Small and medium-sized enterprises are particularly vulnerable to the economic shocks that have buffeted the region in recent months. Any bank that serves these businesses needs to be acutely aware of the challenges they face and have deep experience across the region in how to deal with them.
“How can SMEs pass through price rises to customers? How can they re-price without losing customers?” asks Matías Sánchez, head of retail products Spain and Europe at Banco Santander, western Europe’s best bank for SMEs this year. “Many managers have no experience in this, so we are working close to them to give them clarity.
“We are serving more than two million SMEs across western Europe, and there are a lot of challenges. But we have the footprint to help people and can connect different markets.”
In its main market, Spain, Santander launched Financia&Go, the first fully digital factoring service for SMEs and the self-employed last year.
This builds on existing products such as Tresmares Capital, an independent alternative financing platform for SMEs. The bank has connected eight of its banks to its OneTrade global platform, which onboarded more than 8,000 active SMEs and corporates in 2021; and Ebury, Santander’s international payment, cash management and foreign exchange platform, offers seamless onboarding for SMEs in 20 countries in Europe.
Santander also launched a new app and website for self-employed individual customers and SMEs last year. The net promoter score of customers using the new site is 12 percentage points higher than it was for the previous one.
In September 2021, the bank joined forces with the European Investment Fund (EIF) to provide financing on favourable terms to Spanish SMEs and mid-caps. The EIF will grant a guarantee of up to €360 million that will, when combined with Santander’s financing, total more than €500 million for Spanish companies.
The bank is acutely aware of the challenges that smaller firms face.
“As concerns rise on high inflation and a possible recession, we are working with the government in Spain to give loan extensions where necessary,” explains Sanchez. “The restaurant and tourism sector are booming, but other sectors are facing the effects of pricing and supply-chain disruption. We are very close to them and can offer extra short-term solutions.”
The UK corporate loan book is focused on SMEs and mid-sized and larger corporates, and accounts for 8% of customer loans (the bank has reduced its commercial real estate portfolio to £4.5 billion, from £5 billion in 2020).
“We are trying to spread awareness that SMEs need to look ahead. In the UK, we coach more than 500 companies on how they can change their business model to compete,” Sanchez tells Euromoney.
In 2021, the bank focused on supporting companies to refocus their strategies after the pandemic, offering mentoring for women in business and helping underrepresented businesses. It delivered 33 virtual workshops to 547 SME businesses covering a range of strategic topics such as sales, marketing and reaching profitability.
We are trying to spread awareness that SMEs need to look ahead
Matías Sánchez
In Poland, the focus is on making running a business easier. This has included its eHealth and eLeasing offerings and accessing loans via a mobile application. The bank has also simplified the process of granting guarantees and introduced photo identity verification for company accounts. Customers can update data for all legal documentation through the post office via Mini Firma online banking, while Autopay highway payments have been introduced for corporate customers.
SMEs account for about 77% of total employment in Portugal, so how these firms are banked is vitally important to this economy. Santander has secured €587 million of funding from the European Investment Bank for the sector and reached a guarantee agreement with the EIF for up to €100 million in working capital and investment capacity for the agricultural sector.
With energy security top of the agenda in Europe, transitioning to renewables is an urgent requirement for SMEs.
“We need to build awareness of the green transition,” says Sanchez. “SMEs should not wait – they need to start now. High energy prices are a boost to the transition. We launched a package in May to retrofit energy loans with government backup and support from European funds.”
