Santander Bank - Assignment Example

Santander Bank Introduction Statistics show that Santander bank is among the leading financial organizations in the world. Research shows that Santander bank is the fifth largest bank globally in terms of profitability and the seventh largest in terms of its market share. It has a customer base of approximately sixty six million people. Its branches are spread across forty countries globally and it has a banking experience estimated at one hundred and fifty years. Krull (2015) contend that the success of any business depends largely on the strategies of collaboration and communication that the business has with its customer base. Santander bank has demonstrated this perfectly well by laying an emphasis on the need to collaborate and communicate with the customers and their demands before achieving its own profitability. This has enabled it to enhance and develop its business. This has for long been the secret to the success that it is enjoying today. The following paper shall therefore provide an insight into the current business in which Santander bank operates and to evaluate its business activities to establish its suitability as my placement provider. The mission of Santander bank is geared towards being a resilient financial institution that embraces a culture of market positioning that aims at prioritizing the customers in all its strategies and plans (Santander, 2013). The marketing plan of Santander endeavors to pursue and preserve the enthusiasm of its customers (Santander, 2015). This also enables it to provide its customers with generous services that are in line with the expectations and demands of its consumers. Santander Bank’s Current Business Environment Santander bank operates in an extremely competitive and swiftly evolving business environment. This is mainly due to the fact that most of the financial institutions are adapting to the current trends of marketing so as to develop and capture a wider target market. Its main competitors are the Barclays bank, Royal Bank of Scotland and Standard Chartered Bank (Capital, 2015). Santander bank however stands out from the rest of the institutions as it offers savings accounts that are cost effective and reliable to the customers. All these have both short term and long term benefits to the customers. This unique feature has made it to have a wider market base that has in turn improved its profitability. Santander bank’s current business environment in the financial sector makes it suitable for my placement purposes. Being a business student, I believe that I will gain immensely from the practical experience that I will obtain from this bank. The experience will prepare me adequately in the business world in which I will be required to compete favorably with my competitors. Santander bank being such a successful bank I believe that I will be able to gather excellent lessons that I will make use of in the future. Santander Bank’s Business Activities Santander bank offers banking and financial services to its customers. The services are broadly divided into two, which is, business and personal banking (Santander, 2015). Its target customer market comprises large business enterprises and individual investors. Some of the business segments of the bank are as follows: retail banking, asset management, global wholesale banking and insurance (Guillen & Tschoegl, 2008). The bank also takes part in the run-off real estate business of Spain in which it advances loans to its Spanish customers. The bank equally advances loan to its customers who engage in various activities that are in line with development in the real estate sector. It also advances loans to its customers who take part in real estate equity stakes as well as assets that have been foreclosed. Under the retail banking segment, the bank offers a variety of banking business to its customers. The customers are broadly divided into corporate and individual customers. The global wholesale banking offers a world-wide corporate banking as well as a global market for investment in the banking industry. It also has a number of treasuries that are management internationally. These treasuries serve the purposes of both trading and distribution to the bank’s customers. Under this plan, the bank also takes part in the business of equities. The private banking, insurance and asset management encompass designing and managing mutual and pension plans of its clients. It also designs and manages the insurance of its clients. These designs are either done using wholly owned units or through joint ventures in collaboration with experts in the field (KPMG, 2012). In the United States of America, Santander bank undertakes various financial activities. These activities are done by the banks subsidiary banks as well as its subsidiaries. The operations in the United States include Santander Puerto Rico and Santander bank’s business activities. It also takes part in financial business in the consumer sector which is done by Santander Consumer USA Inc. the total number of branches that the bank has in the United States are approximately 811 (Parada, 2007). As I am a business