Santander's $10 Billion of Deals Stretches `Mom and Pop' Model

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Banco Santander SA’s $10 billion four-nation buying spree since June has some analysts and investors asking whether Spain’s biggest bank is overreaching. The $3.7 billion purchase of 70 percent of Poland’s Bank Zachodni WBK SA, announced on Sept. 10, follows acquisitions in Britain, Germany and Mexico, as Chairman Emilio Botin snaps up assets from firms battered by the financial crisis.

“The question is whether they can keep a tab on risk,” said John Raymond, an analyst at CreditSights Inc. in London. “The bigger you are, the easier it is to miss something that goes wrong in a part of your empire.” “Santander should go a bit slower on acquisitions or otherwise people will think they will need a capital increase,” said Joerg de Vries-Hippen, who helps manage 16 billion euros at Allianz Global Investors in Frankfurt.

Santander prides itself on its ability to control risk across its self-run units, a process that requires strong local management, said Kirchmaier. The bank also needs to keep customers happy as it expands, he said. “Why is Santander a successful bank? It’s because they have very effective and efficient risk management,” he said. “For that you need a lot of people you can trust.”

Source: Bloomberg

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