Awards for Excellence 2016
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Also shortlisted: |
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Bank of America Merrill Lynch |
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Commerzbank |
Selecting the world’s best bank for small and medium-sized enterprises is a challenging task as banking for smaller corporate clients tends to be a domestic pursuit. As the pressure to provide credit to SMEs has grown since the financial crisis, few banks have put these firms front and centre of their global strategies.
Santander, however, has done just that. It has also shown that carefully identifying the needs of smaller firms and matching them with sensible solutions can work internationally.
Santander made clear the global nature of its commitment to SME financing with the launch of the Santander Advance initiative in 2014. SMEs are a strategic segment for the Spanish bank and generate 22% of its retail banking revenues in Europe. The global focus on the sector is therefore understandable and has quickly paid dividends. In Europe, business and customer engagement among participating companies has increased by 5% and 16% (compared with the segment average) since 2014 and client satisfaction rates among participants have doubled to between 8.5 and nine out of 10. Perhaps most importantly, 20% of SMEs that were not clients of Santander before participating in the programme have become customers.
Santander Advance involved the establishment of the Advance Fund, a subordinated financing vehicle for SMEs, launched with €250 million and targeted at projects of at least €1 million in Spain. When the scheme was launched, Santander’s chief executive Javier Marin said the bank could now share with SMEs the advantages of being part of a well-capitalized and highly liquid international group.
“SMEs are a key strategic segment for Banco Santander, and we want to be partners with them in their growth plans,” he said. “We want more customers who are better linked and more satisfied.”
The bank’s global strategy in SMEs comes under the purview of its global head of retail banking Angel Rivera; a specialist division at head office is charged with its implementation.
The plan was always to extend Santander’s SME initiatives outside Spain; now the bank offers Santander Advance in Spain and Portugal, Breakthrough in the UK and Firmowe Evolucje in Poland. Firms have a Santander Passport that gives them access to services at the group’s subsidiaries in other countries. The Advance Fund is now €650 million in size and over 30,000 SMEs participated in it and the Breakthrough programme in 2015. The expansion of the bank’s SME business in the UK has been a particular success. Over 4,000 new jobs have now been created and €220 million invested in nontraditional senior debt funding for high-growth SME projects in Spain, Portugal and the UK.
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Angel Rivera, Santander |
The strategy is to go beyond the provision of finance to address other critical obstacles to growth for SMEs. These include managerial skill development, access to university talent, access to new international markets and digitalization. As part of its Knowledge Institute Santander provides specific managerial programmes for SMEs in coordination with a network of 1,000 universities in the countries in which it operates. It also provides knowledge workshops, masterclasses and hundreds of video tutorials and online courses at the website smetv.today. Santander also sponsors internships at SME firms for university graduates, roughly half of which result in a job offer after three months.
A key factor in Santander’s SME success has been the structure of the global team. It is led by the retail and commercial banking team and has a permanent presence from other core units, including risk, universities, marketing and technology. There is regular reporting to the bank’s CEO. This is mirrored at the country level with adaptations to local market characteristics. There is a network of leading local institutions such as universities, solution providers and public bodies that promote SME growth, such as Mecenium, Company Game and Sage in Spain and Cambridge and Warwick universities in the UK.
One example of this process at work can be seen in Brazil where Santander has launched Santander Negocios e Empresas, a global programme tailored to the Brazilian market. It offers R$15 billion ($4.45 billion) in credit to SMEs in the country and provides the installation of Getnet point-of-sale devices to clients in two days.
Santander also subsidizes university interns in Brazil through its Construindo Equipes programme. In 2015 it signed an agreement with the EIB to make available R$500 million to SMEs in the country – the first ever partnership between a European development bank and a private-sector financial institution in Brazil. In another local initiative, Santander granted R$1 billion in loans to the Brazilian franchising industry while training its own employees to service this sector. More than 85 local franchise chains in Brazil are now its customers.
Santander has also been quick to recognize the potential of partnerships with new online lenders and has had a referral agreement with Funding Circle in the UK since 2014. It is now also combining credit-decision resources with US online lender Kabbage (in which it is an investor) to offer same-day working capital decisions of up to £100,000 in the UK.
