Super Santander

Banco Santander Chairman Emilio Botín’s relentless retail focus helps the Spanish bank thrive through the credit crisis.


Every Monday morning at 10:00, Emilio Botín meets for at least three hours with his colleagues on the executive board committee of Banco Santander to review the business. Santander’s fast-growing network stretches across much of Europe and Latin America, and the bank is now making inroads in the U.S., but in contrast with those of many of his big global competitors, Botin’s strategy is simple: Focus strictly on retail and commercial banking, embrace technology, cut costs relentlessly, and, above all, emphasize risk management. “You don’t need to innovate a lot for this — you don’t need to invent anything new,” Botín told bankers, analysts and government officials last month at a European banking conference at Santander’s ultramodern headquarters in Boadilla del Monte, 15 kilometers west of Madrid. “You just need to dedicate time and attention at the highest level in all financial institutions.”

Botín’s approach may sound old-fashioned, indeed almost quaint, but it is paying off handsomely. Even as major banks around the world are struggling, and sometimes failing, Santander is growing profits and taking advantage of rivals’ weaknesses to expand. In the U.K., where Santander already owned mortgage lender Abbey National, the Spanish bank moved quickly in July to snap up troubled Alliance & Leicester for £1.26 billion ($2.1 billion), then paid just £600 million in September to acquire much of floundering mortgage specialist Bradford & Bingley. Merging those businesses into Abbey will give the bank 751 branches, or 10.3 percent of the U.K. market; £116 billion in retail deposits, or 9.9 percent of the market, ranking behind only Lloyds TSB-HBOS and Royal Bank of Scotland; and 13.3 percent of the U.K. mortgage market, second only to Lloyds.

Across the Atlantic, Santander last month bought the 75.65 percent it didn’t own of Philadelphia-based Sovereign Bancorp for $1.9 billion. Sovereign has been battered by mounting losses on mortgage, home equity and auto loans that caused its share price to drop by 77 percent in the 12 months before the deal. Still, the purchase gives Santander a long-cherished foothold in the northeastern U.S.

Santander’s greatest coup was its acquisition of Brazil’s Banco Real as part of the record-breaking €71 billion (then worth $101 billion) consortium takeover of ABN Amro Bank last year. Botín, who as executive chairman sets his bank’s strategy, kept a clear focus on his target throughout the six-month bid battle and limited his cost by quickly flipping Italy’s Banca Antonveneta, which it also acquired as part of the deal, to Banca Monte dei Paschi di Siena. By contrast, Santander’s consortium partners, RBS and Fortis, overstretched themselves badly and have paid dearly: The British government effectively nationalized RBS last month and forced out its chief executive officer, Sir Fred Goodwin; Fortis dismissed CEO Jean-Paul Votron before being bailed out by the governments of Belgium, Luxembourg and the Netherlands in September and sold off in pieces.

In São Paulo late last month, Botín outlined plans to invest 2.6 billion reais ($1.2 billion) in Banco Real over the next two years to boost the bank’s network by 400 branches, or 20 percent; Santander aims to lift Real’s net income to 7.9 billion reais in 2010 from a projected 4.8 billion reais this year, he added. But Brazilian lenders aren’t taking the competition lying down. Banco Itaú Holding Financeira, the country’s second-largest private bank, agreed early this month to acquire rival Unibanco and create Brazil’s largest bank, with 575 billion reais in assets.

Botín’s clear strategy and shrewd deal making have, in the space of 20 years, transformed Santander from a provincial Spanish lender into an institution near the pinnacle of global banking. With 65 million retail customers in 40 countries, Santander’s breadth approaches that of global giants Citigroup (80 million clients in 100 countries) and HSBC Holdings (100 million clients in 85 countries). With a market capitalization of €53.5 billion, the Spanish bank is now the world’s ninth largest, just behind Citi and ahead of Japan’s Mitsubishi UFJ Financial Group. But Botín isn’t satisfied. He contends that the bank should enjoy a higher valuation because it has avoided any exposure to the U.S. subprime mortgage problem that triggered the global financial crisis. “At this point we should be worth more than €100 billion and rank No. 5 on the global list,” he told Institutional Investor in a recent interview at his office overlooking the golf course on Santander’s headquarters campus. That would place Santander behind Industrial and Commercial Bank of China, HSBC Holdings, China Construction Bank and the Bank of China, but ahead of Bank of America Corp. and JPMorgan Chase.

