- Key insight: Banco Santander's pending acquisition of the Northeast regional bank Webster Financial is one leg of the Spanish bank's plan to boost U.S. profitability, executives said Wednesday.
- What's at stake: Santander laid out new financial targets, including a U.S. return on tangible equity goal of 18% by 2028.
- Forward look: The proposed acquisition of Webster is expected to close during the second half of this year.
Executives at Spain's Banco Santander are confident in their ability to improve profitability in the United States, saying that the pending acquisition of a Northeast regional bank will boost returns, even as other European banks have retreated from the U.S.'s competitive retail market.
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At an investor day Wednesday in London, the banking giant laid out its new financial targets, including a goal to improve its return on tangible equity in the U.S. to 18% by 2028, up from 10% last year.
Part of the strategy involves the successful acquisition and integration of Webster Financial in Stamford, Connecticut, Santander executives said. The pending $12.3 billion deal, announced earlier this month, marks the first time in years that a European-based bank has agreed to buy a U.S. bank.
It is also the largest bank M&A deal announced so far in 2026, and it is one of the largest deals in the past five years. The combined entity is expected to have approximately $327 billion of assets.
One analyst at Wednesday's meeting expressed skepticism about Santander's plan, saying the integration of U.S. assets into European banks "has been a graveyard over the last 25 years." Santander is one of the only European banks that's still operating a U.S. retail business.
Ana Botín, Santander's executive chair, countered by saying that Webster is "a fantastic bank" with "best-in-class profitability."
"This time it's different, and we are going to deliver the goods," Botín said.
She also pointed out that Webster has prior experience in managing successful integrations. In 2022, the $84 billion-asset Webster completed a merger of equals with Sterling Bancorp in New York, a transaction that was designed to build scale in a slower-growth part of the country.
Christiana Riley, Santander's U.S. country head for the past year, said Wednesday that the bank is "building on significant momentum in the U.S. business already," and that it has more than one lever to pull to increase profitability, including a ramp-up in fees from corporate and investment banking.
Fees in that segment have increased 30% in the past two years, Riley told analysts at the meeting. The bank is also combining its auto-lending platform with its deposit-taking platform, a move that should help increase profitability by reducing redundancies, she added.
At least one analyst expects the acquisition, which still needs approval from U.S. and European regulators as well as shareholders of both banks, to be successful overall. Santander is already familiar with the U.S. banking market, and its size and scale mean that it has the necessary technology to support a solid integration, said María Parra, an analyst at Morningstar DBRS.
"They are completely changing the game in the U.S. to position them to be one of the best retail and commercial banks in terms of profitability and market share," Parra told American Banker.
The deal has been expected to close during the second half of this year. On Wednesday, Botín narrowed the window by saying the bank is estimating a closing date during the third quarter.
Santander, which entered the U.S. in 2005 by buying a partial stake in Sovereign Bank in Philadelphia, has been trying to boost its stateside profitability for the past several years. It has been known in the U.S. as a consumer-finance lender, as evidenced by its sizable auto-lending portfolio, which historically has been funded by higher-cost, less-sticky wholesale deposits.
In October 2024, Santander launched a nationwide digital bank in the U.S. to collect low-cost deposits. A year later, the platform known as Openbank had attracted more than $6 billion of customer funds.
But Santander has struggled in recent years with profitability in the U.S. In 2023, its return on tangible equity adjusted for certain capital costs was 6%, it said Wednesday. For all of 2025, the same metric was 10%.
The proposed acquisition of Webster offers a major step-up in the quality and diversity of Santander's U.S. deposits. Webster has 195 branches, mostly in Connecticut but also in Massachusetts, New York and Rhode Island, and an array of deposit sources, including a consumer bank, a commercial bank, health-savings accounts and deposits affiliated with medical insurance claim settlements.
The deal should result in $800 million in cost savings, Santander executives reiterated Wednesday. About one-third of the total is expected to come from technology and operations, another one-third from office consolidations, and the remaining one-third from retail and commercial overlap, Riley said.
The $800 million includes cost reductions at both banks, Riley said. Santander, which bills itself as "a digital bank with branches," has not mentioned any specific post-acquisition branch closures.
One of the deal's main risks is being able to realize the $800 million in cost savings, Parra said.
"But I think they are pretty committed to this," Parra said. "They're not expecting to do any big M&A in the next few years, so as long as they remain focused … I think they will deliver here."
John Ciulla, Webster's chairman and CEO, appeared virtually Wednesday to talk about the pending acquisition. Ciulla is set to become CEO of Santander Bank N.A., while Luis Massiani, Webster's president and chief operating officer, will serve as COO of Santander Holdings USA and Santander Bank N.A. Massiani is also on deck to lead the integration efforts.
"We are confident in our ability to deliver the promised financial metrics of the combined company," Ciulla told the audience. "We're really excited about the scale and the technology that Santander brings to the combined [entity], and we think there are really opportunities to do things not only more efficiently, but more effectively to deliver products and services to our clients."
