There is a new kid on the UK’s corporate banking block and it has taken aim at the crowns of the Big Four. Charles Garfit talked to Ruari McCallion about building long-term relationships with British business.
The changed landscape of the post-2008 financial services world has seen a new star rising in business banking. While Santander built its presence in the UK with the acquisition of three former building societies – Abbey National, Bradford & Bingley and Alliance & Leicester – it has extended its business well beyond the domestic mortgage market. It has a clear and well-planned strategy for developing a strong presence in the corporate and commercial sector.
“Alliance & Leicester had a corporate and commercial banking operation – it held one per cent of the market,” said Charles Garfit, head of manufacturing. “We have been steadily building our commercial business in the UK, with the intention of mirroring our global position.” Santander has strong representation in Spain, Latin America, the East Coast states in the USA, Poland and Germany. That international presence is something it believes is important for its growing corporate client base.
A global brand
While the companies Santander acquired in the UK all had strong brands in their own right they were not positioned where it wants to be seen, as a broad-spread, business bank.
“The Santander brand is known globally; rebranding in the UK reflected the need for unification,” he explained. So what does Santander have to offer manufacturing business in particular? The same as the established banks are offering or something else?
“We provide a wide range of products and services, of the sort you would associate with commercial and corporate banking. Our online Connect Internet bank solution gives customers access to their accounts from their computers,” he said. All present and correct, so far. “We offer competitive invoice and asset finance products and what we offer manufacturers in particular is a broad understanding of the vast array of plant and machinery they require. My team is made up of people who know the right questions to ask.” He went on to assert that Santander’s dedicated asset managers enable the bank to talk to both suppliers and manufacturers and to build a deeper understanding of the customer’s business and thus to determine the right solutions for them.
“We also look at the out-turn and the ways that an investment will help the customer to increase output and profitability. We always endeavour to truly understand its impact and effect,” Garfit said. To be fair, all the major banks are saying pretty much the same thing; it is when he explains the makeup of his team that one begins to get a different flavour. As Santander UK did not have a large corporate and commercial infrastructure it had to recruit personnel from outside. It has looked for individuals with particular skills and attitudes and also gone for people with experience of industry and related activities – Garfit himself was a consultant, for example – and then trained them how to do banking.
“Over a five-year period we have been recruiting hand-picked people for relationship banking,” he said. Relationship banking is a phrase that one likes the sound of but the reality does not always match up to the desire. “We now have around 700 personnel based at 60 business centres across the UK. Our training is aimed at increasing their knowledge and skills. We have been working with the Warwick Manufacturing Group, for example.”
Santander’s fundamental belief is that the purpose of the bank is to help its business customers to evolve, not simply to grow. It will actively encourage them to seek out new markets and new territories. In that context, its international presence is a distinct benefit.
“Santander can connect our customers with buyers of products and vendors of raw materials, across the globe,” he explained. It gets better. “This is a service that is free to all our commercial customers.” And there’s more. The bank takes customers on trade missions – it recently took a group of company representatives to Brazil and introduced them to appropriate buyers, a significant number of whom were Santander customers as well. Quite a few of the delegates came back with firm orders, secured during the trip.
New approach, new products
“Our common global identity helps to establish trust and to overcome potential sticking points,” said Garfit. Obviously, creditworthiness is important, as is security in the case of lending. But he says that his team wants to spend the right amount of time with prospects and customers in order to build relationships, to properly understand customers and their businesses. “That enables us to help them achieve their personal ambitions as well as the ambitions of the business they run.” Its products are also tailored to the manufacturing customer base and the offer may go a bit further than some competitors. Take something called ‘reverse factoring’, for example.
“We will pay your bills for you, in advance of when settlement is required. Our customer gets the benefit of improved cashflow and it may enable them to negotiate better terms,” said Garfit. “This is pretty normal for FTSE-100 companies but we offer it to all corporate and commercial customers.” Subject to status, of course. He is also proud of the fact that credit colleagues are based in regional centres – that is real people making decisions; “Computer says no” is not something a Santander commercial customer will have to endure.
Santander is particularly focused on helping fast-growth businesses. Its ‘Breakthrough’ initiative aims to identify, nurture and support emerging business leaders. The ‘Masterclass’ feature offers participants site visits and the chance to benefit from others’ knowledge and experience. Breakthrough organises at least two ‘live events’ per region, which cover current and anticipated challenges and contributions from shared experience of larger companies. The Internship initiative helps to match high-quality graduates with SMEs that could beneﬁt from their skills. There is even a section on corporate social responsibility. The right elements are tailored to each customer. Of course, it is a banking offer so funding is a core element – but it’s more than an ordinary secured loan.
“It incorporates tooling, assets such as machinery, buildings, and so on,” he said. “And we don’t just look at the business as it is today; we look at where it will be after the investment.” A phrase that he repeats often is ‘grown-up conversation’. Santander’s approach to corporate and commercial banking is firmly rooted in knowledge, in-depth assessments and thorough understanding. It can lead to terms in asset finance that are more suited to the broader situation than the formula, for example.
“The good thing about the manufacturing sector is that all manufacturers are different; they have their own characteristics and nuances,” said Garfit. “We believe in human intervention at all levels. We will have grown-up conversations about assets, customers, value of projects or investments, longevity and the value an investment brings to a business. We believe what sets Santander apart is that relationships are the cornerstone of our business.”