MGMT 403 Strategic Leadership: Banco Santander Case Study Analysis

This case study analyzes the strategic leadership of Banco Santander under Emilio Botín, focusing on his internationalization and diversification strategy through acquisitions. The analysis addresses the risk-spreading value creation for shareholders, the rationale for increasing presence in the U.S. market, and potential strategies for doing so. Key success factors for international diversification, including risk management and governance, are examined. The study also analyzes the internal governance mechanisms of ownership concentration within Banco Santander, including capital increase and the Santander Scrip Dividend Scheme. The case study utilizes references to support the analysis.

Running Head: Strategic Leadership
Strategic Leadership
Name of the Student
Name of the University
Author’s Note

1STRATEGIC LEADERSHIP
Botin’s strategy was to acquire large foreign banks which have some sort of financial
straits, some of these banks are located in developing countries in South America. Will this
risk spreading create value for shareholders? Under what circumstances could these
acquisitions create benefits for shareholders?
Botin’s strategy was to create value for the foreign banks with inclusion of financial
straits. The banks present in the South America follows four fundamental ways that help to
generate greater shareholder value. The points that are cover the risk and create value for the
shareholder focus on facing continuous pressure from the regulator and on the other side the
former’s expectation. The risk spreading factor will not halt the bondholders from generating
worth because the equilibrium within the shareholders is on an advanced level of funding and
then lately the investment is generated in the form of returns. The senior executives and the
board of directors of Santander is a bold risk taker who has grown extremely clever with the
merging, but at the same time he also generated sustainable profit machine (Sane & Halan,
2017).
The motives for profit under the statuses that will accommodate to the shareholders is
when he reached out to the prominent foreign banks that have a minimum of 10% market share.
The Botín's strategy had made him earn a billion dollar decision. A merger is the agreement that
was made between two existing companies in US to be as one company. The acquisition was a
smooth functioning of the growing organization that planned to expand as he bought the bank at
a bargain-basement price which was an independent subsidiary. The functioning of the bank was
kept very simple as the rival firm was growing. The bank offered loans to high quality risk
(Marsidi, Annuar & Abdul Rahman, 2016).

2STRATEGIC LEADERSHIP
Should Banco Santander increase its presence in the U.S. market? Why or why not?
Banco Santander is the 16th largest bank in the world with the accumulation of total asset
of $1,763.23. The Banco Santander United States of America should increase its presence in the
U.S. market as it comes headfirst to aid thousands of customers who drive home novel and who
uses the vehicle on a daily basis with financing through licensed dealers countrywide and even
on the basis of online with the assistance of Road Loans direct-lending program. The bank is
recognized for its ordinary surroundings, silent and peace, for its famous superiority of life,
national establishment and complete communal, in local services and communication structure
(Paz-Aparicio & Ricart, 2013).
Santander is increasing as the days are passing and its aim and focus is on attending the
ultra- wealthy as this global bank is putting more of resources on the private wealth in its arms. It
has a strong aim in adding tens of billions under the assets which is grouped under the
management within the period of next three years. The lenders of the Latin America will have a
strong presence to target the higher class of society in the countries like Brazil and Mexico. The
other part of the banks such as in UK and US where the Santander’s private bank is feebler.
These banks can be set as a target and the retail banking out lets can be harmed and its chain in
Miami. The shareholders of the bank are observing for an individual or a company that owns one
stock from the enterprise’s standard. As a subject of equity owners the shareholders are subjected
to capital gains or in case of fatalities and the dividend payments as the residual claimants of a
firm (Sapir & Wolff, 2013).

3STRATEGIC LEADERSHIP
Assume that Banco Santander decides to increase its presence in the U.S. market. How
should it do so?
Banco Santander decides to increase its presence in the U.S. market by the process of
middle market that satisfies the customers with the current banking relationships and which
generates no guarantee success for the future course of action. The strategy that can help in
sharpening the competitive positioning and strive a competitive idea against the new players. The
growing competition in the US market is lending its business in the banking sector both in large
and small size firm. The banking sector in the United States can aggressively target the middle
market segment and attempt to grow their wallet in recent times. The bank can generally
perceived to compete on the price were the product or service differentiation. Secondly
disruptive forces creates evidence on the customers and small business banking that creates a
market place for the leading and digital banking are to reshape the competitive dynamics in the
middle of the business. The analysis that suggest is entirely based on the new players who are the
leading marketers in the economy. To win the new competitive landscape the institution will not
only have to sharpen their existing positioning but also devise new approach and tools that
effectively compete against the other players (Allen et al., 2014)
The first strategy that is implemented is focused on the smaller middle market companies
that attract the financial firm and secondly the next wave is towards the disruption that happens
as marketplace for the leaders and other fintech that makes the firm moves into a space.
Similarly the United States has larger outpour in the economy and it tries to capture the larger

