Banco Santander Explores SRTs for Buy Now, Pay Later Loans
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy SAN?
Source: seekingalpha
- Risk Transfer Strategy: Banco Santander is in discussions with investors to hedge approximately €500 million ($588 million) of buy now, pay later loans through the booming market for significant risk transfers (SRTs), aiming to mitigate potential credit risks and enhance financial stability.
- Surging Market Demand: The use of SRTs has surged as European and North American banks seek to shift risks associated with corporate lending, and this transaction positions Santander favorably to meet strong demand from pension managers and hedge funds.
- Positive Stock Reaction: Following the news, Santander's stock rose 4.3% in midday trading, reflecting a positive market response to its risk management strategy, which may bolster investor confidence and drive future capital inflows.
- Innovative Loan Products: This potential transaction marks Santander's first use of SRTs linked to buy now, pay later loans, showcasing its innovative capabilities in consumer credit and potentially opening new revenue streams while enhancing its competitive position in the market.
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Analyst Views on SAN
Wall Street analysts forecast SAN stock price to fall
2 Analyst Rating
0 Buy
1 Hold
1 Sell
Moderate Sell
Current: 12.180
Low
4.90
Averages
7.40
High
9.91
Current: 12.180
Low
4.90
Averages
7.40
High
9.91
About SAN
Banco Santander SA is a Spain-based company primarily engaged in retail and commercial banking. The Company operates through a model focused on personal and business banking, with significant operations in Europe, Latin America, and the United States. Its strategy emphasizes sustainable growth supported by customer centric operations, digital transformation, capital discipline, and a risk management framework. The Company leads an international network of subsidiaries offering the following services: retail banking, commercial banking, corporate and investment banking, wealth management, insurance, digital payments, capital markets services, advisory, risk‑management solutions, and structured finance.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Banco Santander Explores SRTs for Buy Now, Pay Later Loans
- Risk Transfer Strategy: Banco Santander is in discussions with investors to hedge approximately €500 million ($588 million) of buy now, pay later loans through the booming market for significant risk transfers (SRTs), aiming to mitigate potential credit risks and enhance financial stability.
- Surging Market Demand: The use of SRTs has surged as European and North American banks seek to shift risks associated with corporate lending, and this transaction positions Santander favorably to meet strong demand from pension managers and hedge funds.
- Positive Stock Reaction: Following the news, Santander's stock rose 4.3% in midday trading, reflecting a positive market response to its risk management strategy, which may bolster investor confidence and drive future capital inflows.
- Innovative Loan Products: This potential transaction marks Santander's first use of SRTs linked to buy now, pay later loans, showcasing its innovative capabilities in consumer credit and potentially opening new revenue streams while enhancing its competitive position in the market.
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- Santander Acquisition Praise: Banco Santander's acquisition of Webster Bank received positive feedback, with a former hedge fund manager praising it as a quality asset, reflecting confidence in the bank's future growth potential.
- Altria Stock Recommendation: Altria Group is advised to reduce holdings as analysts note its stock has surged too quickly, suggesting investors consider locking in some profits to mitigate risk.
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- Holiday Impact: With most global stock markets closed for Labor Day, trading volumes have plummeted, particularly in Asia where markets in Hong Kong and the mainland remained shut, exacerbating market uncertainty.
- Economic Outlook: Despite the European Central Bank and Bank of England holding rates steady, expectations for future rate hikes have risen, with traders pricing in a 75% chance of an ECB hike in June, which could impact investor confidence moving forward.
- Industry Dynamics: In the U.S., Apple has issued a better-than-expected revenue forecast, showcasing strong sales and earnings, which may positively influence global markets, particularly in the tech sector.
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- Significant Funding: Ebury has secured approximately £550 million in funding, primarily led by Centerbridge Partners with participation from existing shareholders including Santander, Vitruvian Partners, and 83North, indicating strong market confidence in its cross-border payment platform.
- Continued Support from Santander: Santander will invest £50 million, maintaining a 55% stake in Ebury, which not only solidifies its leadership in the fintech space but also provides robust support for Ebury's international expansion efforts.
- Rapid Business Growth: Since Santander's investment in 2020, Ebury has seen revenue growth exceeding 30% annually, serving over 27,000 businesses across 30 regulated markets, demonstrating strong demand for its global payment solutions.
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- Market Decline: Asian markets are down across the board, with futures indicating similar losses in the U.S. and Europe, despite the S&P 500 being on track for its best month since 2020, highlighting market fragility amidst volatility.
- Central Bank Policies: The Bank of England and European Central Bank are set to announce interest rate decisions today, with economists predicting both will hold rates steady at 3.75% and 2% respectively, in response to inflationary pressures and uncertainty.
- Corporate Earnings: Major banks including Standard Chartered, BNP Paribas, and Societe Generale have all exceeded profit expectations, demonstrating resilience in the financial sector that may provide support for the broader market.
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- Muted Market Reaction: Despite the significant news of the UAE's departure, oil prices remain stable, and both Asian stocks and European futures show relatively muted performance, indicating a cautious market response to the announcement.
- Strong European Banking Performance: UBS reported a first-quarter profit of $3 billion, exceeding expectations, while Santander's profit surged by 60%, and Deutsche Bank also beat bottom-line forecasts, highlighting a robust recovery in the European banking sector.
