Santander UK: A Bank in Transition and Turmoil

Santander UK is going through a period of significant change. The bank has been facing challenges with its IT systems, with a major outage in 2019 affecting over 100,000 customers.

The bank's IT issues are not the only concern, as Santander UK has also been criticized for its treatment of customers and staff. In 2020, the bank was fined £43 million for failing to protect customers from financial scams.

Santander UK's parent company, Santander Group, has been working to address these issues and improve the bank's services. The bank has invested heavily in digital transformation, with a focus on improving its online and mobile banking platforms.

Santander UK's history began with three constituent companies: Abbey National, Alliance & Leicester, and Bradford & Bingley, all former mutual building societies. These companies were eventually purchased by the Santander Group.

Abbey National was bought by Santander in July 2004 for £9 billion, and Alliance & Leicester was purchased in September 2008. The branches and savings business of Bradford & Bingley, which had been nationalised by HM Government, were also acquired by Santander.

The bank was rebranded as Santander on 11 January 2010, with Formula One driver Lewis Hamilton unveiling the first rebranded branch in central London. By the end of the month, there were 1,045 Santander branches across the UK.

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Santander UK has a fascinating history, and it all began with three constituent companies: Abbey National, Alliance & Leicester, and Bradford & Bingley, all former mutual building societies.

These companies were bought out by the Santander Group in a series of deals, with Abbey National being acquired in July 2004 for £9 billion.

The Santander Group then purchased Alliance & Leicester in September 2008, followed by the branches and savings business of Bradford & Bingley, which had been nationalized by the government.

The rebranding process was a massive undertaking, with Abbey National and the savings business and branches of Bradford & Bingley being rebranded as Santander on January 11, 2010.

That day, Formula One driver Lewis Hamilton unveiled the first rebranded Santander branch in central London, marking a significant milestone in the bank's history.

By the end of January 2010, there were 1,045 Santander branches across the UK, with many more following in the coming weeks.

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In 2012, the bank began to reduce the number of duplicate branches, identifying 56 that would close, and relocating staff to nearby branches.

Here's a list of some of the notable branch closures:

Santander UK has been through some significant changes in recent years. In 2010, the bank sold its investment and asset management business James Hay to IFG Group for £35 million.

The bank had its sights set on expanding its branch network, with plans to purchase Royal Bank of Scotland branches in England and Wales, and NatWest branches in Scotland. However, the deal collapsed in 2012.

Santander had a reputation for poor customer service, but in 2011, the bank took steps to improve by bringing its call centre operations back to the UK from India. This move was a positive step towards better serving its customers.

The bank also faced a major issue with the misselling of payment protection insurance (PPI), setting aside £538m to cover customer claims in 2011.

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There were also plans to go public, with an initial public offering (IPO) considered in 2014. However, the bank's chief executive stated that an IPO wouldn't happen until market conditions improved.

The bank has continued to downsize its branch network, announcing plans to shut 140 branches in 2019 and a further 111 by August 2021. This has reduced the size of its branch network to 614.

In 2021 and 2022, Santander outsourced the majority of its back office administration to Genpact in India.

Santander UK offers a wide range of personal, business, and corporate accounts, including current accounts, mortgages, credit products, and savings and investments.

The bank operates online banking services, including mobile apps, and has an internet-only banking division called Cahoot.

Santander's Corporate and Commercial Banking division operates from several regional business banking centres across the UK.

In 2013, Ana Botin announced plans to double the number of these centres to 70 within three years.

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Santander UK is authorised by the Prudential Regulation Authority and regulated by both the Financial Conduct Authority and the Prudential Regulation Authority.

The bank is a member of the Financial Services Compensation Scheme and the UK Payments Administration.

Six-digit account sort codes are used in the range between 09-00-xx to 09-19-xx.

Some accounts formerly held by Alliance & Leicester have sort codes in the range 09-01-31 to 09-01-36.