“Time is proving that Santander’s model is successful,” notes Iñigo Vega, a partner at Madrid brokerage Iberian Equities. “The key is Botín’s management style, which is a mix of low risk-taking and quick decision making.” Oliver Flade, the Frankfurt-based head of European financials research at €740 billion-in-assets Allianz Global Investors, which holds Santander shares, is equally bullish. “What Santander has shown more than any other bank is that if you have competitive advantages in your IT platform, personnel training and cross-selling techniques, you can transfer this expertise to any market,” he says.

Perhaps, but Santander is not without problems of its own, of course. It derives nearly half of its revenue and earnings in Spain and the U.K., and both economies are tumbling into recession, with sharp drops in housing prices. The bank boosted loan-loss provisions by a hefty 91 percent in the first nine months of this year, to €4.0 billion, and the percentage of loans that were nonperforming at the end of the third quarter jumped to 1.63 percent from 0.89 percent a year earlier. Even so, Santander — rare among major banks — posted a 16 percent increase in earnings in the period, to €6.9 billion; Banco Real alone chipped in €451 million.

Santander also faces a big challenge in trying to turn around Sovereign and expand its U.S. presence at the onset of a major recession there. The bank confronts growing problems in Latin America, too. Santander is having to beat a retreat in Venezuela after President Hugo Chávez announced in July that the government will nationalize Banco de Venezuela. The subsidiary contributed 2.3 percent of Santander’s earnings, or €160 million, in the first three quarters of this year. Meanwhile, fears that the world financial crisis will send Latin economies into a tailspin knocked a fifth off of Santander’s stock price late last month. The shares stood at €8.37 at the end of October, down 43.4 percent for the year to date. By comparison the Dow Jones Stoxx 600 Banks index has fallen 52.6 percent.

Undeterred by the growing head winds, though, Botín is determined to keep Santander growing by sticking with his tried-and-true formula and avoiding high-cost, high-risk businesses like investment banking. “We don’t want to do everything,” he says, contrasting Santander’s strategy with the universal banking model of Citigroup. “We are best at commercial banking, and we want to be only in significant markets where we can attain critical mass.”

The Spanish bank’s relative strength has made it a potential bidder for many distressed banks in recent weeks, but Botín and his colleagues are being selective. Santander looked at buying Deutsche Post’s 50 percent stake in Deutsche Postbank and suggested a likely price, but ultimately held off because it didn’t have time to conduct due diligence. In September, Deutsche Bank paid €2.79 billion for a 29.75 percent interest and retained an option for the balance. Santander also looked briefly at Wachovia Corp. but never entered into talks; the struggling bank was snapped up by Wells Fargo & Co. for $15 billion after a duel with Citigroup. “It was our professional duty to at least look at their financial numbers,” says the Spanish bank’s chief financial officer, José Antonio Alvarez.

Santander’s ability to seize opportunities quickly largely reflects the tight working relationship among Botín and his trusted team of top executives. The most important regular attendees of the Monday morning executive committee meetings — which may include seven or eight senior managers and a rotating group of seven or eight members of the 19-person board of directors — are Santander CEO Alfredo Sáenz; risk committee chairman Matías Rodríguez Inciarte; his brother Juan Rodríguez Inciarte, who runs Santander’s consumer finance business and serves as Botín’s chief strategist; Francisco Luzón, who heads the bank’s Latin American operations; and Ana Patricia Botín, the chairman’s daughter, who is executive chairman of Santander’s 88 percent–owned subsidiary, Banco Español de Crédito, or Banesto. The close-knit management group has helped Santander achieve a reputation as a cautious bank that nonetheless moves speedily once its senior executives agree. “We have an image of constantly acquiring and expanding,” notes Matías Inciarte. “But we know how and when to sell. And we make decisions very quickly, because we have a very efficient, flexible structure at the top.”

