Awards for Excellence 2019
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Banks’ track record on lending to small and medium-sized enterprises, the growth driver of the economy, remains a mixed one in Europe.
Mutual and public-sector banks, less focused on returns, still dominate the sector in France and Germany. SME loan books in countries such as Italy and Greece continue to need restructuring.
In the UK, sometimes regarded as the most business-friendly of the big European economies, the reputation of the big banks has continued to be poor in the SME sector.
Spain has now emerged as the big western European country with the most aggressively contested SME banking market. Deleveraging and ultra-low margins in mortgages have seen the leading banks look to grow their SME share in an economy also enjoying relatively strong rates of growth in a European context.
Western Europe’s best bank for SMEs, Banco Santander, has attained the dominant share of this coveted sector in Spain thanks to its 2017 acquisition of Banco Popular. It is reinforcing this position; in 2018 it signed four new agreements with the European Investment bank to provide Spanish SMEs with a total of €875 million of funding on advantageous terms.
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Ana Botín |
The Popular acquisition has also made Santander the leading privately owned bank in Portugal in credit, with an especially strong position in local SME lending.
Two years ago, Santander was the mastermind behind the Trade Club Alliance of 13 banks. This was part of a wider ambition to extend the benefits of being a client of a global SME bank by creating an international network of entrepreneurs and exporters.
It is encouraging to see SMEs remain an important part of the bank’s priorities in its recently announced medium-term plan, overseen by executive chairman Ana Botín.
In total, the bank says it provided €117 billion of loans to SMEs and self-employed professionals in 2018. Santander’s position in the UK SME market is for now much less strong than the one it enjoys in Spain, although its reluctance to embark on a big push for UK market share recently is perhaps understandable given the uncertainties of Brexit.
However, the UK has seen a number of new initiatives by Santander targeting SMEs. Santander UK launched its new 123 Business current account in October. In December, the bank announced the acquisition of Albert, an invoicing and bookkeeping app for freelancers and micro-businesses in the UK. Just outside the awards period, Santander-owned fintech company Astop partnered with eBay to offer cash-flow loans to small business using the UK version of the online marketplace.
What is also compelling about Santander’s SME franchise is the thought that goes into developing it. One example is its new ambition to expand its Brazilian merchant acquiring business Getnet to Europe; another, to expand One Pay FX, its blockchain-based transfer service, through a standalone open-market app that SMEs can use.
