Santander Holdings USA has restated a few financial disclosures after finding a “material weakness” in the accounting at its recently absorbed consumer lending arm, which led to the misclassification of some cash flows.
The U.S. subsidiary of Spain’s Banco Santander said Thursday in a
The error involves the misclassification of cash flows by Santander Consumer USA, which specializes in subprime auto lending. Cash flows from held-for-sale loans were misclassified as an investment activity rather than an operating activity, according to the securities filing.
The error did not affect the total amount of cash flows the company reported. But it overstated the company’s investing activity cash flows by about $800 million through the first three quarters of last year, and it understated its operating activity cash flows by the same amount.
“In connection with the restatements, management has determined that a material weakness exists in the Company’s internal control over financial reporting with respect to the classification” of those cash flows, Santander Holdings said in a securities filing.
Santander Holdings’ CEO and chief financial officer have concluded that the company’s “disclosure controls and procedures and internal control over financial reporting were not effective” in the relevant time period, the filing said.
The Spanish bank’s U.S. holding company, which was long the majority shareholder of Santander Consumer USA, recently completed
Given the size of the errors that Santander Holdings reported on Thursday, the company's management “concluded the errors are material to the financial statements taken as a whole” and said in its securities filing that investors should no longer rely on the consolidated financial statements it filed during the affected quarters. It has now filed amended versions of those reports.
This is not the first time that Santander Consumer has had accounting problems.
In 2016, Santander Consumer
Later in 2016, the company said that it had
