Confession Time for Big Banks in Europe: Banco Santander Reports $12.7 Billion Loss
Confession Time for Big Banks in Europe: Banco Santander Reports $12.7 Billion Loss
by Nick Corbishley Jul 29, 2020
Too-Big-To-Fail Santander is also one of the Eurozones worst capitalized banks.
By Nick Corbishley, for
WOLF STREET:
Banco Santander, Spains largest lender and one of the Eurozones eight global systemically important banks (G-SIBs), has posted its first ever loss in 163 years of operations. And it was gargantuan. During the first half of the year, the bank racked up a loss of 10.8 billion ($12.7 billion).
The loss was caused by heavy provisions for expected loan losses. This quarter wiped out the equivalent of one-and-a-half years of the banks global profits in 2019, it posted total global profits of 6.5 billion, and in 2018 of 7.8 billion.
The losses were the result of a 2.5 billion charge related to the recoverability of tax deferred assets as well a 10.1 billion write-down on assets across a number of key overseas markets:
In the UK: 6.1 billion write-down of goodwill amount overpaid for prior acquisitions, which included Abbey National and Alliance and Leicester. Santander already took a 1.5 billion write-down on the value of its UK business last year, blaming new regulations and the expected economic fallout from Brexit.
In the US: 2.3 billion write-down for Santander Consumer USA, which specializes in consumer lending, particularly subprime lending, and these consumer loans are now particularly at risk.
In Poland, its largest market in Eastern Europe: 1.2 billion goodwill impairments charge.
In its consumer finance division, which is present in 15 markets: 477 million hit.
Santanders shares initially reacted to the news by slumping 5.8%. They then staged a partial recovery, only to slump again, ending the day down nearly 5%. Shares are down an eye-watering 45% this year, making it one of the continents worst-performing large financial institutions. ...........(more)
https://wolfstreet.com/2020/07/29/confession-time-for-big-banks-in-europe-banco-santander-reports-12-7-billion-loss/