By Jeannette Neumann
MADRD-- Ana Patricia Botín has the grievous duty this week to
bury and memorialize her father, Emilio Botín, the Banco Santander
SA chairman who died suddenly on Tuesday evening of a heart
attack.
As his newly appointed successor, Ms. Botín must turn her focus
next week to advancing the life's work of her father, who
transformed Santander from a regional Spanish lender into the
largest bank in the eurozone. Santander's board unanimously chose
Ms. Botín, 53 years old, on Wednesday to become the fourth
generation of her family to lead Santander.
She will have to hit the ground running.
On Monday she is set to preside over a meeting with shareholders
who are voting whether to accept or reject Santander's proposal to
buy out the 25% of its Brazil unit that it doesn't currently
own.
While analysts expect approval of the deal, there have been
rumblings of discontent in recent months among some shareholders in
the Brazil unit. They say Santander has put them between a rock and
a hard place: If they don't accept the offer, they will be left
with illiquid, difficult-to-sell shares; if they do accept the
offer, they will be selling a stock just as they believe the unit's
declining share value is set to rebound.
Citigroup analyst Stefan Nedialkov said that there could be
fewer such buyback deals of Santander's own businesses and
subsidiaries with Ms. Botín at the helm. Ms. Botín is likely to
have an "intense focus" on customers and products in the U.K.,
Mexico and Brazil, he wrote in a research note on Wednesday.
Ms. Botín had led Santander's U.K. unit since December 2010 and
was "instrumental in turning around the company by attracting more
clients," Mr. Nedialkov added. She was closely involved in
designing the U.K. unit's 1-2-3 checking accounts, which offer
customers cash and other rewards for keeping steady deposit
balances and paying household bills online.
More broadly, Ms. Botín needs to establish a clear mission and
strategy for Santander, Berenberg Bank analyst Nick Anderson
said.
"Her father was defined by being a phenomenal deal maker, but
such deals are no longer an option given regulatory changes and the
size of the bank," he said. Santander's existing strategy of
listing subsidiaries, such as the U.S. consumer unit, risks turning
the bank "into a form of investment trust," he said.
News of Mr. Botín's unexpected death and his daughter's new role
dominated front pages of all major Spanish newspapers on Thursday.
Most dedicated dozens of pages or entire supplements to the
transition. Front-page photos showed father and daughter, who bear
a striking resemblance to each other.
Ms. Botín will have to work to respect her father's legacy at
the bank, where he was regarded as a patriarch, while moving out of
his shadow. "She needs to make her mark but also avoid change for
change's sake," Mr. Anderson said. She starts from a strong
position, he added, because she knows the bank "inside out" and is
highly regarded by colleagues and employees as well as
competitors.
The new chairwoman must also focus on bolstering the bank's
capital level, analysts say. Santander executives have said that
the bank plans to have a core capital ratio of 9% by the end of
2014 under Spain's latest regulations. That is above regulatory
requirements but below the ratio held by peers. A lower capital
level means a bank has less of a buffer against losses.
Mr. Botín, who died at the age of 79, oversaw Santander's
expansion into the U.S., where the lender bought Sovereign
Bank.
"In the 10 countries where we have operations, all of them are
important, but I can say that the United States is probably the
main focus for us," Mr. Botín said at a news conference in
January.
His daughter faces several tasks in the U.S., including the
resubmission of Santander's capital plan.
The bank's U.S. unit, Santander Holdings USA Inc., failed the
Federal Reserve's stress test in March because of qualitative
concerns about its estimations of revenue and loss for its
operation in a stressed scenario. The Fed said that Santander had
passed the quantitative part of the test because it had a
sufficient capital cushion in a stressed scenario.
Santander and other banks that failed the stress tests have
until Jan. 5 to resubmit their plans.
Also, Santander Consumer USA, the bank's consumer finance unit,
disclosed in August in a regulatory filing that the unit received a
civil subpoena from the U.S. Justice Department requesting
documents and communications about the "underwriting and
securitization of nonprime auto loans since 2007," part of a
broader government probe examining how lenders issue and package
car loans.
Santander said in the filing that the bank might from time to
time "become involved in various lawsuits and legal proceedings
that arise in the ordinary course of business."
Santander shares were down 1.2% in early afternoon trading in
Madrid.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
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