4STRATEGIC LEADERSHIP
counterpart. The average quarter revenue for the companies in the segment has grown for more
than 6.6 percentage (Boehe, 2016).
What do you think are the key success factors for the international diversification of Banco
Santander?
The proposed factor for diversification is to set the strategy that is placed for the
motivated for the purpose of empirical success for setting up the international assets that sets the
pricing models which incorporates the SMB and HML factors. The three-factor asset estimating
model leads to a success factors for the global diversification for the banking sector. The
importance of divergence is to maximize the return which is made on speculation that caters to
the different operation of the banking unit. The cause of diversification will made the economy
react differently for the similar events (De, 2013).
The banking regulations in Banco Santander had a long term history and regulators
efforts had made it materialized in formularization of the policies and regulation. Due to the rise
in the global crisis the timing for validation was not one of the best. The first cause for the
success in international diversification of Banco Santander is the bank operation which comes
under the risk management system which caters to high level of I.T and fulfill the best practice of
the entrepreneurial practice in the enterprise risk management system (Angelucci, Karlan &
Zinman, 2015).

5STRATEGIC LEADERSHIP
Secondly the sound risk management systems should be a part of the banking functioning
system and the designing part and implementation should be relevant to risk management
process in adequate organizational structure which ensures the risk that is relevant for the social
cooperate governance.
Thirdly bank governance bodies involve the wide support that brings the changes in the
banking management due to downturn market. it plays an important role in the adjustment of the
whole process in a new situation when the key banking system is in a complicated situation of
managing the risk.
Analyze the internal governance mechanism of ownership concentration in Banco
Santander.
The ownership structure of the Banco Santander under the analysis of the internal
governance has carried out two capital increase. The first mechanism that was analyzed was
dated on 27th July 2017 that made sure that there is no detritions in the capital ratio which results

6STRATEGIC LEADERSHIP
in acquisition of a certain amount of the share portion of Banco Popular Espanol. The new share
that was introduced and an entity of 10 percent capital share was represented (Martín, Martínez
& Nogues, 2013).
The second part where the capital share was increased was on the part of Santander Scrip
Dividend Scheme. It came into effect in the year 2017 in the month of November. The new
shares were issued to an equivalent to 0.7% of the bank share. In the same year after a period of
one month the bank capital share was represented at a huge amount. The stock market
capitalization according to the price was listed on Electronic Spanish Stock Market.
The objectives that safeguarded the ownership mechanism was to deliver the fluidity of
the security challenges that was appropriate in the market where the bank share which has given
complication to such a market that permitted to stabilize and amid the weakening imbalance in
demand and supply. To take advantage was convinced in the situations where the shareholders
can benefit as a whole is in the circumstances somewhere the relation with the view gets altered
in the medium terms. Tradeoff may only take place that is entrusted with the presence of such a
situation in the possession or with applicable performance. The execution of buy-back programs
is relevant to the situations and cover the obligations that are permitted by the bank.

7STRATEGIC LEADERSHIP
Reference
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financial shocks in loan and deposit markets: Role of interbank borrowing and market
monitoring. Journal of Financial Stability, 15, 112-126.
Angelucci, M., Karlan, D., & Zinman, J. (2015). Microcredit impacts: Evidence from a
randomized microcredit program placement experiment by Compartamos Banco.
American Economic Journal: Applied Economics, 7(1), 151-82.
Boehe, D. M. (2016). The internationalization of service firms from emerging economies: An
internalization perspective. Long Range Planning, 49(5), 559-569.
De Socio, A. (2013). The interbank market after the financial turmoil: squeezing liquidity in a
“lemons market” or asking liquidity “on tap”. Journal of Banking & Finance, 37(5),
1340-1358.
Marsidi, A., Annuar, H. A., & Abdul Rahman, A. R. (2016). The formulation of financial,
governance and social index of Malaysian Islamic banks: An integrative approach. Risk
Governance and Control: Financial Markets and Institutions, 6(1), 64-70.
Martín-Aceña, P., Martínez-Ruiz, E., & Nogues-Marco, P. (2013). The Bank of Spain: A
national financial institution. Journal of european economic history, 13(1), 11-45.
Paz-Aparicio, C., & Ricart, J. E. (2013). Offshoring activities impact a company’s business
model: the case of BBVA and Banco Santander. In The Offshoring Challenge (pp. 21-
35). Springer, London.

8STRATEGIC LEADERSHIP
Sane, R., & Halan, M. (2017). Misled and mis-sold: Financial misbehaviour in retail banks?.
Journal of Comparative Economics, 45(3), 429-444.
Sapir, A., & Wolff, G. B. (2013). The neglected side of banking union: reshaping Europe’s
financial system. Bruegel Policy Contribution.