By Jesús Aguado and Arasu Kannagi Basil
MADRID/BANGLORE, Feb 3 (Reuters) - Spain's Santander will buy U.S. regional lender Webster Financial in a $12.2 billion deal to create one of the country's top-10 retail and commercial banks, it said on Tuesday, marking a major bet on the U.S. market.
Unlike its European rivals, which over the past decade have sold up or scaled back, Santander under Executive Chair Ana Botin has put the U.S. at the centre of its strategy.
Botin is now doubling down on that with
a deal that will catapult Santander to a spot among the 10 largest retail and commercial banks in the U.S. by assets, with a combined U.S. balance sheet of approximately $327 billion in assets.
U.S.-listed shares in Santander closed down 6.4% at $12.23.
The Spanish bank, which has recently overtaken Switzerland's UBS as Europe's biggest lender by market value, first entered the U.S. market in 2005 when it bought Sovereign Bank and is currently one of the market's biggest players in the auto lending business.
The potential for takeover activity among Wall Street banks and large regional lenders has increased in recent months under President Donald Trump on the expectation that regulators will sign off on deals that would have likely been blocked or opposed by the previous administration.
According to LSEG, the acquisition would be the biggest banking deal since October 2025, when Fifth Third Bank announced its $10.8 billion takeover of Comerica Inc and HSBC announced its $13.6 billion bid for Hang Seng Bank.
In 2023, Santander also expanded into corporate and investment banking in the U.S. after hiring more than 100 staff from collapsed lender Credit Suisse.
Botin said the strategically significant acquisition of Webster Financial, based in Connecticut, would allow the bank to strengthen scale and profitability and lower funding costs.
It offered 2.0548 of its shares and $48.75 in cash for each Webster share. Botin said the bank was not considering raising the offer.
The deal, which also helps the lender offset some pressure from lower lending income, is expected to close in the second half of 2026.
Botin said the bank was not planning to do any more bolt-on acquisitions over the next three years.
The acquisition will put Santander on track to deliver a return-on-tangible-equity ratio of about 18% in the U.S. by 2028, among the top five for profitability within the 25 largest U.S. commercial banks, with a target of more than 20% by 2028 at group level.
Santander aimed to maintain all of its shareholder remuneration commitments, including the 5 billion euro ($5.91 billion) share buyback it approved on Tuesday and its vows to pay out at least 10 billion euros to shareholders against 2025 and 2026 results and maintain a 50% payout ratio.
Santander said the group's CET1 ratio would stand at 12.8% post-closing, and over 13% by 2027.
That combination was also expected to deliver significant combined cost synergies of around $800 million, equivalent to around 19% of the combined cost base.
Centerview Partners, Goldman Sachs and Bank of America advised Santander on the deal.
SANTANDER BOOKS RECORD 2025 PROFIT
On Tuesday, Santander announced a rise of 12% in its 2025 net profit to a record 14.1 billion euros, above forecasts of 13.77 billion euros, with its ROTE rising to 16.3% after AT-1 capital instruments, below its around 16.5% target for the end of 2025.
Santander said it expected its group's net profit in 2026 - without the agreed sale of its Polish businesses, the acquired TSB unit in Britain or the Webster deal - to continue growing beyond 2025 profit and to rise 14% to 16% in 2027 in constant euros.
In the fourth quarter, net profit was up 15% year-on-year to a record 3.76 billion euros, above forecasts of 3.44 billion euros.
Its lending income in 2025, the difference between earnings on loans minus deposits costs, fell 2.8% to 45.35 billion euros, slightly above the 45.2 billion euros expected by analysts.
($1 = 0.8458 euros)
(Reporting by Jesús Aguado in Madrid and Arasu Kannagi Basil in Bengaluru; Additional reporting by Emma Pinedo; Editing by Krishna Chandra Elurio, Mark Porter and Nia Williams)
