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José Antonio Álvarez
The chief financial officer of Banco Santander, chosen by both buy- and sell-siders as the company that provides Europe’s Best Investor Relations in the Banks sector, saw his strategy of emphasizing retail banking and increasing the company’s coverage area through acquisitions pay off.
Chief Financial Officer
José Antonio Álvarez should be smiling. The chief financial officer of Banco Santander, chosen by both buy- and sell-siders as the company that provides Europe’s Best Investor Relations in the Banks sector, saw his strategy of emphasizing retail banking and increasing the company’s coverage area through acquisitions pay off as the Madrid-based bank was largely sheltered from the economic storm that engulfed so many financial services firms. Nonetheless, he feels Santander is suffering from guilt by association with an industry under siege.
“Even last year, when we reported nearly €9 billion in profit, when we spoke to investors it was difficult to differentiate ourselves from our peers who were in very bad financial shape,” says Álvarez.
It is easy to understand his frustration. Last year a number of big banks either went out of business or were taken over, but Santander reported a 10 percent increase in revenue, to €31 billion, and a 9.4 percent increase in profit, to €8.88 billion; even so, Santander’s share price fell 50.6 percent.
“Santander is performing better than the sector as a whole,” observes Leif Haglund, a portfolio manager at Stockholm-based Nordea Bank. “It’s the business model, the focus on retail, that’s saved them.”
The billions that European governments have poured into economic stimulus packages could help Santander if that spending boosts consumer confidence, and the bank has already benefited from a surge in financial stocks in March and April.
“We’ve seen a strong rally in the past weeks, but the problems haven’t gone away,” says Haglund.
Álvarez isn’t giving up, though. He has faced a lot of skeptical investors as he laid out the bank’s aggressive expansion plans over the past 20 years. Now that the strategy is paying off, he figures all he can do is stick to the message.
“When the share price falls as a result of a sell-off in the financial sector,” he says, “there’s not much we can do except increase our efforts to be transparent and differentiate ourselves from the competition.”
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