In 2009, Santander launched the first current account in the UK without fees, including unauthorised overdrafts, for its current and future mortgage customers.

The bank also waives fees for customers using its automated teller machines in Spain.

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Santander UK has a strong presence in the world of sports and entertainment through its sponsorships and brand ambassadors.

The bank has sponsored the McLaren Formula One team since 2007, significantly increasing its brand awareness in the United Kingdom from 20 to 82 percent.

In 2009, Santander announced a second team sponsorship with Scuderia Ferrari.

Rory McIlroy signed a sponsorship agreement with Santander in September 2011, and Jessica Ennis-Hill became a brand ambassador in February 2013.

TV presenters Ant & Dec joined Santander as brand ambassadors in June 2019, appearing in their television advertising campaigns.

Santander also sponsors bicycle hire schemes in several UK cities, including London, Leicester, and Milton Keynes.

Santander UK was fined £107.7 million by the FCA for repeated anti-money laundering failures.

Between 2012 and 2017, Santander failed to properly oversee and manage its anti-money laundering systems, affecting over 560,000 business customers.

The bank's systems were ineffective in verifying customer information, and it failed to monitor the money going through accounts accurately.

A new customer opened an account with expected monthly deposits of £5,000, but within six months, it was receiving millions in deposits and transferring the money to separate accounts.

The account was recommended for closure by the bank's own AML team in 2014, but it wasn't closed until 2015, and even then, it was due to the FCA's intervention.

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Santander agreed to keep the account open in 2015, but it failed to track this request, leaving the account open until the FCA wrote to the bank in 2016.

The FCA identified several other accounts that Santander failed to manage correctly, leading to over £298 million passing through the bank before the accounts were closed.

Santander knew about the weaknesses in its AML systems and began improving them in 2013, but it wasn't until 2017 that it decided to implement a comprehensive restructuring of its processes and systems.

The bank has not disputed the FCA's findings and has agreed to settle, resulting in a 30% discount on the fine.

Santander UK has consistently delivered strong financial performance, with a net profit of £1.2 billion in 2020. This impressive figure is a testament to the bank's ability to adapt to a rapidly changing market.

The bank's revenue has been steadily increasing over the years, reaching £6.2 billion in 2020. This growth is driven by a combination of factors, including a strong customer base and a diversified range of products and services.

Santander UK's financial performance is also reflected in its return on equity, which stood at 12.1% in 2020. This is a significant improvement from 2019, when the bank's return on equity was 9.5%.

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Santander UK's profits plummeted in its third quarter, with pre-tax profits of £143 million, down nearly 75% from £558 million a year earlier.

The bank took a £295 million hit following a major court decision on car finance commission.

This hit was largely due to a Court of Appeal ruling that set a precedent for the wider motor finance industry, ruling that dealers receiving commission from lenders must ensure their customers are fully informed about the arrangement.

Santander UK's mortgage lending had slumped by £5.5 billion since December last year, and customer deposits have reduced by £7.9 billion in the first nine months of 2024.

The bank cut rates on savings accounts to make them less attractive, which led to a reduction in customer deposits.

Santander UK has indicated it will continue to prioritize profitability and its core banking franchise, which may result in lower mortgage lending and customer deposits in 2024.

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Santander UK made a staggering US$175 million in mistaken payments to tens of thousands of people on Christmas Day.

The bank accidentally paid out money that was meant for corporate clients, including their suppliers and employees.

About 75,000 people received the mistaken payments, including customers of rival banks like Barclays, HSBC, and Virgin Money.

The duplicate payments were made because of a technical issue, not because of any fault on the part of the bank's customers.

Santander UK is working with other banks to recover the money, and is also using its own processes to retrieve the funds.

It's not clear how the banks will deal with customers who have already spent the money, but it's likely that they will have to return it.

This is a rare but costly mistake for the bank and its customers, as we saw in the case of a 911 dispatcher who was arrested for buying a house and SUV with US$1.2 million that was accidentally deposited in her account.

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