Banco Santander CEO Hector Grisi wants to simplify the company so it can reach its profitability targets. His overhaul plans will likely reduce management layers and may lead to some job cuts, people familiar with the matter say.
Paul Hanna/Photographer: Paul Hanna/Bloombe
Banco Santander overhauled its corporate structure as Chief Executive Officer Hector Grisi seeks to simplify the company’s operations.
As part of the changes, the Spanish bank is combining individual countries’ retail and commercial banking businesses under a new global unit, which will be headed by Daniel Barriuso, and creating a new digital consumer bank area that will be led by Jose Luis de Mora, Santander said in a statement late Monday.
The moves are aimed at simplifying the business and helping the company reach profitability targets. They will likely reduce management layers and may lead to some job cuts, people familiar with the matter said, asking not to be identified discussing nonpublic information.
The new management structure will result in five units: retail and commercial, digital consumer bank, payments, wealth management and insurance as well as corporate and investment banking.
The Spanish bank last year named Grisi, who had been running the Mexico business, as the company’s chief executive officer, a role he took on at the start of 2023. A string of hires and management changes followed, including the exit of Antonio Simoes, who had been head of Europe and was seen as a possible CEO candidate. The bank in April hired Christiana Riley, a longtime Deutsche Bank AG executive, as head of its North American and Mexican operations, starting Oct. 1.
An expansion into U.S. investment banking is also in the works, tapping several new hires from the ranks of Credit Suisse.
Santander will align the way it reports financial results to the new model starting in January 2024, with the five global businesses becoming the new primary segments for the group, while country- and region-specific data will become secondary segments, it said.
Santander’s revamp closely resembles a plan announced last week by Citigroup CEO Jane Fraser. In that company’s biggest restructuring in two decades, Fraser reorganized the firm into five main business and eliminated regional chiefs who oversee operations in about 160 countries. The changes will involve a number of job cuts in Citigroup’s back-office functions.
Santander adopted a regional approach to managing its business in 2019, and a year later rolled out a ‘One Santander’ strategy, to which chairman Ana Botin often refers. That strategy was aimed at increasing connectivity, the company says on its website.
With businesses from Spain to the United Kingdom, Brazil and the United States, Banco Santander is one of the largest retail banks in the world. It has about 212,000 employees and a market capitalization of 55.7 billion euros ($59.5 billion). Botin has been executive chairman of the lender since her father died in 2014.
Ousted leaders in Myanmar are launching a crypto-based bank to bankroll efforts to claw back government control from military rule and expand banking access to a population where already limited financial access has been further choked by two years of civil strife.
Named for the Spring Revolution — the protest movement against the ruling military junta — the “Spring Development Bank” will run on a blockchain-based network and perform currency swaps on a decentralized exchange with crypto-coins pegged to the U.S. dollar.
The neobank plans to offer currency swaps, loans, fixed deposits, prize-linked savings accounts and other financial services. The beta launch for the online bank is scheduled for Saturday, with plans for the bank to become fully operational in August, a spokesperson for the bank said Thursday.
Spring Development Bank’s launch comes as an effort — spearheaded by supporters of the National Unity Government, the democratically elected shadow government recognized by the United Nations and the European Parliament that was toppled in the State Administration Council’s military coup two years ago — to provide funding for the exiled government and widen financial access in a country where already limited banking access has been stymied by two years of authoritarian rule and conflict.
“It’s basically a failed state at this point. The economy has collapsed and the banking system has collapsed. Poverty is endemic. The military is committing massive abuses all over the country,” said Joshua Kurlantzick, senior fellow for Southeast Asia at the Council on Foreign Relations. “The NUG are trying anything possible to provide financial autonomy.”
The neobank will enable users to donate directly to the revolutionary effort and bank in four currencies — U.S. and Singaporean dollars, the Thai Baht and the Myanmar kyat — convertible to the fiat-backed stablecoin Tether, when exchange rates are most favorable. Eventually, the bank plans to also support British pounds, euros, South Korean won, Japanese Yen and other currencies.