Nothing illustrates this trait better than Santander’s participation in the ABN Amro takeover. On January 6, 2007, CEO Goodwin of RBS phoned Botín to ask if Santander would join a consortium to bid for the Dutch bank. Four months earlier, Santander’s executive committee and board of directors had held a global strategy session and decided that the bank should increase its presence in Brazil and establish itself in Italy. “So when our good friend Fred contacted us, our executive committee met, and two days later we sent him a message that we were very interested,” recalls Botín.

Botín informed Goodwin that Santander wanted two ABN Amro properties: Brazil’s Banco Real and Italy’s Banca Antonveneta. He also told Goodwin that Santander’s share of the total acquisition price should be €17 billion — which was very close to the €19 billion it actually paid when the deal closed eight months later.

“The odds against the consortium were huge,” says Botín. Barclays made the first public bid and won the backing of ABN Amro’s board and management because it intended to keep the bank intact and to share management. Much of the Dutch media echoed ABN Amro’s argument that the RBS-led consortium would force an unwanted breakup of the group. In a last-ditch defensive move, ABN sold Chicago-based LaSalle Bank — a key prize sought by RBS — to Bank of America. Botín feared that ABN would seek to sell off Banco Real, which would have killed his interest in the megadeal.

But the tide turned in July and August when the three banks reaffirmed their bid and Fortis secured financing and shareholder approval for its part of the deal. Santander had little trouble raising the financing to cover its share of the ABN Amro purchase, selling €7 billion in convertible bonds and arranging the sale and leaseback of its Boadilla headquarters, which netted a gain of €586 million.

Santander’s opportunistic sale of Antonveneta also defrayed nearly half of the cost. From the beginning of the ABN Amro battle, Santander had weighed the options of keeping Antonveneta and building up its Italian franchise or selling it. Chief financial officer Alvarez informed the board that it would take at least three years and further acquisitions to boost Antonveneta’s Italian market share from 2.5 percent to the 10 percent needed to become a serious player. Selling Antonveneta seemed the more appealing choice.

Within days of the signing of the ABN Amro deal, Montei di Paschi made a €9 billion offer for Antonveneta, fully €2.4 billion more than the value Santander had put on the bank, based on its share of the ABN price. “Our executive committee met first, and then a few days later with the board, which did not hesitate,” Botín recounts. When he announced the closing of the Antonveneta deal to an expanded executive committee, including half of the board, on the morning of November 8, 2007, they gave him a rousing ovation. “Emilio is really at his best when he is trading,” asserts one of the participants.

Many Santander investors were equally enthusiastic. “It made me rethink my opinion of Botín,” says Allianz’s Flade. “The message he got across with Antonveneta was that he is willing to create shareholder value by buying cheap and selling dear — and that he wants Santander only in markets where it can be among the top three banks.”

Botín’s decisive leadership in the recent series of deals has dampened speculation among investors about potential successors to the 74-year-old banker. Ana Patricia, 48, remains the presumed favorite to succeed him, but talk of her ascendancy rankles some of the bank’s senior managers. “They have known her since she was practically a child, and sometimes they still treat her that way,” says one participant in the executive committee meetings. “Some of the older guys would never agree to work for her.”

The succession “is talked about much less lately — it’s just not a big concern at this point,” says Alejandro Mínguez Ortíz, a Madrid-based portfolio manager at InverCaixa Gestión, Spain’s third-largest mutual fund manager. Botín, who describes Santander as “the best bank in the world,” insists he’s not going to stop running it anytime soon. “My father held this job until he was more than 80 years old,” he tells II. “Sure, I like to play golf, but only during my lunch hour. I’m not going to spend the rest of my life doing it.”