student, I believe that Santander bank will be a suitable organization for the purposes of placement. This is because of the activities that it takes part in and which are in line with my academic background. This will give me a perfect opportunity to put into practice my theoretical skills in business. I will not only gain valuable experience from my placement in the Santander bank but I will also have a chance to contribute positively to its high-profile matters. This will put me in better position to approach the business market once I am done with my studies. SWOT Analysis of Santander Bank Strengths Santander bank has world-wide differentiated operations. Most of its profitability is realized from its global branches such as Brazil, Chile, The United Kingdom, Germany, Mexico, Poland and the United States of America (Reuters UK, 2015). Spain only gives it a profitability of 12%. It makes it an important choice as a placement provider as I will be able to gather a lot of information from its international activities. This will also enable me to gain better practical insight on how the international banking system works. Having my placement in such a global financial institution will give an invaluable opportunity to learn from the best professionals in the banking sector. I will also have a chance to learn how the marketing strategies of a financial institution can enable them to succeed in the global arena. Its presence in the global market will also help me to learn the various business strategies that it uses and this will add to my existing knowledge of the global banking environment. Santander bank has met the core capital requirements that have been laid down by the European banking Authority. This is quite important for my placement as I will be able to learn how a financial institution can maintain its capital requirements. This is also significant as it will give me ideas on the importance of keeping the necessary capital requirements so as to avoid liquidation. It is equally important to note that Santander bank has publicly listed the stakes that it has in Banco Santander Brasil and Banco Santander Chile (Reuters.com, 2015). This means that it would not be difficult for it to raise any capital that it needs for its business operations. It would easily raise the capital that it needs by selling some of its operation slices. This would be made possible without affecting the debt worries of the European community. This means that it is a stable banking institution that can comfortably affect its business operations. I therefore have a strong belief that was internship will not be affected in any way whatsoever as Santander is a financial health financial institution. The shares that Santander bank has look relatively cheap. Recently studies show that the shares of Santander bank have changed hands under a book value of averagely 60%. The bank’s trailing one year dividend yield tops 13% (Euromonitor.com, 2015). The bank also has a robust strategic alliance with other institutions that are leading in the financial industry. This alliance will be quite helpful during my placement period as I will be able to carry out a comparative analysis of the financial institutions. I will also be able to determine the challenges that the leading financial institutions do face in their business operations. The alliance is also an important element for the bank’s growing profitability. The bank’s strong operating performance is equally useful as it puts it in a better position to sponsor a number of community events. This is quite strategic for my placement as I will be able to interact with the community and learn the views that they hold of the bank. Weaknesses Despite the fact that Santander bank is endowed with numerous strengths, it also has got its own fair share of weaknesses. The bank’s business seat is situated in Spain and this is the largest weakness as non-performing loans have become the norm of the day. This is largely attributed to the market of Spain. Santander bank has also put much reliance on the policies of the Eurozone (Euromonitor.com, 2015). This makes it to ignore other global policies that would be important in its business operations. Nonetheless, for the purposes of my internship, it will put me in a better position to learn how over-dependency on a single policy can affect the business of a financial institution. It is also important to note that Santander bank has got very little presence in the Asian continent. This is as compared to the other banks of the same financial standing. This has made it not to achieve maximum profitability as it is not making use of all the target market. This particular weakness equally makes Santander bank a suitable placement provider as it will enable the intern to learn from this challenge. It is also possible to come up with solutions that would turn out to be quite helpful. The bank will offer a challenging opportunity for the intern to determine any viable solutions for this challenge. The bank’s payment percentage is also very high (Capital, 2015). This presents a big weakness as the customers’ bonuses may not be secured in the event of