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Banco Santander Explores SRTs for Buy Now, Pay Later Loans
- Risk Transfer Strategy: Banco Santander is in discussions with investors to hedge approximately €500 million ($588 million) of buy now, pay later loans through the booming market for significant risk transfers (SRTs), aiming to mitigate potential credit risks and enhance financial stability.
- Surging Market Demand: The use of SRTs has surged as European and North American banks seek to shift risks associated with corporate lending, and this transaction positions Santander favorably to meet strong demand from pension managers and hedge funds.
- Positive Stock Reaction: Following the news, Santander's stock rose 4.3% in midday trading, reflecting a positive market response to its risk management strategy, which may bolster investor confidence and drive future capital inflows.
- Innovative Loan Products: This potential transaction marks Santander's first use of SRTs linked to buy now, pay later loans, showcasing its innovative capabilities in consumer credit and potentially opening new revenue streams while enhancing its competitive position in the market.
See More
Investor Perspectives on Multiple Companies
- Scotts Performance Risk: Scotts Miracle-Gro Company highlighted that poor weather conditions could adversely affect its performance, indicating a high sensitivity of its business to climate factors, which necessitates cautious risk assessment by investors.
- Santander Acquisition Praise: Banco Santander's acquisition of Webster Bank received positive feedback, with a former hedge fund manager praising it as a quality asset, reflecting confidence in the bank's future growth potential.
- Altria Stock Recommendation: Altria Group is advised to reduce holdings as analysts note its stock has surged too quickly, suggesting investors consider locking in some profits to mitigate risk.
- NextDecade's Outlook: NextDecade is viewed as having potential in LNG demand, although analysts maintain a cautious stance on its future performance, recommending investors to remain on the sidelines for now.
See More
German Stock Market Hit Hard by New COVID Variant Concerns
- Market Reaction: The German stock market has faced a significant blow due to concerns over a new COVID variant emerging in South Africa, leading to a sharp decline in major indices and reflecting investor anxiety about a potential resurgence of the pandemic.
- Holiday Impact: With most global stock markets closed for Labor Day, trading volumes have plummeted, particularly in Asia where markets in Hong Kong and the mainland remained shut, exacerbating market uncertainty.
- Economic Outlook: Despite the European Central Bank and Bank of England holding rates steady, expectations for future rate hikes have risen, with traders pricing in a 75% chance of an ECB hike in June, which could impact investor confidence moving forward.
- Industry Dynamics: In the U.S., Apple has issued a better-than-expected revenue forecast, showcasing strong sales and earnings, which may positively influence global markets, particularly in the tech sector.
See More
Ebury Secures £550m Funding to Expand Cross-Border Payments Platform
- Significant Funding: Ebury has secured approximately £550 million in funding, primarily led by Centerbridge Partners with participation from existing shareholders including Santander, Vitruvian Partners, and 83North, indicating strong market confidence in its cross-border payment platform.
- Continued Support from Santander: Santander will invest £50 million, maintaining a 55% stake in Ebury, which not only solidifies its leadership in the fintech space but also provides robust support for Ebury's international expansion efforts.
- Rapid Business Growth: Since Santander's investment in 2020, Ebury has seen revenue growth exceeding 30% annually, serving over 27,000 businesses across 30 regulated markets, demonstrating strong demand for its global payment solutions.
- Future Development Strategy: Ebury plans to use the funding to support product development and geographic expansion while scaling AI capabilities to optimize payment processing and foreign exchange solutions, which is expected to further enhance customer experience and drive business growth.
See More
Market Volatility Amidst Surging Oil Prices
- Surging Oil Prices: Brent crude has reached wartime highs, raising investor concerns about the potential resumption of armed conflict, which could negatively impact global economic recovery and market stability.
- Market Decline: Asian markets are down across the board, with futures indicating similar losses in the U.S. and Europe, despite the S&P 500 being on track for its best month since 2020, highlighting market fragility amidst volatility.
- Central Bank Policies: The Bank of England and European Central Bank are set to announce interest rate decisions today, with economists predicting both will hold rates steady at 3.75% and 2% respectively, in response to inflationary pressures and uncertainty.
- Corporate Earnings: Major banks including Standard Chartered, BNP Paribas, and Societe Generale have all exceeded profit expectations, demonstrating resilience in the financial sector that may provide support for the broader market.
See More
UAE's OPEC Exit Sends Shockwaves Through Markets
- UAE Exits OPEC: The UAE announced its exit from OPEC effective May 1, with the Energy Minister stating a desire for more freedom to achieve a capacity goal of 5 million barrels per day by 2027, a move that could prompt other members to follow suit and weaken OPEC's influence.
- Muted Market Reaction: Despite the significant news of the UAE's departure, oil prices remain stable, and both Asian stocks and European futures show relatively muted performance, indicating a cautious market response to the announcement.
- Strong European Banking Performance: UBS reported a first-quarter profit of $3 billion, exceeding expectations, while Santander's profit surged by 60%, and Deutsche Bank also beat bottom-line forecasts, highlighting a robust recovery in the European banking sector.
- Airline Industry Crisis Warning: Ryanair's CEO warned that European airlines could face bankruptcy if jet fuel prices do not decline, reflecting the industry's concerns over rising operational costs.
See More
