Santander Bank (SAN.US) expands its US business to welcome the key puzzle! The $12 billion deal to acquire Webster Finance (WBS.US) was approved by the Federal Reserve

The Zhitong Finance App learned that Spanish banking giant Santander Bank (SAN.US) has obtained approval from the Federal Reserve to acquire Webster Finance (WBS.US). This will be one of the largest transactions carried out by European banks in the US market. The Spanish banking giant is expected to complete the deal on August 20, after receiving approval from other regulators.

Santander proposed the acquisition of Webster Finance for about 12 billion US dollars in February of this year. This is part of the bank's executive chairman Anna Botin's strategy to promote business expansion in the US. “This merger will strengthen our position in one of the world's most attractive banking markets and steadily move us towards becoming one of the best-performing banks among our American peers,” Boting said in a statement released late Tuesday.

Santander said its US business is expected to achieve a tangible return on equity of approximately 18% in 2028 after the transaction is completed and the integration is completed. At the same time, the deal is expected to increase earnings per share by about 7% to 8% and provide a return on invested capital of around 15%.

Santander also recently completed the acquisition of British bank TSB. The bank said it will focus on promoting the integration of TSB and Webster Finance's two acquisition deals in the future. Santander previously promised to increase net profit to over 20 billion euros (approximately US$23.1 billion) by 2028.

Santander is trying to make up for the size shortfall in the US retail and commercial banking market through the acquisition of Webster Finance. For the Spanish banking giant, winning Webster Finance would mean lower financing costs, a stronger deposit base, more cross-selling space, and using a higher profit contribution weight from the US business to increase its valuation and profit base.

According to a previous transaction document, after the transaction is completed, Santander's consolidated assets in the US are about 327 billion US dollars, which is expected to rank among the top ten retail and commercial banks in the US; Santander's management determined that after the scale of operations is drastically raised, it can not only reduce financing costs, but also bring about 800 million US dollars in pre-tax cost synergy. So, in other words, it's not just “buying a retail bank,” it's filling Santander with one of the most critical pieces of the puzzle in global banking competition — deposits, customers, and balance sheet size in the US. Santander has previously made it clear that this acquisition is a key step for it to become a major US retail banking participant.

Some analysts said that if large international banks headquartered in Europe want to increase valuation premiums and profit flexibility, and expect to gain valuation points against Wall Street commercial banking giants, they must have a stronger ability to expand their localized retail and commercial banking business in the US. The European market is growing slowly, and the US retail banking business is more strategically valuable in terms of deposit pricing, credit expansion, and cross-selling space.