Ana Botin: The most powerful woman in banking

Santander's chief executive tells James Ashton there is long-term profit in serving risky, high-growth companies

Could I have misheard? Ana Botin, the chief executive of Santander UK, just described her bank as a "challenger" to the "Big Four". In a market that the Business Secretary Vince Cable is intent on opening up to new competitors, did he really have Santander, with millions of customers, in mind when he called for entrants to overhaul the status quo?

Challenged maybe, for its well-documented problems with customer service, but a challenger? Tell me more.

"We are a challenger bank; let me say that once, twice and three times if necessary because people still sometimes think of us as being very big," says Ms Botin, in urgent, rapid-fire language. "We are big in mortgages, we invested a lot to have a very strong capital base. The challenge is not just in small and medium-sized enterprises (SMEs), our relationships in current accounts and even credit and debit cards are very much behind."

In taking the battle for customers to Barclays, Lloyds, HSBC and Royal Bank of Scotland, Ms Botin has an eye on banking for SMEs with a £300m "breakthrough fund" she is championing.

So while retail customers are being steered to its 123 account, whose advertising features sports stars Jessica Ennis, Jenson Button and Rory McIlroy plugging the benefits of cashback on household bills, Ms Botin also believes there is a gap serving high-growth, risky companies with revenues of up to £12m.

These are the founders who can't find backers to help them move on to the next level without giving away a chunk of equity. So far nine have been backed with a layer of mezzanine finance, including the London salad chain Vital Ingredient, and another 300 are being examined.

On top of the funding, there are trade missions organised to New York and Brazil, and help recruiting bright talent from universities.

Why is she bothering? After all, it takes five times the equity to provide the same amount of financing to an SME compared to a mortgage. And Santander already has 14.6 million retail customers – a legacy from its creation by combining Abbey, Alliance & Leicester and Bradford & Bingley. Ms Botin explains she is intent on rebalancing the bank and that SMEs could make Santander more profitable in the long term.

"That is the reason why last year, this year and probably the year after we will be reducing our mortgage lending," she says, sitting in a meeting room at advertising agency Saatchi & Saatchi where she has just met a group of entrepreneurial hopefuls. Ms Botin, 52, was parachuted into the job more than two years ago when her predecessor, Antonio Horta Osorio, was poached to lead Lloyds Banking Group. She is the daughter of Emilio Botin, the 78-year-old chairman of Spain's giant Santander Group, and a fair bet to succeed him when he eventually retires.

Her business push contrasts with Santander's retail woes, where it has been hit with its share of payment protection insurance provisions and its investment advisers came under fire in a mystery shopping exercise.

"It will never be completely fixed," she says of the retail bank. "You can always do better, OK, but you should see great improvement over the next few years. We want to get it right for everybody but because we have put together three institutions it is very hard because if you are an Alliance & Leicester customer or an Abbey customer you are used to relating to your bank in a certain way. People think it's a current account, but it's not a current account, it's a whole service around a current account."

The industry's focus is clearly on getting lending moving again, despite entrepreneurs complaining that most banks don't understand them. The Government's Funding for Lending Scheme, which is designed to bring down the cost of lending, has livened up the mortgage market but its impact on SMEs is less clear. Either way, rock-bottom interest rates are bad news for people with a nest egg to protect.

"Well, obviously savers are going to suffer," Ms Botin says. "If the Government is funding itself at 2 per cent you know how much are you going to pay savers if you want to lend money at a cheaper rate? People have the incentive to build a factory or open new stores. It is a trade-off."

But Ms Botin believes she has an advantage over other bankers in understanding business because of a three-year stint in technology venture capital when she founded the web consultancy Razona. That broke up a banking career which took her from the JP Morgan trading floor in New York, before returning to Santander, where she led Banesto, its Spanish lender.

"It was incredibly hard but it was incredibly exciting too. I fully sympathise when things don't go as you think they are going to go and you cannot find the right people. I remember trying to hire a finance director. I consider myself to be quite persuasive when I want. I could not convince the people I wanted to come and work with us.

"That is why internships are so important. Bright graduates will either set up their own companies or come and work for us or a consulting firm or government. But going to work for a small company if you are really good? No way."

The do-it-yourself approach to business banking was forced on Santander, which has 5 per cent of the SME market, when a deal to buy a slice of Royal Bank of Scotland that would have tripled its market share in this area fell through after two years of negotiations. Nevertheless, it still expects to double the size of its network of 35 business centres over the next three years. SME lending is growing at 20 per cent a year, albeit from a small base.

If all goes well, Santander should be able to float its UK business, once touted with a value of £20bn, which was put on ice when stock market conditions slumped.

"Santander group strategy is to have listed subsidiaries, we believe that our major banks have to be listed for a very simple reason: if we want to be one of the leading banks in UK, this is a service business and we have to be local, we have to be part of the community."

At group level, Santander already has 1.3 million British shareholders, mainly former Abbey investors who opted for paper when the takeover took place. They haven't fared badly – if you discount the last year when fears over the Spanish economy sent stocks south and the group had to write down lots of property investments.

"Overall, it's been much better than the alternatives, let me leave it at that," she says. It could be worse, I suppose, if the lender was exposed to the Spanish economy. "It's doing a lot better, thank you very much," she says, narrowing her eyes. And will the same be said of Santander as it tries to become the entrepreneur's friend?

The CV: Ana Botin

Born October 1960. Oldest child of Emilio Botin and Paloma O'Shea

Education St Mary's Ascot; Bryn Mawr, Philadelphia; Harvard University

2010 to present Chief executive of Santander UK

2002 – 2010 Ran Banesto

1988 Joins Santander

1981 – 1988 JP Morgan

Had golf coaching from Seve Ballesteros, her brother-in-law

Married with three children

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs People

Ashdown Group: Human Resources Manager

£28000 - £35000 per annum + Benefits: Ashdown Group: A successful organisation...

Recruitment Genius: Internal Recruiter - Manufacturing

£20000 - £30000 per annum: Recruitment Genius: An Internal Recruiter (manufact...

Ashdown Group: HR Manager (CIPD) - Barking / East Ham - £50-55K

£50000 - £55000 per annum + 25 days holidays & benefits: Ashdown Group: HR Man...

Recruitment Genius: Operations / Project Manager

£40000 - £48000 per annum: Recruitment Genius: This software company specialis...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea