Asset Finance Market
Santander closes the curtains on its UK asset finance business
Santander UK has recently revealed it will be ceasing operations in the new asset finance market from the end of 2019. Chris Lemmon explores the reasons why…
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According to reports, low interest rates, UK regulation and Santander’s position behind the ‘Big Four’ – HSBC, Barclays, Lloyds and Royal Bank of Scotland – were the main drivers in the decision to wind down the business’s £800m asset finance arm. Following the disbanding of the division, the bank will look to divert its resources to other areas of the business.
No new customers will be taken on from January 2020, while existing customers will remain on the books until the collection of their debts has been concluded.
Tim Hinton, head of corporate and commercial banking at Santander, said that the banking industry is changing at a rapid pace. “To ensure that we can continue to grow and improve our business and meet more needs for our core customers, we made some changes to our operating structure and focus earlier this year.”
In April earlier this year, Santander announced that it would be making £1bn (€1.2bn) of cost cuts across its global operations in an effort to achieve its profitability targets. The announcement meant the writing was on the wall for 1,150 retail banking branches and more than 3,700 jobs. Britain has faced the brunt of the cuts, with the country accounting for a tenth of Santander’s €1bn of savings from the European business.
The lender then said that the restructure would affect its corporate and commercial banking division, with the report stating it would consult 330 staff about redundancy while creating 130 new roles.
The announcement follows the news earlier this year that Barclays Partner Finance would be withdrawing from the motor finance market, following an internal strategic review.
In a statement, Barclays Partner Finance said: “Barclays Partner Finance is currently number one in UK retail point of sale and has a vision to continue to lead this market through continued investment in new capabilities and innovation to grow.
“After a strategic review of its Motor Portfolio, Barclays Partner Finance has made a commercial decision to reduce its focus on Motor Point of Sale Finance.
“Given this outcome, the business will no longer invest in the Motor Portfolio as a growth area and will shortly cease to originate new business in this segment. We will continue to support colleagues as we work through this transition.”
It is clear that it is a tough market out there for businesses, with high-profile industry participants playing it safe at a time of economic uncertainty. Whether conditions improve or worsen once Brexit is finally behind us remains to be seen, but in the meantime I wouldn’t be surprised if we saw more companies reign in their operations.