Exclusive: Santander to double SME market share

Robyn Hall

May 14, 2013

Speaking to Mortgage Introducer, Marcelino Castrillo, corporate and commercial managing director, said the bank is sitting on £2bn of capital from the abandoned purchase which has been set aside to fund organic growth some of which will be used to grow the corporate and commercial business.

He said: “We have been established now for four years and growing healthily. We have around a 5% share of the commercial market and we want to increase this to 10% in the next three to four years, this is our aspiration.

“There is a big appetite to continue growing as we have.”

Castrillo said that its main route to market for commercial lending is through its own business bankers which it has been investing “heavily” in and it will continue to use this channel for the majority of its commercial distribution.

But he added that intermediaries will play an important role.

He said: “Santander Corporate and Commercial is a small bank and our distribution network does not allow us to reach as many companies as we would like to. For that reason we do use an introducer network.

“We have used it in the past and we will continue to do so going forward. We use a panel and we have a select group of introducers that we have a strong relationship with and which understand our risk appetite. We will continue to work this way as we gear up to lend more in this sector.”

Santander UK received a capital injection from the group in late 2009 to acquire 316 RBS branches in England and Wales as well as NatWest branches in Scotland. Business and commercial customers attached to these branches would have been transferred to Santander along with the personal and private bank accounts.

Free to lend this money out to its customers, Castrillo said the corporate and commercial bank has mapped out its plans for growth.

Castrillo said: “We are going to double the size of our business which means that we will double the amount of our business centres that we have across the country and that will translate into almost doubling the amount of people we have in our front office and again that will have an implication in the introducer channel and how we gear that up as well. For me the introducer channel is a very nice complement to the business we have but we will always work with a select group of intermediaries which understand us.”

Adam Tyler, chief executive of the National Association of Commercial Finance Brokers, said: “At the NACFB we enthusiastically welcome Santander’s announcement. There’s a great deal of demand among UK SMEs for more freely available lending, especially for smaller loans below the £100,000 level.

“We strongly feel that the extra Santander money is lent through the right sort of broker, and NACFB members are the ones who are regulated, who abide by an industry-recognised code of practice, who complete regular up-to-date training and who have proven experience in the commercial market. Santander is a long-standing patron of the NACFB and we feel sure they will continue to support our brokers and, through them, SMEs around the country.”

Lucy Hodge, director of Vantage Finance, said: “Commercial lenders do prefer to use specialist commercial brokers rather than opening up distribution to the whole of market because otherwise they will get inundated with applications which may not make sense. So Santander’s strategy is quite natural. One would hope that within that strategy it will look to continue to build relationships with introducers.

“But this is absolutely an encouraging sign. Commercial finance has been area which has been underserved for some time now. There are specialist lenders in the market place which have really helped but to see some of the a high street lender come back into the market will improve competition, it is a very positive step.”

In April, the Bank of England extended the Funding for Lending Scheme so that it would run until 2015 instead of 2014 and one of its new objectives was to target lending to SMEs. In an attempt to encourage lenders to channel more of their funds towards commercial lending the Bank decided to increase the incentive for banks to lend to SMEs both this year and next.

Castrillo added: “We have participated in the Funding for Lending Scheme so far. We are definitely looking at the second part of the scheme and effectively we will be growing SME lending by around 10% per annum over the last few years so this change puts us in a good place in terms of taking advantage of this scheme, so this is definitely something that we are looking at.”

Sign up to our daily email