Botín is the third generation of his family to lead the bank. It was founded in 1857 by six businessmen in Santander, a port on the Cantabrian Coast 210 miles north of Madrid. In 1909 the first Emilio Botín — the chairman’s grandfather — became executive chairman, a post he held until his death in 1923. His son, also Emilio, rose to lead the bank in 1950. During the subsequent 36 years, he pursued organic growth and acquisitions in other regions of the country to transform Santander from a sleepy provincial institution into the sixth-largest bank in Spain, with 1,500 branches and 10,000 employees. “He created a bank with a national presence,” says Mauro Guillén, an international management professor at the Wharton School at the University of Pennsylvania and co-author of Building a Global Bank: The Transformation of Banco Santander. “But his son turned it into a global powerhouse.”

The Botíns have long held sway at Santander despite owning relatively little of the bank. The family has never held more than 5 percent, and today owns 2.5 percent, mostly through a foundation. Emilio Botín’s 0.9 percent personal stake doesn’t even make him a billionaire, and certainly not the wealthiest Spaniard, as press reports often portray him.

The third Emilio succeeded his father as chairman in 1986. He modernized the bank’s technology and introduced innovative retail banking products such as the “Supercuenta Santander,” a heavily advertised, high-interest savings account launched in 1989 that caught other banks flat-footed. The organic growth strategy positioned Santander well for the series of 1990s mergers encouraged by the government to help the Spanish banking industry stave off potential takeovers by larger financial institutions from other European countries. In 1994 the government auctioned off the nearly bankrupt Banesto, whose chief executive, Mario Conde, was later convicted of fraud and imprisoned for concealing the bank’s poor health. Santander outbid rival Banco Bilbao Vizcaya, the forerunner of BBVA, and paid $2.4 billion for 73.5 percent of Banesto (it now owns 88 percent) to become Spain’s largest bank.

Botín sealed his reputation as a master deal maker five years later by orchestrating the merger of Santander with the country’s No. 3 lender, Banco Central Hispano. To pull off that deal, Botín agreed to install the smaller bank’s chief executive, Angel Corcóstegui, as CEO of the combined group while he shared the chairmanship with Central Hispano’s chairman, José María Amusátegui. After a three-year power struggle, however, Amusátegui and Corcóstegui resigned, leaving Botín as the undisputed boss of Santander Central Hispano, which was renamed Banco Santander last year. The two bankers walked away with a cool €164 million in severance, prompting some of the bank’s shareholders to charge them and Botín with mismanagement and misappropriation of funds, but a National Court judge ruled in 2005 that the payments were lawful.

The merger dented Santander’s reputation in other ways. The bank closed 1,600 of its 4,200 branches in Spain within three years and sent 16,000 employees into early retirement. “When a client sees his bank branch shut down and the departure of employees he has known for years, and he has to use a more distant branch where he knows nobody — well, that provokes real anger,” acknowledges Enrique García Candelas, head of Santander’s branch network in Spain. The bank also incensed clients by boosting fees for basic services such as check cashing, money transfers and account management. The number of customers at the Spanish branch network plummeted, from 8.5 million in 2002 to 7.6 million in 2005.

To reverse this decline, Santander in 2006 launched a campaign called “Queremos Ser Tu Banco” — “We want to be your bank.” It offered to cancel all fees and commissions for clients as long as they used at least one of a list of Santander products, which included payroll accounts, pensions and mutual funds, among others. In the first year of the Queremos campaign, Santander lost €87 million in fees and commissions but gained hundreds of thousands of customers — the total had risen to 8.4 million at the start of this year. Cross-selling also took off. From 2005 to 2007 the number of customers with debit cards climbed by 41 percent, credit cards rose by 58 percent, personal loans by 46 percent and life insurance policies by 60 percent.

