By Carola Saldias Castillo, Financial Institutions

From a group perspective, the acquisition is not transformational. Webster’s assets represent only 4% of the Santander Group on a proforma basis, but it is more relevant in terms of revenue contribution, particularly as it will strengthen the stake of the US as a core market, from 11% of the group’s net profit (pro-forma Scope Ratings, using YE 2025 data) to closer to 16%. Around one-third of the group’s bottom-line will still come from emerging markets (Mexico, Brazil, Chile, Argentina).

Santander’s geographic diversification and strong, highly predictable earnings capacity are key credit strengths underpinning Scope’s AA-/Stable issuer rating.

The addition of Webster Bank’s deposits will allow Santander to double its deposit market share in the North-East region of the US to 8%. Santander’s US operations are small in terms of total loans (USD 128bn), but its combination with Webster will increase the loan portfolio by 70%.

There is a clear similarity between this transaction and Santander’s acquisition of TSB Bank in the UK, allowing Santander to upscale its operations in very competitive and complex, though very profitable markets. However, the smooth execution of both transactions is yet to be seen.
 

Expected synergies support ambitious profitability targets

Santander expects significant cost synergies to materialise through 2028, despite a relatively limited branch overlap. Total cost synergies of roughly USD 800m, stemming primarily from corporate efficiencies, IT and overheads, correspond to around 19% of the proforma combined cost base. In addition, Santander states that it has identified at least USD 100m for balance-sheet optimisation, allowing for a target efficiency ratio of 40%, down from a pro-forma 48% considering both entities (Santander US and Webster).

The transaction is expected to yield a return on tangible equity for the combined entities of 18%, up from 10%, as the increase in scale finally gives Santander the upside to align the performance of its US operation to the group target levels of >20% by 2028. However, the highly competitive banking sector in the US adds view some challenges on the delivery of those profitability targets.

Loan portfolio mix improves but material CRE exposure changes risk profile of the US operation

We view the high concentration of Webster’s loan portfolio in commercial real estate (CRE) with caution, as it represents almost 40% of the total loan portfolio as of YE 2025. On a pro-forma basis, that becomes 21% in combination with Santander US.

As a sensitive sector of the economy, this portfolio could be subject to asset-quality deterioration under a volatile economic scenario, generating higher-than-expected losses, and eventually eroding the expectation for improvements in baseline profitability of this transaction.

Nevertheless, we take comfort from the fact that at aggregate level, CRE exposure remains limited, and that Webster’s asset-quality track record has proven to be of adequate quality.

Impact on capital reflects active optimisation strategy and focus on M&A to drive RWA growth.

The anticipated capital impact of 140bp is manageable in the context of Santander’s organic capital generation capacity (c. 200bp in 2025 net of RWA growth and gross of distributions and model impacts). The excess capital generated by recent sale of the operation in Poland provides 95bp of buffer to absorb the effect of the acquisition.

Barring unexpected earnings surprises, and assuming continuity in the group’s capital distribution policy of 50%, the group’s CET1 ratio will fall from the current 13.5% to 12.8% post-acquisition, still at the high end of its 12%-13% CET1 ratio target range, and an adequate distance from its 2026 regulatory requirement of 9.85%.

Despite the worsening of US/EU financial markets co-operation and policy unpredictability under the current US administration, we note that Santander is showing strong appetite to deploy additional capital in the US, a very competitive, though profitable market.

See also: Scope downgrades the United States of America’s credit ratings to AA- and revises Outlooks to Stable.