Now Reading:

Santander insurance claims provision hits profits


Santander insurance claims provision hits profits


Santander’s profits and shares have taken a hit after the Spanish lender said it was setting aside 620 million euros to cover compensation for insurance policies miss sold by its UK branches.

The euro zone’s biggest bank wants to cleaning up its British arm’s balance sheet before selling shares next year.

Santander’s first-half net profit was 3.5 billion euros, down 21 percent on the same period last year.

Even without that provision in the UK, the bank’s net profit would have been down seven percent, dragged lower by rising funding costs and higher provisions against bad assets in Spain in the wake of the country’s property bubble bursting.

In the UK the charge and higher regulation costs dragged Santander to a pretax loss of about 270 million pounds (305 million euros) in the second quarter.

Santander’s business in Spain had reached a “turning point,” Chairman Emilio Botin said in June. Spanish banks have had their margins squeezed by rising funding costs and increased provisions against bad loans and falling real estate prices.

A decade of expansion abroad has reduced the proportion of Santander’s profit earned in Spain to less than what it gets in Britain or Brazil, yet Santander’s cost of borrowing on international money markets has risen in line as the Spanish government’s has.

Every story can be told in many ways: see the perspectives from Euronews journalists in our other language teams.

Next Article