A key to the success of the Queremos campaign has been the installation of an information technology platform called Partenón, which has cut transaction costs, increased productivity and allowed for the creation of in-depth profiles of clients. Banesto launched Partenón in 2001, and four years later, Santander adopted it at its Spanish branches. Under Ana Patricia Botín, a high-tech enthusiast, Banesto has now rolled out an advanced version of Partenón, called Alhambra, at its branches, including one in Moncloa, a middle-class neighborhood just west of central Madrid that is favored by retired military officers and is home to the prime minister’s office.

Thanks to Alhambra, Moncloa branch manager José María Villamiel and his seven colleagues are able to segment the overdue borrowers among their 3,200 retail clients into five categories, ranging from one to 16 days in arrears to more than 90 days; beyond the latter point the branch is required to set aside nonperforming-loan provisions. “That’s why we begin calling clients as soon as they fall behind by 16 days,” says Villamiel, who reviews the updated Alhambra list of clients in arrears with his staff in a daily 8:00 a.m. meeting. “Their reaction is usually pleasant enough, and they pay up quickly. If it’s a good client, we take the opportunity to push another product, like insurance.”

Alhambra constantly seeks to suggest new products to suit each client’s profile. Villamiel calls up on his screen the portfolio of a 74-year-old customer with more than €1.2 million in assets, from which the bank earned €27,203, or a hefty 2.23 percent margin, last year. The client already has six bank products, but Alhambra pegs him as a good candidate for a new insurance offering, which appears as a pop-up alert attached to the client’s file. The file offers a detailed breakdown of the client’s spending habits from his bank account and credit card, including the maintenance of two homes, ownership of two cars, purchase of a flat-screen television, visits to his favorite restaurant, highway tolls indicating his weekend destinations and even pharmacy bills.

Alhambra’s up-to-the-moment scoring system provides benefits to clients too. Sizable loans can be approved in less than 48 hours, and customers in good standing get on-the-spot approval for car financing and consumer loans. But for the bank the beauty of the IT platform is the efficiency it brings to cross-selling. The Moncloa branch sells 4.6 financial products per client. Leading the list are savings accounts, payroll deposits, debit and credit cards, mortgages, consumer loans, insurance and mutual funds. Alhambra shines a bright light on branch employees as well, measuring their individual and combined performances. Twenty percent to 50 percent of their compensation is in bonuses linked to financial targets attained by the branch.

Notwithstanding the impressive IT platform, credit risks are mounting in Spain. Nonperforming loans jumped to 1.92 percent of all credits at Santander’s domestic network in the first nine months of this year from 0.66 percent a year earlier, and to 1.18 percent at Banesto from 0.43 percent. Loan-loss provisions surged 116 percent in the first nine months at Santander’s network, to €513 million, and by 22 percent, to €206 million, at Banesto. Mortgages and other real estate loans accounted for 12 percent of income at both networks in 2007. Most mortgages are for primary residences rather than the hard-hit secondary-home sector, and the average loan-to-value ratio is slightly below 60 percent, which provides some protection against losses. But with Spain’s unemployment rate surging to 11.3 percent at the end of August from 8.3 percent a year earlier, most analysts expect continued credit deterioration.

Outside its home market, Santander has made a number of important forays since the 1990s, mainly in Latin America, where it buttressed its presence with the 2000 acquisitions of Banco Serfín in Mexico (now Banco Santander) for $1.53 billion and of Banespa in Brazil (also renamed Banco Santander and soon to be merged with Banco Real) for $4.87 billion.

The bank’s big breakthrough, however, was its 2004 purchase of Abbey National for £8.25 billion ($15.6 billion at the time). The deal was one of the first major cross-border bank acquisitions in the European Union, and it showed how an acquirer could use technological and marketing expertise to create value. Previous mergers had favored domestic buyers who relied on cost-cutting to generate earnings. By entering the mature U.K. market, Santander was also moving beyond its cultural comfort zones of Iberia and Latin America.

