Santander UK staff brace for more job losses after 38% drop in full-year profits

Staff at Santander UK are bracing themselves for further job losses, as the bank confirmed it would push ahead with a cost-cutting programme after a 38% drop in full-year profits.

An earnings report by the Madrid-based Banco Santander released on Wednesday showed that the UK was its only region to suffer a slump in profits for 2024, apart from a South American arm comprising Peru, Uruguay and Colombia.

Santander UK’s pre-tax profits tumbled by more than a third to £1.3bn, partly owing to the £295m it was forced to put aside to cover potential compensation for the car loan commission scandal last November. The bank said bigger bonuses for staff and executives also fuelled its costs, with details are expected in an annual report due later this month.

It is now looking at how further “simplification and automation” of the business could “help drive cost efficiencies in 2025”. Job cuts are understood to be part of that programme.

Bosses started quietly cutting hundreds of UK jobs in 2024, as part of a 1,400 headcount reduction plan that was only confirmed by Madrid-based executives during a Spanish-language press conference in October.

However, the bank surpassed its targets, having cut 1,800 jobs throughout the year – bringing its headcount in Britain down from 19,800 to 18,000. It is not clear whether there are any targets for job losses for 2025.

The news will increase speculation over whether the bank could court a potential buyer for its UK operation. It emerged last month that bosses were reviewing the future of the British business amid frustrations over regulation and costs.

Santander’s executive chair, Ana Botín, has since tried to quell rumours of a disposal, saying the UK was a “core market and will remain a core market for Santander”, but speculation was further increased by the surprise resignation of the UK chair, William Vereker, days later. Vereker has denied reports that this was because of a rift with Botín.

Regardless, it would be difficult to find a suitor until the costs of the looming motor finance commission scandal are decided.

The lender has been grappling with the fallout of a shock court judgment last October that vastly expanded an Financial Conduct Authority investigation into motor finance commissions and sent compensation estimates soaring. The landmark ruling determined that paying a “secret” commission to the car dealers who had arranged the loans without disclosing the sum and terms of that commission to borrowers was unlawful.

Barring the case being overturned at the supreme court in April, lenders including Santander UK, Lloyds Banking Group and Close Brothers could face a combined bill of £44bn, coming close to rivalling the payment protection insurance (PPI) mis-selling saga.

The chancellor, Rachel Reeves, has since tried to intervene, urging the supreme court to avoid handing a “windfall” to borrowers affected by the motor finance commission scandal.

The motor finance scandal has caused further frustration in Madrid, where Santander bosses have long been frustrated with British rules including the ring-fencing regulations, which force bigger banks to separate and protect their consumer deposits from the rest of their investment banking operations. Watchdogs have promised to ease some of those restrictions, although the proposals are so far aimed at supporting smaller banks that have fewer deposits.