- Key insight: Santander's pending acquisition of Webster Financial checks several boxes for the Spanish bank, which has been seeking greater scale and profitability in the U.S.
- Expert quote: "Being one of the most profitable banks in our core geographies is a key target for Santander, and the Webster acquisition gets us there." — Ana Botín, group executive chair, Banco Santander
- Forward look: The deal must win the approval of U.S. and European regulators as well as shareholders of both banks. Santander is targeting a closing in the second half of 2026.
In 2023, Banco Santander laid out a plan to boost its scale and profitability in the United States, and over the next three years, the Spanish banking giant made progress on that initiative.
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The strategy got a boost from the 2024 launch of a nationwide digital bank designed to collect low-cost deposits, which the bank uses to help fund its sizable U.S. auto-loan portfolio.
On Tuesday, Santander announced another significant milestone in its stateside growth push, saying it will acquire Webster Financial, a regional bank in the Northeast, in a deal valued at $12.3 billion.
"Being one of the most profitable banks in our core geographies is a key target for Santander, and the Webster acquisition gets us there," Ana Botín, group executive chair, said Tuesday during a call with analysts. "Webster provides this final step change that we needed in the U.S."
The deal, which is expected to close during the second half of 2026, pending U.S. and European regulatory approval and a thumbs-up from shareholders of both banks, is the largest U.S. bank merger or acquisition by assets and by deal value since 2021.
It also marks the first time in several years that a European bank has agreed to acquire a U.S. bank. To the extent that European banks had been competing stateside, they have mostly retreated from the ultra-competitive U.S. retail market in recent years.
The $84 billion-asset Webster, which is based in Stamford, Connecticut, has long been on Santander's wish list as a way to improve the bank's scale in the U.S., according to a person familiar with the bank's thinking.
For starters, Webster offers Santander a way to diversify its loan portfolio, which has been dominated by consumer finance loans. Webster's loan book has a strong lineup of commercial-and-industrial and commercial real estate loans.
Webster also brings to the table a stable source of low-cost deposits from a combination of sources, including a consumer bank, a commercial bank, health-savings accounts and deposits that are affiliated with medical insurance claim settlements. The bank operates about 195 branches, mostly in Connecticut, but also in Long Island, Massachusetts and Rhode Island.
The deal fills a geographic gap for Santander, whose branches are concentrated in the greater Boston market as well as the metro New York City market and eastern Pennsylvania.
"There are some nice geographic synergies," David Smith, an analyst at Truist Securities, told American Banker on Wednesday. The combined footprint "is a little bit more contiguous," he said.
Christiana Riley, who has been Santander's U.S. country head for the past year, will remain in that role. John Ciulla, Webster's chairman and CEO, will become CEO of Santander Bank N.A. Luis Massiani, Webster's president and chief operating officer, will serve as COO of Santander Holdings USA and Santander Bank N.A., and he will also lead the integration efforts.
The $12.3 billion price tag will be paid 65% in cash and 35% in stock. Santander expects to realize $800 million in total cost savings, including $480 million in "headquarters efficiencies and branch optimization," along with $280 million in technology and operations savings and $35 million in "other initiatives," Botín told analysts.
Santander's return on tangible equity in the U.S. is expected to increase to 18% by 2028, the bank said, up from 10% for all of 2025. The deal should deliver earnings per share accretion of 7%-8% by the same year.
Analysts spent Tuesday night and Wednesday morning digesting the details of the transaction, which will make Santander the second-largest foreign-owned retail and commercial bank in the U.S., following TD Bank.
Its combined U.S. operations — which include the auto loan originator, Santander Consumer; the retail-focused Santander Bank, which houses Openbank, its two-and-a-half year-old digital bank; and Santander Capital Markets — currently have $243 billion of assets, the bank said.
Post-acquisition, Santander will have about $327 billion of assets, making it larger than two of its Northeast regional rivals. Citizens Financial Group in Providence, Rhode Island, had $226.4 billion of assets as of Dec. 31. Buffalo, New York's M&T Bank, which made a splash in Connecticut when it bought People's United Financial in 2022, had $212.9 billion of assets at the end of 2025.
In a research note Wednesday, analysts at Morningstar DBRS said the Webster deal is "a new sign that Santander is in a major expansion cycle." In July, Santander said it would acquire TSB Banking Group, a retail bank in the United Kingdom, in a bid to strengthen its position in that market.
"We view this deal as a major strategic step in Santander's long-term ambition to strengthen its U.S. footprint, a push that accelerated after the launch of Openbank in October 2024," the Morningstar DBRS analysts wrote. "It also highlights Santander's divergent strategy, as many European peers have been retreating from North America."
The list of European banks doing business in the U.S. has shrunk in recent years. Banco Bilbao Vizcaya Argentaria in Spain sold much of its U.S. presence to PNC Financial Services Group in Pittsburgh. HSBC Holdings in London sold most of its U.S. retail business to Citizens. And BNP Paribas in Paris sold a U.S. bank subsidiary to Bank of Montreal.
Santander is funding its expansions in the U.S. and the U.K. in part by redeploying the proceeds it has realized through the recent sale of its Polish subsidiary, Santander Polska, Botín said on the call. The Webster acquisition represents about 4% of Banco Santander's total assets, she added.
The tie-up between Santander and Webster appeared to catch some analysts off-guard.
In a research note, David Chiaverini, an analyst at Jefferies, said he was "somewhat surprised to see Santander step in here," considering that it hasn't done an M&A deal in the U.S. since 2009. That's when Santander bought the remaining stake in Philadelphia-based Sovereign Bank.
"We believe this move may signal renewed interest from foreign institutions looking to build scale in the U.S. under a more favorable regulatory backdrop for bank M&A," Chiaverini wrote.
The anticipated timeline to close the deal, which could be five to 11 months from now, based on Santander's estimates, is longer than the amount of time other bank M&A deals have taken to close during the second Trump administration. For example, Fifth Third Bancorp's Feb. 1 acquisition of Comerica took less than four months to be finalized.
"One wrinkle for me is that the overall regulatory environment seems to be becoming more accepting of M&A," Smith said. "But given everything that's going on geopolitically, will U.S. regulators love a European bank acquiring a U.S. bank?"
Still, "Webster is pretty small in the grand scheme of things and also, Santander is already a very big U.S. bank," he added.
One point analysts seem to agree on: Bank M&A, which picked up speed in the second half of last year, will continue to accelerate this year. The biggest challenge will likely be the potential for negative stock-price reactions, which played out in the aftermath of certain M&A deals in 2025, including the merger of equals between Pinnacle Financial Partners and Synovus Financial.
Santander's stock fell by as much as 6% Tuesday afternoon after the deal was reported. By late Wednesday afternoon, it had somewhat recovered and ended the day up about 2%.
"To the extent that you can find a deal that's less dilutive or has a faster earnback, it seems like [those are] being better received" by the market, Smith said. "It's just a question of how much do 'day one' reactions dissuade some deals [from getting done] when there are longer-term benefits for the bank and shareholders."
