Could Santander achieve success in Canada?
But while the market appears ready for a brand new entrant, gaining a foothold won’t be easy, said Michael Liquornik, president and principal of advisory firm Fin-Serv Advisors Inc.
“It’s great that you’re opening your doors. But what is the strategy to actually get people to deposit money? Because it’s not like we lack banking options in this country,” he said.
Santander hasn’t said much about its plans and had no comment for this story.
The company has kept a low profile as it really works to secure a banking license that can allow it to simply accept those deposits and expand its services. In April, the finance minister approved his request, nevertheless it still requires the approval of the banking regulator, which has one 12 months from the minister’s approval to make a choice.
So far it looks as if Santander plans to proceed on its chosen path within the USA, said Liquornik.
The bank launched its no-fee, high-interest online Openbank offering in each the U.S. and Mexico in recent months, partially to lift deposits to fund its auto lending business.
Santander also has an auto lending business in Canada, having agreed to purchase Edmonton-based Carfinco for about $300 million in 2014. The bank renamed it Santander Consumer in 2021, saying on the time it was “excited about the future under this globally recognized brand.”
It is smart to finance your automotive loans with deposits as they’re cheaper than wholesale financing. However, it isn’t clear what number of Canadians would switch banks simply to get a better rate of interest on their deposits, Liquornik said.