Abbey was an old-style savings and mortgage bank that was losing market share and racking up big losses — £1.64 billion in 2002 and 2003 — after years of underinvestment and weak management. Many analysts doubted Santander’s ability to pull off the deal and compete against big U.K. rivals like HBOS. But the Spaniards moved quickly to overhaul Abbey’s management and import Santander’s technology and selling skills.

Santander slashed Abbey’s staff by 7,000 employees, or 29 percent, to 17,000, helping it cut costs by £300 million within two and a half years, six months ahead of schedule. Executives also moved quickly on the credit front. Fearing a downturn in the U.K. credit cycle two years ago, Abbey started clamping down on unsecured consumer lending in August 2006, shrinking its exposure by 24 percent by the end of 2007. Once margins began to rise last year, Abbey ramped up mortgage lending again. The bank is now the second-largest mortgage lender in the U.K., with 13 percent of outstanding loans, and it leads in new mortgage lending this year, taking advantage of the turmoil at market leader HBOS, which agreed in September to be acquired by Lloyds TSB Group. Abbey also grew its savings deposits by 5 percent in 2007 by offering above-market rates.

“With healthy deposit growth on the funding side and no quality problems on our books, we were able to take advantage of the liquidity threat that other banks were facing and grab a bigger share of the loan market,” explains António Horta Osório, a Citigroup and Goldman, Sachs & Co. alumnus who ran Santander’s subsidiaries in Portugal and Brazil before being named CEO of Abbey in 2005. The results have been impressive. Abbey’s net profit rose from €811 million in 2005, the first full year of Santander’s ownership, to €1.201 billion in 2007; earnings were up 4.1 percent in the first three quarters of this year, to €943 million.

Now Abbey aims to use its increased heft from the additions of Alliance & Leicester and Bradford & Bingley to grow its retail business. The bank’s cross-selling ratio of 1.5 products per client trails the U.K. average of 1.75, but executives hope to use the techniques honed in Spain to boost that number to 6 among its 15.8 million U.K. mass-market clients and 400,000 affluent customers. Abbey is also making a determined push into corporate lending. A&L adds 2.5 percent of the British corporate lending market to Abbey’s 1 percent share. “Our ultimate goal is to become a full-fledged commercial bank,” says Horta.

Banco Real elicits even more enthusiasm than Abbey among Santander executives. When Real is merged at a still-undisclosed date with Santander’s existing Brazilian subsidiary, it will create the country’s third-largest private sector lender by branches and loan volume, behind the new Itaú Unibanco and Banco Bradesco. Santander, though, will have its hands full with those two institutions as well as with state-owned Banco do Brasil, all of which are bigger and enjoy strong relationships with Brazilian companies and consumers. “Bradesco and Itaú can compete with any banks in the world — and especially on their home territory,” says Antônio Delfim Netto, a former Brazilian Finance minister who now does business consulting.

Bradesco is known for its mass-market approach to retail banking, whereas Itaú has emphasized more-affluent big-city clients and blue-chip corporates. “Santander resembles Itaú more than Bradesco in client base and approach to the business,” notes Santander CEO Sáenz. To compete head-on with Itaú, the Spanish bank will have to offer the investment and private banking services demanded by upscale Brazilians. That’s why Santander in February followed up its acquisition of Real with the purchases of ABN Amro’s wholesale banking unit in Brazil from RBS for €750 million and ABN Amro’s asset management operation in Brazil from Fortis for €209 million.

Botín predicts that in three to five years, Santander will match the income levels of either Itaú or Bradesco, and Sáenz, with typical restraint, says, “It would be unforgivable if we didn’t succeed in Brazil.”

That sort of confidence is so far missing in the U.S. In 2005, Santander bought a 19.8 percent share of Philadelphia-based Sovereign, a stake that was subsequently lifted to 24.9 percent for a total price of $2.92 billion, or $27 a share. But Sovereign, which grew rapidly from 1990 to 2006 under acquisitive CEO Jay Sidhu and then under his successor, Joe Campanelli, binged on auto loans outside the Northeast and has been hammered by the credit crisis. The bank took $1.6 billion in charges for bad loans in the fourth quarter of 2007 and eliminated its dividend in January, forcing Santander to take a €737 million write-down on its stake. The Spanish bank also contributed $335 million to a $1.89 billion capital raising by Sovereign in May, which included a $1.39 billion stock offering and a $500 million debt issue.

