Santander: the bank that escaped the credit crunch

Matthew Lynn investigates the rise and rise of the family-run Spanish bank that now has 24 million British customers — and wonders whether its story is too good to be true

If ever a banking deal came with the curse of the black spot, it was the takeover of Dutch bank ABN Amro at the height of the last boom in 2007. Three European banks teamed up to launch a hostile £49 billion raid, the largest financial takeover in European history. Two of them went to a horrible fate: our own Royal Bank of Scotland, which dreamed up the deal, had to be rescued by Gordon Brown, while the Belgium-Dutch group Fortis was itself nationalised soon afterwards. But the third partner, Banco Santander of Spain, not only survived the ABN deal apparently unharmed, but came out of it smelling sweetly of roses.

Santander is the great enigma of European finance. To the casual observer, it has no right to be still in business. It is the biggest bank in what looks like the most bust economy in the eurozone. Outside its home territory, it has been snapping up banks around the world in recent years and taking on new business at a rate that might have made even Sir Fred Goodwin wonder if his foot wasn’t pressed a bit hard on the pedal.

But Santander just keeps getting bigger and bigger, coping with a few losses and minting a fortune from its core businesses. Some City analysts wonder whether it can really have ridden the credit crunch with such consummate ease — or has it, along with the rest of the Spanish banking industry, just managed to hide its true losses in a deep cellar somewhere?