Article content
The world’s largest bank for total assets received a license for its subsidiary to operate in Canada last month, something confirmed by a notice published in the Canada Gazette, the official government newspaper, on March 29.
Article content
It is granted a bank license means that Santander Consumer Bank (SCB) can now take consumer deposits.
“The expansion of activities by banks such as SCB can provide the impetus to increase competition, which should be beneficial for Canadians in the form of more options and better prices in loans and deposits,” said Sailie Ashtekar, a senior analyst of the financial institutions of North America, the credit classifications, in Morningstar Dbrs,.
But he said that competing with the great six is ​​”easier to say it than it” since the group dominates the market.
“However, any development that adds possible new participants or initiatives that increase access to the Canadian market … are opportunities to increase competition,” he said.
Santander’s presence in Canada dates back to about 10 years, when he spent $ 300 million to buy Financial Group Carfinco Inc., based in Edmonton, which provided vehicle loans to borrowers who could not obtain financing.
The company has not revealed what its approach in Canada will be, but Ashtekar said that he believes that the most likely avenue will be “to strengthen the existing car financing franchise” by reducing financing costs by replacing funds wholesale with toughest customer deposits and then working to expand to other retail products and services.
Article content
“Any strategy must be built on the premise that the dominant positions of the Big Six will remain intact in the future,” he said. “Any strategy should be directed to specific niches, most likely focusing on the financial services of consumers/retailers, an area in which Santander has a strong reputation worldwide.”
Santander has focused on “specific niches where they feel they can compete more effectively” in the United States and Mexico, Ashtekar said in a note on March 31.
With 168 million customers worldwide, Santander has a strong presence worldwide. The company has largely achieved its objective of achieving at least one market share of 10 percent in each of its main markets outside Spain, except in the United States, according to the note.
The bank could take advantage of each of these strengths to grow in Canada, said Ashtekar.
“The bank could seek the cross sale of solutions already developed in other places that could benefit the Canadian market, such as private banking, asset management and perhaps the commercial financing of international payments.”
Recommended from the editorial
-
RBC says that winning the ‘arms race of AI’ for future growth
-
The HBC restructuring plan opposed by employees
-
Santander Bank looking at the Canadian Banking License
But the large six, which represent 95 percent of total bank assets in Canada, represents a “material entrance barrier,” Ashtekar said.
“It is common for Canadians to open their first bank account with one of the large six and remain loyal for decades,” he said. “In addition, Canadians who use multiple services and banking products are less likely to change banks.”
• Email: nkarim@postmedia.com
Mark our website and support our journalism: Do not miss the business news you need to know: Add Financiast.com to your markers and register in our bulletins here.
Share this article in your social network
