Ana Botín Faces Her Biggest Test at Santander

With her appointment as chief executive officer of Banco Santander's (STD) U.K. unit in November, Ana Patricia Botín has a chance to prove she should succeed her father, Emilio Botín, 76, as chairman of Spain's largest bank. All she has to do is repair the bank's customer-service reputation and pull off an initial public offering.

London will be the toughest test yet for Botín, 50, whose performance is being closely watched in Spain, where Botíns have helped manage Santander for 115 years. She took charge of Britain's second-largest mortgage lender after former U.K. head António Horta-Osório defected to lead rival Lloyds Banking Group (LYG).

Santander's U.K. IPO will probably take place in the fourth quarter of this year, Emilio Botín said on Feb. 3. Engineering an IPO won't be easy for Botín because mortgage lending in the U.K. is shrinking, interest rates are rising, and Santander's biggest competitors, Lloyds and Royal Bank of Scotland (RBS), are regrouping after bailouts.

Ana Botín, who declined to be interviewed, also will have to address the bank's reputation for poor customer service. Santander was dubbed Britain's "most-complained-about bank" in September by Which?, a British consumer magazine, after the lender received 216,958 complaints, or eight per 1,000 accounts, in the first six months of last year. The bank said in December it had mistakenly mailed as many as 35,000 statements to the wrong people in the U.K., sharing customers' financial details. In an appearance before the House of Commons Treasury Committee on Jan. 18, Botín said Santander, which has 1,400 branches in Britain, hired 1,000 people to improve operations. "We are beginning to improve, but there is a lot of work to be done," she said.

The bank wants employees to get to know their customers better to enhance service and sell more products, Botín told 2,500 managers in a meeting at the Earls Court exhibition center in London in February, according to an executive who attended the event and asked not to be identified, in keeping with company policy. Botín, who boosted lending to small and medium-size businesses at Banco Español de Crédito, or Banesto, the Spanish retail arm of Santander she ran before moving to London, wants to do the same in the U.K., where 80 percent of the bank's business is with retail customers, the person said. Her other priority, she said, is increasing profitability and efficiency as she prepares for the IPO. Profit at the unit rose to £1.7 billion ($2.8 billion) last year, from £1.5 billion in 2009, the bank reported on Feb. 3.

Emilio Botín has run Santander for 25 years, building it from the sixth-largest Spanish lender to the biggest, with 179,000 employees and €1.2 trillion ($1.7 trillion) in assets. He is the third member of his family to be chairman of Santander, though the Botíns control only about 2 percent of the company's shares. Santander grew through the global financial crisis, adding €300 billion of assets since 2007. Shares have declined 14 percent over the past year to Mar. 22, compared with a 5 percent drop in the 48-member Bloomberg Europe Banks and Financial Services Index.

A 1981 economics graduate of Bryn Mawr College in Pennsylvania, Botín worked at J.P. Morgan, now part of JPMorgan Chase (JPM), in Madrid and New York for eight years before joining Santander. A Santander spokesman declined to comment on the bank's succession plans. "There's always going to be the issue of who her father is," says Julian Chillingworth, who helps manage about £15 billion at Rathbone Brothers in London. "She comes with a reasonable reputation, so let's see how she gets on."

The bottom line: Taking over Santander's British unit at a difficult time, Ana Botín has a chance to show that she deserves to run Spain's biggest bank.

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