander Consumer Bank, they're likely going to preserve the Carfinco management team and corporate culture. A better test might be how well regarded Sovereign Bank, N.A., in the U.S., which is Santander's U.S. banner, and Santander Consumer Finance are regarded.
Cheers,
Doug
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