The credit crisis took a mounting toll on Sovereign, though. The bank posted a third-quarter net loss of $982 million after taking charges of $575 million on holdings of Fannie Mae and Freddie Mac preferred shares; it also started to hemorrhage deposits, suffering an outflow of $4.2 billion, or 8.8 percent of its deposit base. Desperate for capital as its stock price dropped to record lows, Sovereign agreed to sell itself to Santander for $1.9 billion, or just $3.81 a share.

Santander can claim to have bought Sovereign for a bargain. But for investors, who have come to expect clarity from the bank’s expansion decisions, the Sovereign case is perplexing. “They don’t seem to have a strategy for the U.S.,” says InverCaixa’s Ortíz. “Sovereign doesn’t offer any scale, and it’s in low-growth businesses.”

Chief financial officer Alvarez insists that Santander knows Sovereign well — and knows how to fix it — because for the past two and a half years the Spanish bank has had three of the 12 seats on its board and four executives in senior management. Santander plans to reduce risk-weighted assets by $10 billion, to about $50 billion, by the end of 2009 by trimming the bank’s securities portfolio and its auto loan book. “We are not in a hurry to do it — there will be no fire sales,” says Alvarez.

In addition to proving itself in the U.S., Santander’s biggest challenge is deciding where else to expand. The bank’s strong financial position enables it to pick and choose from among a bevy of low-priced assets up for sale around the world. “There are possible big acquisitions being proposed to us, but I’m not convinced they are the ones we want to make,” says Sáenz. He mentions Banamex as a property Santander would jump at, but says it’s unlikely that Citi will sell its Mexican subsidiary.

Asia represents a big gap for Santander, and one that argues against comparisons with Citi and HSBC. Both Botín and Sáenz agree that it may be too late to afford a major acquisition in China or India. “Also, we don’t have a pool of managers in Asia who know commercial banking,” notes strategist Juan Inciarte.

Longer term, Santander needs to decide whether to pass control of its future into the hands of another Botín. Ana Patricia, the eldest of six siblings, earned a BS in economics from Pennsylvania’s Bryn Mawr College in 1981 and then worked for seven years in JPMorgan’s Treasury and Latin America divisions in New York and Madrid before joining Santander in 1988. Three years later she became chief executive officer of Santander’s wholesale and investment banking arm, Banco Santander de Negocios, and made a series of investments in Latin America that provided the basis for Santander’s powerful banking networks in Argentina, Brazil, Chile and Mexico.

After taking a three-year hiatus to run a €215 million private equity fund, Suala, Ana Patricia returned to the Santander fold in 2002 as CEO of Banesto, and her record there has bolstered her reputation. “But Ana Patricia has been running Banesto in a very good economic environment,” points out Iberian Equities’ Vega. “Now we have to see how she manages the bank in a more difficult economy.” So far, so good, seems to be the answer. Net income rose 6.5 percent in the third quarter, to €204.4 million, and the bank’s nonperforming loans and loan-loss provisions are more modest than Santander’s in Spain.

“She would be the first woman to lead a global bank,” says Wharton’s Guillén. “It would really promote the brand internationally.”

But Don Emilio is fit and continuing to enjoy banking very much — and generating the results to match. He jets off to Brazil every other month to keep watch over the fusion of Santander’s businesses there, and he goes back to his native Cantabria every few weeks to meet local industrialist clients, just as he used to do before Santander became a global power. He may decide that he’s not ready for full-time golf for several more years. And by then having a woman run one of the world’s largest banks may no longer be a novelty or a branding argument in his daughter’s favor.