Key Takeaways:
The Federal Reserve's approval removes the last regulatory obstacle to Santander's $12.3 billion takeover of Webster Financial, a deal set to close Aug. 20 and lift the Spanish lender into the ranks of the largest U.S. banks.
Banco Santander received Federal Reserve Board approval Tuesday for its $12.3 billion acquisition of Webster Financial, clearing the final regulatory hurdle for a transaction that will make the Madrid-based lender the 19th-largest U.S. bank with $253.6 billion in combined assets, according to the Fed.
"Santander US and Webster are a perfect match," Ana Botín, executive chair of Santander, said. "This combination will strengthen our position in one of the world's most attractive banking markets and put us firmly on track to build one of the highest-performing banks among our U.S. peers."
The Fed's sign-off followed approval from the Office of the Comptroller of the Currency on June 12 and authorization from the European Central Bank on July 21. The transaction is now expected to close Aug. 20, roughly five months after the deal was first announced in February. Webster shareholders approved the acquisition in May, according to a securities filing.
Once integrated, Santander expects its U.S. business to reach a return on tangible equity of about 18 percent by 2028, with 7-8 percent earnings-per-share accretion and an estimated 15 percent return on invested capital. The deal is the largest U.S. bank merger announced so far this year.
The acquisition caps a two-decade push by Santander to build scale in the United States. The bank entered the market in 2006 with a 20 percent stake in Sovereign Bank, acquired the rest of Philadelphia-based Sovereign in 2009, and renamed it Santander Bank in 2013, operating across nine Northeastern states. Botín has described the Webster addition as "a final step change" for U.S. growth after years of trying to gain scale and profitability.
Webster, founded in 1935 and headquartered in Stamford, Connecticut, brings roughly $86 billion in assets and about 195 branches across Connecticut, New York, Massachusetts and Rhode Island. The combination diversifies Santander's U.S. loan book, which has historically been weighted toward consumer finance, by adding commercial-and-industrial and commercial real estate lending. Webster's deposit base — spanning its consumer bank, commercial bank and health savings accounts business — provides a stable source of low-cost funding.
The deal also signals regulatory openness to cross-border bank consolidation during the second Trump administration, though the path was not without friction. President Trump threatened to cut off trade with Spain earlier this year after Madrid declined to allow U.S. airfields to be used for strikes on Iran; trade between the two countries has continued uninterrupted since the start of the Iran war. During its review, the Fed received two negative comments from one person raising concerns about potential branch closures and reduced access to lending, according to the Fed's approval notification.
Santander, founded in 1857, reported €1.5 trillion in total funds as of June 30, with more than 182 million customers, 6,500 branches and 185,000 employees. Webster shares fell 2.99 percent to $65.00 on Tuesday, while Santander's Madrid-listed stock slipped 0.11 percent to €12.506. Upon closing, most of Webster's businesses will become part of Santander Bank, N.A., and the two companies will continue to operate independently until then, with customers told no action is required.
This article is for informational purposes only and does not constitute investment advice.
