Building a Global Bank: The Transformation of Banco Santander (review)

In this interesting work, professors Mauro Guillén and Adrian Tschoegl provide us with the opportunity to read new findings on the banking and insurance industry, a topic they have studied in depth for the last years. In aggregated terms, the main Spanish companies investing abroad belong to that industry, the Santander Group being one of the main ones. In nine chapters, the authors study the international expansion of the Santander Group (to which the Banco Santander belongs), focusing on its corporate strategy. It is worth highlighting that during the last 20 years, the Banco Santander grew from being the second largest in Spain to being the world's ninth largest bank.

The book studies Banco Santander's 150 years' growth from its origins as a family-owned company in 1857 up to the present times. The authors study how this institution evolved and adapted to the changing domestic and international conditions in a process that resembles the general trends by the Spanish financial sector in general. Therefore, this case study can be useful for scholars trying to understand the general evolution of Spain's financial sector.

Banco Santander's international expansion started after 1986, when Emilio Botín III took over as executive chairman of Grupo Santander and carefully re-oriented the bank's strategies to take advantage of the changing institutional framework of Spain's financial industry, which started in 1984. These included the end of maximum limits in interest rates, the opening of Spain's financial to foreign investment (which immediately increased competition), and the decrease on banking regulations. The bank adapted by globalizing its operations, increasing investment in marketing, and investing in the training of its labor force.

Corporations in the service sector can follow a globalization process either through a gradual (lineal) process (also known as the Uppsala model) or an opportunistic (contingent) one. The lineal process is usually followed when the company moves to a country in which it feels more comfortable due to a short cultural distance and delaying its entry to more unknown markets. Banco Santander clearly followed a lineal process when entering Latin America. The bank could take advantage not only of a common language and culture but also of the poor expansion of the financial sector in that continent and the privatization policies taking place after the 1980s. Despite its more visible and better-known presence in Latin America after the 1980s, the bank had already initiated international operations decades before when in 1951 it opened representative offices in Cuba, Mexico, and Great Britain, and in Brussels in 1970. After the big expansive push of the late 1980s, the bank followed a process of expansion through the acquisition of Banesto in 1994, Banco Central Hispano in 1999, and the Abbey Bank (Great Britain) in 2004, which at the moment was the largest cross-border retail banking deal in Europe and permitted Banco Santander to become the world's ninth largest in terms of asset value.

The bank's international expansion was also facilitated by some crucial marketing strategies, which included the creation of the so-called "super products," like super-deposits, super-funds, super-mortgages, and super-credits among others. While these were products oriented to retail banking, after 2006 the bank also entered the investment-banking sector, investing in firms in the financial, construction, industrial, and technology industries.

This book will be useful not only to scholars but also to practitioners in the financial sector. It is pleasant to read and provides important details on recent and historical events in Spain.