an act of strike. All these weaknesses are important for the intern to learn more on how to mitigate them. Opportunities Recent research shows that Santander bank has opened up new opportunities in China. This is especially after the branch it owns in Shanghai got a license for renminbi dealings (Capital, 2015). This enabled it to capture a wide target market in China and hence to remarkably improve its profitability. The bank has got opportunities to grow tremendously in Brazil and the rest of Latin America. This is largely due to the developing market operations of Banco Santander. This will equally enlarge its customer base and hence its profitability. It will also be able to enlarge its market share and this will ultimately give it a competitive advantage over the other financial institutions. The financial crisis that exists in Europe can also accord Santander bank an opportunity to pick up assets at fairly fire-sale prices. Santander bank has got an opportunity to invest in small enterprise banking. It can also invest in micro-financing. This will give it a leeway to capture the middle-class and the lower-class in the countries that it has its branches. This is a road towards more profitability as it will increase its current market base. An introduction of small banking projects in regions in which banks are not available will give Santander an opportunity to grow immensely as its market share will increase. The micro-financing will help the bank to attract a customer base of the minority groups such as the women and the youth in some of these countries. Lastly, Santander bank can influence the system of the banking in Europe in a manner that it will implement a new set of laws and regulations (Gillen & Tschoegl, 2008). This will be geared towards controlling the flexibility in which the banks in Europe operate. For purposes of placement, Santander bank stands at a better position as a placement provider with all these numerous opportunities that it has. This will enable the intern to gain more knowledge in the business world. This will equally enable the intern to learn how to make use of opportunities so as to increase the profitability as well as the market share of an organization. Threats Most of the threats that Santander faces largely arise from the financial crisis that Europe is in (Krull, 2015). The financial troubles such as recession are likely to affect the business activities of the bank. The ever changing regulations by the government are also threats as the bank cannot easily determine its business operations under a stable regulation (Krull, 2015). The instability can have negative effects on its budget formation. It can also affect the implementation of other activities that are significant for the improved performance of the bank. The student as an intern will be able to gain more insight on how unstable government regulations can negatively affect a financial institution. This will also be quite helpful as the intern can learn the kind of relationship that governments do have with the financial institutions. This will ultimately give one ideas on how this relationship affects the business operations of the financial institutions. The bank equally faces global economic policies that are stringent. This also negatively affects its business operations. They can easily affect the market share of Santander in the international market. It is important to note that Santander bank face stiff external competition from other financial institutions. Some of these are Barclays bank, Royal Bank of Scotland and the Standard Chartered Bank (Krull, 2015). The stiff competition makes the bank not to achieve the target market as well as the market share that it would have desired. This threat can however turn out to be a great opportunity if the bank devices methods in which it can be able to have a competitive advantage over the others. As a placement provider, the student will have an invaluable opportunity to learn how an organization can effectively eliminate or limit its external competitors. One will also be in a position to learn how to establish a competitive advantage over the external competitors. Lastly, the financial problems seen in countries such as Spain, Greece, Italy, Ireland and Portugal can destroy the positive features of the bank. They would also probably result in an emergency in the currency for the Euro. As a placement provider, the student can learn from this threat to determine how financial institutions can deal with the financial crisis that they face in their day to day activities. Financial Status of Santander Bank Revenue and Profits Source: The Company’s 2014 Annual Plan pg. 104 Santander bank’s profitability has been on the rise over the years. In 2014, it achieved a profit increase of 39.3% from its 2013 profits. The steady growth in profit is attributable to the excellent performance that the bank experienced in its main areas of income statement. This was equally due to the fact that most of the bank’s business units had recorded a good performance. The graphs below show how the bank has improved its profitability and hence gaining a competitive advantage