Banco Santander’s agreement to acquire Webster Financial for 12.3 billion dollars is facing a potentially significant hurdle: the scrutiny of the Trump administration. While the deal requires approvals from multiple regulatory bodies, two agencies directly overseen by President Trump – the Office of the Comptroller of the Currency (OCC) and the Department of Justice’s antitrust division – hold considerable sway over its fate.
Santander expressed confidence that the transaction will close in the second half of , but securing the necessary approvals is far from guaranteed. Beyond the OCC and the DOJ, the deal also requires the sign-off of the Federal Reserve, where Kevin Warsh is expected to take the helm in May, and its European counterpart, the European Central Bank (ECB). The bank also needs approval from both companies’ shareholders, a vote Santander’s Ana Botín anticipates will occur in the coming months without issue.
The acquisition, which will create a top-10 US bank by assets and a top-5 deposit franchise in the Northeast, hinges on the successful merger of Webster and Santander’s existing US subsidiary. A break-up fee of 489 million dollars has been stipulated in the purchase agreement, though this would not be payable if the deal collapses due to regulatory concerns.
Political considerations are increasingly common in large corporate transactions, particularly within the financial sector. The recent attempted takeover of Sabadell by BBVA in Spain serves as a cautionary tale. The Spanish government not only reviewed the competition assessment by the National Commission on Markets and Competition (CNMC) but also launched a public consultation, ultimately imposing conditions that significantly altered the proposed synergies and contributed to the deal’s failure. These conditions included maintaining the independence of Sabadell in terms of corporate structure, assets, and decision-making for a period of three to five years.
While regulatory approval is standard procedure for deals of this magnitude, the current political climate under President Trump adds a layer of complexity. Trump has repeatedly criticized perceived trade imbalances and has championed a protectionist agenda aimed at bolstering domestic industries. Whether this extends to blocking a foreign entity from acquiring a US bank remains to be seen.
Botín’s previous interactions with President Trump suggest a degree of rapport. The two participated in a roundtable discussion at the World Economic Forum in Davos, alongside other business leaders, where mutual praise was exchanged. Botín highlighted Santander’s commitment to investing in the US and applauded Trump’s deregulation efforts, prompting the President to commend her for doing a “fantastic job.”
However, the Trump administration’s policies are known for their volatility. The President’s focus on reversing perceived economic disadvantages for the US could potentially extend to scrutinizing acquisitions like Santander’s bid for Webster. According to a report by CNBC, Santander’s Ana Botín warned that tariffs pushed by President Trump will hit the U.S. Harder than Europe, stating that “tariffs [are] a tax. It’s a tax on the consumer.” She also noted that, the economy will pay a price, with less growth and more inflation.
The timing of the acquisition also comes as Santander is making significant investments in its US operations. The bank recently announced a 12.2 billion dollar acquisition of Webster Bank, a move that will create a top-five deposit franchise across key states in the US Northeast. This deal is expected to lift Santander’s US return on tangible equity to 18 percent by , delivering 7-8 percent earnings per share accretion.
Santander is planning a securitized loan transaction (SRT) tied to a 1 billion pound loan pool, signaling a broader M&A push. This move is intended to bolster key solvency ratios, as outlined in a presentation. The bank’s expansion strategy appears to be predicated on capitalizing on opportunities within the US market, but the success of these endeavors is now inextricably linked to the political winds in Washington.
The acquisition of Webster Financial represents a substantial bet on the American economy by Spain’s largest bank. However, the final outcome remains uncertain, contingent not only on regulatory approvals but also on navigating the unpredictable landscape of the Trump administration’s trade and economic policies.
