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Santander looks at splitting car finance from rest of UK division Santander looks at splitting car finance from rest of UK division
(about 2 hours later)
Review follows fallout from commission scandal, which could cost bank up to £1.9bn in compensationReview follows fallout from commission scandal, which could cost bank up to £1.9bn in compensation
The Spanish owner of Santander is reportedly considering splitting off its scandal-hit motor finance business from the rest of its UK business as part of a corporate shake-up that could make the bank more attractive to potential buyers.The Spanish owner of Santander is reportedly considering splitting off its scandal-hit motor finance business from the rest of its UK business as part of a corporate shake-up that could make the bank more attractive to potential buyers.
Banco Santander has been reviewing the future of its UK business in recent months, amid mounting frustrations over regulations and costs. That includes the fallout of the growing car finance commission scandal, which analysts at RBC Capital say could cost the bank up to £1.9bn in compensation to its former borrowers.Banco Santander has been reviewing the future of its UK business in recent months, amid mounting frustrations over regulations and costs. That includes the fallout of the growing car finance commission scandal, which analysts at RBC Capital say could cost the bank up to £1.9bn in compensation to its former borrowers.
The potential reorganisation would involve moving the consumer finance division, which houses its car loan business, out of the Santander UK business, according to Bloomberg, which cited unnamed sources. The prospective split would require approval from financial regulators. A spokesperson for the bank declined to comment.The potential reorganisation would involve moving the consumer finance division, which houses its car loan business, out of the Santander UK business, according to Bloomberg, which cited unnamed sources. The prospective split would require approval from financial regulators. A spokesperson for the bank declined to comment.
Hiving off the car finance business could make the UK bank more attractive to potential buyers. In January, it emerged that Santander UK could be put up for sale, though City bosses have privately said it would be difficult to find a buyer until the final costs of the motor finance commission scandal are decided. Hiving off the car finance business, which is based in Redhill in Surrey, could make the UK bank more attractive to potential buyers. In January, it emerged that Santander UK could be put up for sale, though City bosses have privately said it would be difficult to find a buyer until the final costs of the motor finance commission scandal are decided.
A supreme court decision is due later this year. If the court rules in consumers’ favour, car loan providers including Santander could face a combined bill of up to £30bn, according to the rating agency Moody’s.A supreme court decision is due later this year. If the court rules in consumers’ favour, car loan providers including Santander could face a combined bill of up to £30bn, according to the rating agency Moody’s.
Santander UK put aside £295m to cover potential payouts to car loan customers in November, when it had been forced to delay the release of its financial results as it assessed the fallout of a court of appeal ruling on the car finance scandal.Santander UK put aside £295m to cover potential payouts to car loan customers in November, when it had been forced to delay the release of its financial results as it assessed the fallout of a court of appeal ruling on the car finance scandal.
That judgment, handed down in October, vastly expanded an Financial Conduct Authority investigation into motor finance commissions and sent compensation estimates soaring. The landmark ruling determined that paying a “secret” commission to the car dealers who had arranged the loans without disclosing the sum and terms of that commission to borrowers was unlawful.That judgment, handed down in October, vastly expanded an Financial Conduct Authority investigation into motor finance commissions and sent compensation estimates soaring. The landmark ruling determined that paying a “secret” commission to the car dealers who had arranged the loans without disclosing the sum and terms of that commission to borrowers was unlawful.
It contributed to a drop in annual pre-tax profits at the multinational lender, making the UK the only region to suffer a slump in earnings in 2024, apart from a Santander’s South American arm comprising Peru, Uruguay and Colombia.It contributed to a drop in annual pre-tax profits at the multinational lender, making the UK the only region to suffer a slump in earnings in 2024, apart from a Santander’s South American arm comprising Peru, Uruguay and Colombia.
It is unclear whether a corporate overhaul in the UK could lead to further job cuts.It is unclear whether a corporate overhaul in the UK could lead to further job cuts.
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The bank, which has 18,000 UK staff and has headquarters in Milton Keynes, confirmed in October that it was cutting 1,400 jobs across its UK business as part of its efforts to reduce costs. In February it said it was looking at how further “simplification and automation” of the business could “help drive cost efficiencies in 2025”.The bank, which has 18,000 UK staff and has headquarters in Milton Keynes, confirmed in October that it was cutting 1,400 jobs across its UK business as part of its efforts to reduce costs. In February it said it was looking at how further “simplification and automation” of the business could “help drive cost efficiencies in 2025”.