Santander's latest move in the UK car loan scandal has sparked a heated debate, with the bank accusing the City watchdog of overreach. The Spanish lender's bill for the scandal has now topped £461 million, while simultaneously announcing a $12 billion takeover of an American bank, Webster Bank. This dual announcement has raised eyebrows, especially with the bank's criticism of the Financial Conduct Authority's (FCA) compensation scheme.
Santander UK had initially expressed concerns over the FCA's £11 billion redress scheme, which aimed to resolve the escalating motor finance scandal. The bank's latest move involves setting aside an additional £183 million to compensate drivers overcharged through unfair commission practices between lenders and car dealers. However, Santander argues that the FCA's proposals go too far, extending beyond simply reversing financial harm caused by unfair relationships.
The bank's UK boss, Mike Regnier, has previously urged the government to intervene, warning that the current proposals could cause significant harm to consumers, jobs, and the economy. This concern led to Santander cancelling a quarterly results update last October due to uncertainties surrounding the redress scheme. Despite these challenges, Santander UK reported a 14% rise in annual pre-tax profit for 2025, reaching £1.5 billion.
The Spanish parent company, Banco Santander, also announced a 12% increase in net profit for 2025, reaching a record €14.1 billion (£12.1 billion). These positive financial results came shortly after the announcement of the Webster Bank takeover, valued at $12.2 billion. The deal will create a significant player in the US market, with Santander gaining a US balance sheet of $327 billion in assets, $185 billion in loans, and $172 billion in deposits.
However, investors were less enthusiastic, causing a 3% drop in Spanish shares on Wednesday morning. The Webster acquisition is the latest in a series of Santander's Anglo market acquisitions, including the July takeover of UK high street lender TSB from Sabadell for £2.6 billion. This move will position Santander as the third-largest UK bank in terms of personal current account deposits, behind Lloyds and NatWest.
As analysts and industry experts await further developments, the question remains: will Santander successfully integrate TSB, strip out duplicate roles and branches, and potentially phase out the 215-year-old TSB brand? The outcome of these strategic decisions will significantly impact the bank's future in the UK and its global expansion plans.
