Bloomberg News

Santander’s Candelas Predicts ‘Deposit War’ to Capture Savings

April 11, 2012

A “deposit war” is set to break out in Spain as banks compete for customer funds, said Enrique Candelas, head of Banco Santander SA (SAN)’s consumer banking business in the country.

“The economy has to deleverage and this means a lower demand for credit and also implies that in the medium term that there will be the need for more saving,” Candelas said in a speech in Madrid today. “This is undoubtedly going to provoke a deposit war.”

Higher financing costs, lower revenue from commissions and falling credit demand have made the Spanish banking industry barely profitable, Candelas said. The solution lies in adjusting the prices of loans and products to reflect the greater costs of doing business and seeking efficiency gains, he said.

Candelas predicted that 10,000 to 12,000 bank branches may need to close in Spain as the industry cuts costs. He said Santander, Spain’s largest bank, won’t close any branches as it seeks to wrest market share from competitors. Bank branches in Spain have already dropped to about 39,800 from a 2008 peak of about 45,700, according to Bank of Spain data.

As Spain faces its second recession since 2009, Santander’s strategy is focused on seeking business with companies and higher-income customers, Candelas said. The bank will only consider buying banks rescued by the government under “very favorable” terms, he said.

To contact the reporter on this story: Charles Penty in Madrid at

To contact the editor responsible for this story: Frank Connelly at

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