Is a U.K. turnaround looming for Santander?

Banco Santander (BME: SAN) could be considering a major strategic shift: its exit from the UK market after two decades of operations, according to recent speculation. Since the acquisition of Abbey National in 2004, the UK has been a key market for the Spanish bank. However, operational challenges, low returns and legal problems could be motivating this possible decision.

Factors behind the possible withdrawal
1. Low financial returns: Santander UK has faced a significant decline in profits. In 2024, the bank's UK results posted a 45% drop, reflecting lower profitability compared to other key markets such as the U.S. and Latin America.
2. Legal and regulatory issues: Auto lending has been a constant source of litigation and stringent regulations, increasing costs and operational complexity in the country.
3. High operating costs: Maintaining a large-scale operation in the UK has proven challenging, especially in an environment of high banking competition and increasing regulatory pressures. This contrasts with the bank's strategic focus on more profitable markets with higher growth potential, such as the United States.

Santander's strategic priorities
The bank led by Ana Botín has shown a growing interest in markets such as the United States, where diversification and expansion potential offer better return prospects. This strategy is aligned with its focus on efficiency and resource optimization, moving away from operations that do not meet its long-term profitability objectives.

Technical Analysis
On the daily chart, using the ActivTrades WACD indicator, the stock is currently in a sideways range, the smoothed triple mean indicates a clear perforation of its last high zone, coinciding with the high of April and May 2024. Coinciding with the high zone of April and May 2024, the cumulative delta volumes show a bullish continuation with a gradual volume contraction. If we look at the VWAP and the SELL and BUY signals of the indicator, no signals have been given on the daily chart, but they have been given on the 1Hour chart prior to the movement that has occurred in the last three days. It can be seen that the sideways range of the stock initiated in May 2024 has been clearly perforated, so we must wait to see if the stock reaches its highs and continues its upward movement, or proceeds to correct later.

Outlook and future
Although there is no official confirmation about a possible withdrawal from the UK, this decision could mark an important milestone in Santander's global strategy. The UK market, although historically relevant, seems to have lost prominence to the opportunities offered by other regions.
The uncertainty about Santander's future in the UK raises important questions about how its international presence will be reconfigured and how this decision could affect its image and valuation in the financial markets.
Ion Jauregui –ActivTrades Analyst





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