in the market. Balance Sheet Source: From the company’s 2014 Annual Report pg. 110 The balance sheet above shows that in the year 2014, Santander bank experinced an increase in the amount of loans that it advanced to its customers as well as in funds in most of the countries in which it has branches. In the lending sector, there was an increase in ten of Santander bank’s significant markets. The bank’s net loan to deposit also grew to 113% compared to 2013 when it was 112%. Lastly, it is evident that the total capital ratio of the Santander bank was 11.8%. Financial Analysis of Santander Bank’s Competitors Source: https://finance.yahoo.com/q/co?s=SAN+Competitors From this comparative analysis, it is clear that the Santander bank has a relatively higher competitive advantage in the market as compared to its main competitors. This makes it to have a greater market share and a wide customer base that will ultimately increase its profitability. Conclusion From the foregoing analysis, it is clear that Santander bank is suitable company for my placement. This is mainly due to its high profitability and high market share. The bank also happens to be among the top banks globally and hence it can offer an invaluable opportunity to learn from the high-profile matters that it engages in. its global presence accords an intern the chance to come up with detailed banking and financial solutions. Its huge enterprises and individual investors will also accord the student more knowledge in the banking sector. Executive Summary This report gives an analysis of Santander bank as a suitable placement provider. The report gives an introduction to the bank which encompasses a brief history. This report equally analyses the business environment and the business activities of this bank. Being a bank that mainly deals in financial matters, I found it to be a suitable placement provider considering the fact that I am a business student. The report has outlined the bank’s SWOT analysis so as to determine its suitability as a business provider. Lastly, the report gives a comparative financial analysis of the bank with its major competitors. Curriculum Vitae PERSONAL DETAILS: Name: Date of Birth: Nationality: Marital status: Gender: Current address: Phone no: Email: Languages: English (fluent) CAREER OBJECTIVE: To be dynamic and acclaimed in all areas of direct responsibility and ready to work in a challenging environment in which my skills and potentials are utilized to the maximum and duly appreciated. I strive to be an effective team player in the ever challenging career demands and challenges. SUMMARY OF QUALIFICATIONS AND SKILLS: Undergraduate: Technical skills: Microsoft Office: Word (Advanced), Excel (Basic), PowerPoint (Advanced) Languages: English (Fluent) EDUCATION AND ACADEMIC QUALIFICATIONS: - TO -: Institution: Type of education sought: Qualification: -TO -: Institution: Type of education obtained: Qualification: WORK EXPERIENCE: - To - Intern, (Organization) Responsibilities: - To - Intern, (Organization) Responsibilities: VOLUNTEER WORK: 1ST TO 6TH SEPTEMBER 2014: Volunteer, (Organization) Responsibilities: 1ST TO 22ND MARCH 2013: Volunteer, (Organization) Responsibilities: EXTRA CURRICULAR ACTIVITIES: Voluntary/Community Service: University Clubs/Societies: Sports: Hockey and athletics. Hobbies: Travelling; Networking; Reading various literatures; Doing charity work; attending public talks and conferences. REFEREES: References Capital, Z. (2015). Santander: A True Global Bank With A New Strategy In Place. [online] Seekingalpha.com. Available at: http://seekingalpha.com/article/3116756-santander-a-true-global-bank-with-a-new-strategy-in-place [Accessed 3 Aug. 2015]. Euromonitor.com, (2015). Banco Santander Company Profile - SWOT Analysis. [online] Available at: http://www.euromonitor.com/banco-santander-sa-in-consumer-finance/report [Accessed 3 Aug. 2015]. Guillén, M. and Tschoegl, A. (2008). Building a global bank. Princeton, NJ: Princeton University Press. KPMG, (2012). UK banks: Performance benchmarking report. UK: KPMG Krull, R. (2015). Banco Santander: Strengths, Weaknesses, Opportunities, Threats (SAN). [online] Fool.com. Available at: http://www.fool.com/investing/general/2012/05/07/banco-santander-strengths-weaknesses-opportunitie.aspx [Accessed 3 Aug. 2015]. Parada, P. (2007). Lessons from the Strategy of Banco Santander: The Three-Step Process of Internationalization in Retail Banking. Georgetown University Reuters UK, (2015). Santander's new head Ana Botin reaffirms bank's strategy, dividend. [online] Available at: http://uk.reuters.com/article/2014/09/15/uk-santander-botin-idUKKBN0HA0K520140915 [Accessed 3 Aug. 2015]. Reuters.com, (2015). Banco Santander SA (SAN) Company Profile | Reuters.com. [online] Available at: http://www.reuters.com/finance/stocks/companyProfile?symbol=SAN [Accessed 3 Aug. 2015]. Santander, (2013). Annual Report. Santander Santander, (2013). Resolution plan for Santander bank. Santander Santander.co.uk, (2015). Santander | Our Strategy - Santander UK. [online] Available at: http://www.santander.co.uk/uk/about-santander-uk/about-us/our-strategy [Accessed 3 Aug. 2015]. Read More