Santander USA Bolsters Its Board After Failing Fed Stress Test

Richard Spillenkothen
Former Federal Reserve head of banking supervision Richard Spillenkothen. Photographer: Dennis Brack/Bloomberg

Santander Holdings USA Inc., one of two foreign-owned banks to fail the Federal Reserve’s stress test this year, named Thomas S. Johnson as its first lead independent director amid an expansion of its board.

Richard Spillenkothen, 65, the Fed’s former head of banking supervision; Catherine Keating, 52, a former JPMorgan Chase & Co. executive and chief executive officer of Commonfund; and Alan Fishman, 68, chairman of Ladder Capital Finance Holdings, were also named independent directors, according to a statement Friday from the lender, which is owned by Madrid-based Banco Santander SA. Johnson, 74, is the former CEO of Greenpoint Financial Corp.

“These changes are among the many steps we are taking to reinforce best practices and meet our standards of excellence,” non-executive Chairman T. Timothy Ryan said in the statement. The moves “will further strengthen governance and oversight of our businesses.”

Santander is under pressure to demonstrate to regulators it’s improved internal compliance controls after the bank failed an annual review in March that tests whether the biggest lenders can withstand financial distress. Santander and Deutsche Bank AG were rejected because of qualitative concerns about internal processes for managing risk.

Santander is one of six U.S. lenders that will be restricted in buying mortgage servicing rights because they haven’t met regulatory requirements, regulators said this week.

The appointments increase the U.S. unit’s board to 14 members with two vacancies, according to the statement.

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