The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Rising interest rates a ‘game changer’, says Santander’s Álvarez

Rising inflation expectations matter to the banking industry. Santander CEO José Antonio Álvarez explains, however, that negative real rates will probably persist for the next five or 10 years because of Covid.

percentage-signs-storm-iStock-960.jpg
Photo: iStock

Rising inflation – and by extension higher interest rates – could propel a recovery in European banks’ financial performance in 2022, according to Banco Santander CEO José Antonio Álvarez.

“This a game changer in the industry, especially in Europe, where rates are negative,” he says, describing the prospect of higher interest rates in the UK and the US, as well as discussion about how the European Central Bank will react to higher inflation.

Official rates are already rising in Santander’s other core markets of Brazil, Mexico, and Poland, he notes. Meanwhile, more than half of Santander’s deposit book in Spain and Portugal is indexed to Euribor, meaning it is the prospect of a rise in official rates that matters, not if it happens.

“Whether I’m positive or very positive on the outlook for our industry depends on where rates go in 2022,” Álvarez says. “We run a €900 billion deposit book. With very low rates, revenues on that book were limited at best.”

Negative rates

Álvarez says ultra-low interest rates have been particularly punitive on banks with branches – their main purpose being to gather deposits and assets under management – because of their higher costs versus digital peers.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree