A Bold Bet at a New Performance High: Santander Bank(SAN.US) Invests $12 Billion to Acquire Webster(WBS.US), Aiming for a Top Ten Position in the U.S.

Santander Bank (SAN.US) has released its financial report for Q4 2025 and the full year. The report shows that driven by an improved interest rate environment and global business transformation, the bank’s net profit attributable to shareholders for the full year reached a record €14.101 billion, a 12% increase from the previous year; the bank’s total annual revenue still successfully reached a high of €623.9 billion, roughly in line with the market’s previous target guidance of €620 billion. Along with the earnings release, Santander Bank announced two “deep water bombs,” revealing plans to acquire U.S. Webster Financial (WBS.US) for $12 billion, and the board also approved a new €5 billion share repurchase program.

Santander Bank Q4 Net Profit Up 15%, Capital Adequacy Ratio Rises to a Record 13.5%

Santander Bank will hold an investor day on February 25, where it will announce new financial targets. The bank continued its explosive growth in the fourth quarter, with quarterly net profit reaching €3.764 billion, a 15% year-over-year increase, not only setting a quarterly profit record but also significantly surpassing the market analyst consensus forecast of €3.48 billion. This historic performance was mainly driven by a notable increase in customer activity worldwide and strong net fee income.

Despite pressure on net interest income in some markets, net fee income at fixed exchange rates grew by 9%, effectively smoothing profit volatility. Key financial indicators include the bank’s return on tangible equity (RoTE) rising to 16.3%, and earnings per share (EPS) soaring 17% year-over-year to €0.91.

The sustained performance growth is mainly attributed to the deepening of its “One Transformation” global operational strategy, which involves simplifying product models and increasing digital penetration. By 2025, Santander Bank successfully onboarded approximately 8 million new customers, expanding its global customer base to 180 million.

Additionally, to reward investors, the board approved a new €5 billion share repurchase plan and reaffirmed its goal of distributing at least €10 billion to shareholders between 2025 and 2026.

In terms of asset quality and capital adequacy, Santander Bank delivered its most robust results in recent years. As of December 31, 2025, the group’s non-performing loan (NPL) ratio improved further from 3.14% at the end of the previous year to 2.91%, with risk costs stable at around 1.15%. Notably, its core Tier 1 capital adequacy ratio (CET1) rose to a record high of 13.5%, well above the regulatory red line of 9.83% and significantly higher than the bank’s previous target range of 12% to 13%.

Santander Bank stated on Wednesday that its full-year goal is “to achieve mid-single-digit revenue growth and reduce costs in constant euros.” The bank also expects “profit improvement,” with the CET1 ratio at least 12.8%.

One of Europe’s Largest Bank Deals in the U.S.: Santander’s $12 Billion Acquisition of Webster

Alongside the earnings announcement, Santander Bank revealed a highly strategic expansion plan, aiming to acquire U.S. Webster Financial for approximately $12 billion. This move marks Santander’s accelerated reshaping of its North American footprint, aiming to boost its tangible equity return (RoTE) in the U.S. to over 20% by 2028 through integrating Webster’s commercial banking base with its existing consumer finance strengths.

Under the final agreement, Santander will acquire Webster Financial Group at a comprehensive price of $75 per share, comprising 65% cash and 35% stock, with the transaction expected to close in the second half of 2026. This strategic merger will create a financial giant with total assets of $3.27 trillion, directly ranking among the top ten retail and commercial banks in the U.S., and becoming one of the most systemically important financial institutions nationwide.

Moreover, this deal is one of the largest-ever transactions by a European bank in the U.S., marking Santander’s breakthrough beyond its traditional role as one of the largest auto lenders in the U.S., and focusing on expanding its presence in the country. It is also part of CEO Ana Botín’s strategy to extend the bank’s reach into growth markets while shrinking some European operations.

At Tuesday’s press conference, Botín said that without a U.S. presence, “it’s impossible to become a truly global bank.”

Morgan Stanley analysts commented that this deal will create a more balanced business structure and lower capital costs in the U.S. However, investors might react coolly—expecting instead that excess capital be used “to fund additional cost-saving measures and return to shareholders.”

Given Webster’s footprint in New York City, Massachusetts, and its headquarters in Connecticut, Santander will gain a significant market position in the Northeast U.S. According to Webster’s Q4 business overview, the bank has nearly 200 branches and assets exceeding $80 billion.

Webster also operates commercial banking services, including loans, commercial real estate financing, capital markets, and treasury management. Its website indicates that the company also offers healthcare financial services, such as operating health savings accounts.

The Webster acquisition is the third deal led by Botín since she took office less than a year ago, aimed at expanding the company’s scale in the UK and the U.S. Last April, Santander completed a key capital operation, selling a 49% stake in its Polish subsidiary to Erste Group Bank for €7 billion (about $8.3 billion), freeing up strategic capital.

Currently, Santander is steadily advancing its acquisition of UK retail lender TSB, with an exclusive agreement reached in July last year with Spain’s Sabadell Bank, partly funded by the proceeds from the aforementioned equity sale.

While the proposed $800 million cost savings plan—including $480 million from headquarters consolidation and $280 million from technology efficiencies—seems feasible, Jefferies analysts noted in a report that integrating TSB and Webster “may be quite challenging.”

Santander’s €10 Billion Acquisition to Fulfill the Unfulfilled “American Dream” of European Peers

Botín has held her current position for over 11 years, consistently focusing on strengthening Santander’s capital buffers while avoiding large-scale deals. The bank’s stock price more than doubled last year, creating favorable conditions for its strategic moves. She stated in an analyst call that the bank plans to avoid transformative acquisitions for the next three years.

In recent months, under the more relaxed regulatory environment under President Donald Trump, a wave of mergers among small U.S. banks has emerged. Earlier this year, U.S. regional bank U.S. Bancorp (USB.US) announced an agreement to acquire broker-dealer BTIG for up to $1 billion. In 2024, Huntington Bancshares (HBAN.US) agreed to acquire Cadence Bank for $7.4 billion.

In 2021, as regional banks began some deal activity, Webster was also a buyer, agreeing to acquire Sterling Bancorp, valued at $5.14 billion.

Some European banks have struggled to establish a foothold in certain U.S. markets. In 2020, Banco Bilbao Vizcaya Argentaria SA agreed to sell its U.S. banking operations; a year later, BNP Paribas SA announced the sale of its Bank of the West division, exiting the U.S. retail market.

Jefferies analysts stated in a Tuesday report: “The combination of Santander’s consumer finance business with Webster’s commercial franchise and high-quality deposit base will significantly enhance the bank’s regional scale.”