Santander’s €60 Billion in Asset Shifts Is Set to Slow Next Year

Bloomberg2024-12-19

(Bloomberg) -- Banco Santander SA, one of Europe’s most active sellers of bank risks and assets, is setting a lower bar for next year, as the competition to win investors such as private credit giants...

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That’s likely to drop to 40 billion in 2025, Gamez said in an interview at the lender’s headquarters in Madrid.As explanation, Gamez referred to comments from his boss, Chief Financial Officer Jose Garcia Cantera, who said in an analyst meeting earlier this month that the lower figure would be more sustainable.Santander’s ability to increase its capital levels was previously “our biggest issue” with the stock, Morgan Stanley analysts including Alvaro Serrano and Giulia Aurora M","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0106831901.USD":"贝莱德世界金融基金A2","LU0795875086.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","BK4581":"高盛持仓","LU0158827948.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"A\" (USD) INC","LU0106261372.USD":"SCHRODER ISF US LARGE CAP \"A\" ACC","LU1548497426.USD":"安联环球人工智能AT Acc","LU2089284900.SGD":"Allianz Global Sustainability Cl AM Dis H2-SGD","LU0225283273.USD":"SCHRODER ISF GLOBAL EQUITY ALPHA \"A\" (USD) ACC","LU2089283258.USD":"安联环球可持续基金Cl AM Dis","BK4516":"特朗普概念","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU2111349929.HKD":"ALLIANZ GLOBAL SUSTAINABILITY \"AM\" (HKD) INC","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","BK4585":"ETF&股票定投概念","LU0795875169.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD-H","SAN":"桑坦德银行","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","BK4534":"瑞士信贷持仓","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1732799900.SGD":"JPMorgan Investment Funds - Global Income A (irc) SGD-H","BSBR":"桑坦德巴西分行","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU2023251221.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"AM\" (USD) INC","LU2271345857.HKD":"ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (HKD) ACC","BSAC":"桑坦德银行智利","LU0912757837.SGD":"JPMorgan Investment Funds - Global Income A (mth) SGD-H","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU1732800096.USD":"摩根大通环球收益基金A (irc)","BK4588":"碎股","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","LU2347655156.SGD":"JPMorgan Investment Funds - Global Income A (icdiv) SGD-H","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","LU0971096721.USD":"富达环球金融服务 A","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","BK4207":"综合性银行","LU2028103732.USD":"ALLIANZ GLOBAL SUSTAINABILITY \"AMG\" (USD) INC","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","LU0158827781.USD":" ALLIANZ GLOBAL SUSTAINABILITY \"AT\" (USD) ACC","BK4127":"投资银行业与经纪业","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4504":"桥水持仓","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD"},"translate_title":"桑坦德银行600亿欧元的资产转移明年将放缓","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SAN":0.9,"BSAC":0.9,"BSBR":0.9},"content_text":"(Bloomberg) -- Banco Santander SA, one of Europe’s most active sellers of bank risks and assets, is setting a lower bar for next year, as the competition to win investors such as private credit giants Apollo Global Management Inc. and Blackstone Inc. is heating up.\nStrong demand for bank assets has created a “blue-sky scenario” that’s likely to enable Spain’s largest bank to move €60 billion ($63 billion) in risk-weighted assets off its balance sheet this year, said Sergio Gamez, who runs the Global Asset Desk unit overseeing the effort. That’s likely to drop to €40 billion in 2025, Gamez said in an interview at the lender’s headquarters in Madrid.\nAs explanation, Gamez referred to comments from his boss, Chief Financial Officer Jose Garcia Cantera, who said in an analyst meeting earlier this month that the lower figure would be more sustainable.\nGamez’ GAD unit is at the center of a program, known as balance sheet rotation or asset mobilization, that has turned Santander into a prolific seller of bank assets and credit risk. As part of the effort, it’s been making heavy use of significant risk transfers, which allow banks to free up capital used to back up loans by paying investors to take on some of the credit risk. \nBut Santander faces rising competition from other banks seeking to shed assets and risks. SRTs in particular have surged in popularity, with S&P Global Ratings saying that’s likely to make pricing less favorable for issuing banks. \nWhile Santander has long used asset sales and SRTs to manage its balance sheet, the more centralized approach to the deals under the GAD unit has helped focus the program, Gamez said. He can now use securitizations across jurisdictions and loan types. \nGamez got a new mandate to speed up the asset rotation in mid-2023. He has created a team of around 50 people that includes staff around the world. \nThese so-called capital relief trades are set to help Santander increase its pretax profit by as much as €800 million this year, Cantera said in the analyst meeting earlier this month, according to a note from Barclays Plc analysts.\nBelow Peers\nAs with so much else in banking, capital relief trades are driven by regulation. Banks are required to hold risk-dependent levels of capital to backstop assets such as loans, which can render them unattractive if they yield too little. Selling those loans or the attached risk to investors that are outside the banking sector — and its rules — tends to free up capital for new investments at higher returns.\nThe deals are seen as key for Santander, which has long had a capital level below many of its peers. While analysts have said that this situation constrains the lender’s ability to make strategic decisions such as acquisitions, they also expect that gap to narrow in the future.\nSantander’s ability to increase its capital levels was previously “our biggest issue” with the stock, Morgan Stanley analysts including Alvaro Serrano and Giulia Aurora Miotto said in a note last month. But there’s now an improved outlook for the lender, partly thanks to its use of SRTs, they said.\nAs part of its asset mobilization effort, Santander is currently seeking to offload €150 million ($158 million) worth of mortgages to KKR & Co., people familiar with the matter said. It’s also close to agreeing a sale of €900 million in similar loans to Morgan Stanley, Bloomberg has reported. \nRepresentatives for Santander and KKR declined to comment on the previously unreported transaction.\nSantander is also partnering with large credit investment firms that take on some of the loans originated by the Spanish lender, but don’t face the same level of regulation since they don’t take deposits.\nRamping Up\nRecent examples are two separate deals that saw Blackstone Inc. and Apollo Global Management Inc. each invest in infrastructure loans originated by Santander worth $1 billion and $370 million, respectively. \nThe big question is just how long the boom in investor demand that’s underpinning Santander’s asset mobilization program will last. \nMany other banks are ramping up their usage of SRTs to manage their capital and the increasing supply may eventually force the issuing banks to offer higher rates to investors. A plan by Europe’s top banking regulator, the European Central Bank, to speed up approvals may further stoke issuance. \nNew bank capital rules known as Basel endgame are set to kick in next year and could mean banks have to sell bigger risk chunks to obtain capital relief, S&P Global Ratings said in a report in November. SRT pricing “may not remain as favorable to issuers as it has been so far this year,” the firm said in the report. \nAs a result, Santander is trying to identify new ways to keep balance sheet rotation at an elevated level. Gamez is looking into so-called forward flows agreements during 2025, he said, referring to a novel partnership between banks and private credit firms in which the latter commit to finance lending that’s yet to come.  \nAnother potential headwind is intensifying regulatory scrutiny, with the International Monetary Fund recently warning of “negative feedback loops” from SRTs. Some watchdogs are taking a close look at the links between banks and the non-bank investors in their loans and risks, especially if the deals are funded by credit from other banks.\n“We generally think that securitization can be a useful instrument to move risks to the part of the financial system where they can be better borne than on banks’ balance sheets,” ECB banking supervision head Claudia Buch said earlier this week. But “we need to make sure that there is no spill-back effect on the banking sector.”\n--With assistance from Claudia Cohen, Bruce Douglas and Helene Durand.\n©2024 Bloomberg L.P.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.4","shortVersion":"4.29.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492407821"}