23 April, 2013
Santander Consumer Finance
1. Please describe and evaluate the Country/Political Risk faced by this organization and describe its successes and failures.
Having established itself as a strong financial leader within the financing sector of Spain, Santander has shown great strides in the overall growth towards becoming a worldly recognized leader concerning their involvement in finance on a global scale. The globalization process demonstrated by Santander is of grand success in comparison to many financial business endeavors throughout a multitude of various demographics, lifestyle and economic sectors. It is because of this extreme ...view middle of the document...
Having been founded in Spain in 1950, it took nearly 50 years to begin expansion towards Latin America and London. Within years, Santander gained its first acquisition of Banco Espanol de Credito as well as a successful merger with Banco Central Hispano in 1994 and 1999 respectively. Continuing in growth, Santander expanded beyond the field of retail banking and began delving into consumer lending. Santander has continued to grow displaying impressive results in 2008 where the company operated in 20 countries with impressive market share in total workforce as well as bank profit totals.
The degree of difficulty in maintaining such a large scale organization demonstrates various problems in maintaining a strong organizational structure. The level at which Santander had been performing on a global scale varied from segment to segment with no real business ideology and systematic approach within these sectors. The importance of organizational strength and balance with a unified approach towards a company goal is representation of an area of work and need for Santander.
2.What has been the lending strategy followed by Santander?
With its largest lending activity geared towards auto finance, Santander gained a strong market presence in providing financial assistance to consumers. With a strong dependence on auto and retail credit presence, Santander also delved into different financial services.
---Are lending decisions based on the credit background of the borrower, or on the riskiness of the venture?
Lending decisions by Santander are based on the credit background of the borrower. Through the development of a credit-approval system, SCF gained insight into these consumers on an online database which allowed for the use of real time analysis in determining interest rates for the business interactions.
---How do they manage risk?
Through its developments in building a stronger organizational business structure, Santander had developed a strategy that was particular to each individual region due to the major differences associated within each sector. The influences of culture and political importance were best understood by the residents of such areas and with allowing appropriate power and techniques to these individuals, a better understanding of potential business as well as associated risk would be better handled on a local level as opposed to receiving all instructions and directions from Madrid. Our case study states, “Local branches were also in charge of product development. If a new product entailed risks, it needed the approval of a central committee.” This appropriation of power, allows for smooth day to day operations in ensuring the best possible outcome for customers on a local level with a global mindset.
---How do they finance their loans?
In financing their loans, Santander draws sources from senior debt, commercial paper, asset-backed securitization and customer deposits. With encouragement towards funding by...