Santander Bank (SAN.US) expands its U.S. business with a crucial piece! $12 billions acquisition of Webster Financial (WBS.US) approved by the Federal Reserve

According to Golden Ten Data, Spanish banking giant Santander (SAN.US) has received approval from the Federal Reserve to acquire Webster Financial (WBS.US). This will become one of the largest deals undertaken by a European bank in the US market. After obtaining approval from other regulatory authorities, the Spanish banking giant expects to complete the transaction on August 20.

Santander proposed to acquire Webster Financial for about $12 billion in February this year, as part of Executive Chair Ana Botín's strategy to expand its US operations. In a statement released on Tuesday evening, Botín said: “This merger strengthens our position in one of the most attractive banking markets globally and steadily moves us towards becoming one of the best-performing banks among our US peers.”

Santander stated that, upon completion and integration of the transaction, its US operations are expected to achieve a tangible return on equity of about 18% by 2028. Meanwhile, the deal is expected to boost earnings per share by about 7% to 8% and deliver around a 15% return on investment capital.

Santander recently also completed the acquisition of UK bank TSB. The bank said that future efforts will focus on integrating both the TSB and Webster Financial acquisitions. Santander previously committed to raising net profit to over €20 billion (about $23.1 billion) by 2028.

Santander aims to address its lack of scale in the US retail and commercial banking market through the acquisition of Webster Financial. For this Spanish banking giant, acquiring Webster Financial means lower financing costs, a stronger deposit base, greater cross-selling opportunities, and leveraging higher profitability from US operations to enhance its valuation and earnings base.

According to a previous transaction document, after the deal is completed, Santander’s combined assets in the US will reach approximately $327 billion, positioning it among the top ten retail and commercial banks in the country. Management at Santander believes that significantly increasing its operating scale will not only reduce financing costs but also bring about $800 million in pre-tax cost synergies. In other words, this is not simply a matter of “buying a retail bank”—it is about filling the most critical gap in Santander’s global banking competitiveness: expanding US domestic deposits, customers, and balance sheet scale. Santander had previously made clear that this acquisition is a crucial step toward becoming an important participant in the US retail banking sector.

Analysts note that, for large international banks headquartered in Europe, if they hope to increase valuation premiums and earnings resilience and attain the valuation benchmarks enjoyed by Wall Street commercial banking giants, they must possess stronger local retail and commercial banking expansion capabilities in the US. The European market grows at a slower pace, while US retail banking offers greater strategic value in deposit pricing, credit expansion, and cross-selling opportunities.