Run on the Ethereum-compatible blockchain network Polygon and based on the Uniswap Protocol, a decentralized exchange, the bank will offer a 2% spread on exchange swaps and a lottery program that consumers can enter with non-fungible tokens.
To protect its users from being targeted by the military junta, which has become notorious for its violent repression of dissidents, Spring Development Bank will run on a web-only platform to prevent an app from identifying its users.
“The bank’s interface will look and feel like an application, but we encourage everyone to access it using their incognito window so it doesn’t store any browser history,” a bank spokesperson told Cointelegraph.
Hard cash is hard to come by in Myanmar, where the use of foreign currencies is restricted and banks have reportedly been forced to suspend accounts tied to resistance efforts. That has stymied the shadow government’s efforts to fund its challenge to the junta, which have included campaigns to issue revolutionary bonds, host auctions and reign in support from foreign governments.
“We cannot just move funds into a banking system controlled by the military, so we have to provide this alternative financial system that’s based on trust and guaranteed by the government,” Tin Tun Naing, the governor of Myanmar’s interim central bank and acting minister for finance and industry, told Cointelegraph.
Spring Development Bank also serves as an opportunity to expand banking access to the roughly 55 million Burmese living in the country — of whom three quarters were unbanked in 2019, according to a report from the Yangon-based business consultant ONOW — and the some 2 million beyond its borders that frequently send money back home.
“One thing [the NUG] is probably trying to do is provide services to the public,” Kurlantzick said. “It’s an incredibly impoverished population.”
After being offered to the public in two phases and raising funds through remittances, currency exchanges, loans and other means, the bank aims to onboard 100,000 active users within six months of operations and 500,000 users within a year’s time.
Last year, the NUG planned to launch a de facto digital central bank currency, the Digital Myanmar Kyat, in an attempt to broaden access to financial services and disrupt the ruling military power.
But with technological access limited in a country wrecked by violence and where crypto is a foreign concept to most people, setting up a full-fledged bank may prove to be a hard undertaking.
“That’s different than trying to set up banks with crypto in a country in an actual war zone,” Kurlantzick said.
“You have weak internet access and an inability for many people to assess knowledge about global markets,” Kurlantzick added. “You’re talking about operating in something that’s the equivalent of 1993 Somalia. So, the ability to pull off any of these things seems quite difficult to me.”
But for revolutionaries already accustomed to unlikely odds, the bank’s purpose is more straightforward.
“Spring Development Bank and the blockchain technology it’s powered by is the natural progression in terms of a fundraising strategy for the NUG,” a bank spokesman told Cointelegraph.
Shoppers and trams on Istiklal Street in Istanbul. With the appointment of Hafize Gaye Erkan, Turkey joins a club of fewer than two dozen central banks globally that have a female chief.
Moe Zoyari/Bloomberg
Turkish President Recep Tayyip Erdogan named Hafize Gaye Erkan, a former co-chief executive officer of First Republic Bank, as his new monetary chief, a move that may mark the end of ultra-low interest rates and constant government interventions to prop up the lira.
The announcement, made just after 1 a.m. local time on Friday, brings Erdogan closer to completing a makeover of his economic team after reelection last month to extend his two decades in power. Erkan worked for nearly a decade at Goldman Sachs Group Inc. before spending almost eight years at failed regional lender First Republic.
Erkan becomes Turkey’s first female central bank governor and faces the unique challenge of working for a president who believes — contrary to empirical evidence and mainstream theory — that cheaper money leads to slower inflation. The appointment follows Erdogan’s pick of ex-Merrill Lynch bond strategist Mehmet Simsek as treasury and finance minister.
