Madrid, Feb 4, 2026, 19:03 CET — The market has closed.
Banco Santander shares dropped roughly 3.5%, ending at 10.70 euros in Madrid on Wednesday following the bank’s announcement to acquire U.S. lender Webster Financial for $12.2 billion. During the session, the stock fluctuated between about 10.53 and 10.91 euros. (Yahoo Finance)
The move is significant as Ana Botín pushes Santander further into U.S. retail banking, just as investors reward European banks for buybacks and strong capital positions. “Webster provides this final step change that we needed in the U.S.,” Botín told analysts this week, adding there are no plans for additional acquisitions in the next three years. German Lopez, a banking professor at IESE in Spain, was blunt: “In the U.S., either you gain scale… or you leave.” (Reuters)
Santander posted solid annual results, setting a high bar for any major transaction. Profits climbed 12% to 14.101 billion euros in 2025, while the bank’s CET1 ratio—a key regulatory capital metric—stood at 13.5%. The board also greenlit a new 5 billion-euro share buyback, part of a wider distribution plan spanning 2025-26. (Santander)
According to filings, Santander will pay Webster shareholders $48.75 in cash plus 2.0548 Santander American Depositary Shares (ADS) for each Webster share, valuing the deal at $75 total. The payment breaks down to about 65% cash and 35% new Santander shares. Santander also projected its CET1 ratio to land between 12.8% and 13% by the end of 2026. The deal is slated to close in the second half of 2026, pending regulatory approvals.
Santander is pitching the deal as a move to boost its U.S. footprint. The bank says the merger will vault it into the top ten U.S. retail and commercial banks by assets, and place it among the top five deposit franchises in key Northeast states. By the end of 2025, it expects to hold roughly $327 billion in assets, $185 billion in loans, and $172 billion in deposits. Santander aims for an 18% RoTE — return on tangible equity, which excludes goodwill — in the U.S. by 2028, backed by about $800 million in annual cost savings by the same year. (Santander)
Not everyone is convinced about the timing. Morgan Stanley downgraded Santander from “overweight” to “equal-weight,” arguing that upside potential looks limited after the recent rally. They also flagged higher execution risk now that U.S. integration is on the table. The bank described the planned cost savings as “ambitious” and warned that deep cuts could hurt revenue—especially since Santander doesn’t have a strong record with integrations in this market. (Investing.com Australia)
Spain’s market has closed, putting the spotlight on Santander’s buyback plans. The bank informed the CNMV it will launch a new repurchase programme worth around 5.03 billion euros, running from Feb. 4 to July 21, 2026. Goldman Sachs International will handle the purchases independently. According to Cinco Días, the maximum shares to be bought back won’t exceed 1.326 billion. (Cinco Días)
In New York, Santander’s U.S.-listed shares climbed roughly 0.9% to $12.35 by late morning. Webster’s stock held steady around $72.24. Traders frequently engage in “merger arbitrage” with stock-and-cash deals—buying the target’s shares and shorting the acquirer’s—injecting volatility into both stocks’ short-term action.
The downside is clear: more dilution than investors expected and less flexibility for capital returns if costs spike during the U.S. expansion. Cinco Días reported the share component would mean issuing around 330 million new Santander shares as ADS, with the cash portion estimated at about 6.6 billion euros. The outlet also pointed out the deal would cut into the bank’s CET1 ratio, dropping it from 13.5%. (Cinco Días)
European stocks edged lower on Wednesday, dragging the broader market with them as banks posted mixed earnings. Santander’s shares took a bigger hit following the Webster announcement. Spain’s IBEX 35 barely moved, closing almost flat. (Reuters)
Investors are set to focus on more details about the capital impact and the timeline for shareholder and regulatory approvals once Madrid markets open Thursday. Bank stocks may also react to shifts in UK rate expectations after the Bank of England releases its February policy decision and minutes on Feb. 5. (Bankofengland)