Erkan, who lived in the U.S. for more than 20 years, left San Francisco-based First Republic in a surprise move about 18 months before its collapse in May. She then became CEO of Greystone, a New York-based commercial-property lender, but left after a few months.
The lira was 1.5% weaker near 23.47 per dollar as of 12:19 p.m. in Istanbul. Its depreciation has accelerated this week as state banks temporarily reined in efforts to bolster it. Turkish stocks rose.
Erkan replaces Sahap Kavcioglu, who served for just over two years and firmly backed Erdogan’s belief that lowering interest rates was the best way to combat inflation. In a separate presidential decree published on Friday, Kavcioglu was named the new head of Turkey’s banking regulator, taking over an institution that once had a crucial role but was sidelined as the central bank pursued policies to channel loans to favored industries and promote the use of the lira.
“Erkan’s appointment hopefully marks an improvement over the policies of her predecessor,” said Nick Stadtmiller, head of product at Medley Global Advisors. “The lingering question is whether Erdogan will allow the central bank to raise rates sufficiently to bring down inflation.”
Turkey joins a club of fewer than two dozen central banks globally that have a female chief. A study earlier this year suggested that at the current rate of progress, it would take over a century for there to be an equal number of women and men at the helm of monetary authorities and major financial institutions.
The unorthodox economic policies under Erdogan have contributed to a cost-of-living crisis and prompted foreign investors to pull billions of dollars out of Turkish bond and stock markets in recent years. Inflation, which peaked at over 85% last year, has decelerated but remains around 40%.
Erkan’s ability to slow price rises and bring back portfolio investors will depend in large part on how much autonomy Erdogan — a self-described “enemy” of high interest rates — gives her. He’s fired previous governors for tightening monetary policy too much and as recently as May 19 said that interest rates would come down further.
Investors will be watching for a big rate hike at the central bank’s next meeting on June 22. JPMorgan Chase & Co. and Barclays Plc expect the base rate to be increased by 16.5 percentage points to 25%. JPMorgan says the bank may opt to make the move even earlier.
Bloomberg Economics doubts there will be an emergency meeting before late June, expecting the central bank to put out a statement before then to underscore its commitment to price stability and hint at a lift in rates.
Despite the state interventions, the lira is down more than 20% this year. It’s the worst performer among major emerging currencies after Argentina’s peso.
What Bloomberg Economics Says
“We see the reversal of the central bank’s accommodative stance as the first step needed before its complex policy set, aimed at supporting the lira, can be dialed back. A weaker lira could in fact be a policy choice for an economy facing a high current account deficit, by giving exports a competitive price boost. It could also help attract higher tourist numbers and spending.” — Selva Bahar Baziki, economist.
Unlike some of her predecessors, Erkan’s background is primarily in finance and not economics. She earned a Ph.D. from Princeton University in financial engineering and applied mathematics, according to her LinkedIn page, and her roles at First Republic included president and chief investment officer.
Following her short stint at Greystone, she started occasionally writing for Turkish daily Dunya. Though her broader views on policy remain little known, her columns give a rare insight into her take on current events in the global economy.
In March, she argued the Federal Reserve’s monetary tightening raised the risk of a recession in the U.S. by the end of the year and pondered the alternative offered by Japan’s low rates policy.
The Turkish central bank has been at the center of the growth-at-all-costs strategy that Erdogan has pursued since he turned his office into the nexus of all executive power in 2018.
Before installing Kavcioglu as governor in March 2021, Erdogan ousted his three predecessors for tightening monetary policy too much. Under Kavcioglu, the central bank slashed the benchmark to 8.5% from 19%, despite prices spiraling higher.
“I remain cautious that monetary and economic policy will shift to a more investor-friendly direction as Erdogan remains in the driver’s seat,” said Brendan McKenna, strategist at Wells Fargo & Co. in New York.
—With assistance from Karl Lester M. Yap, Tom Redmond, Patrick Sykes, Asli Kandemir and Zoe Schneeweiss.
