Ana Botín’s Santander Payouts Face a Dealmaking Test
Observer ·
In 2015, Ana Botín cut Santander’s dividend to strengthen the bank. Eleven years later, she is returning billions while integrating purchases in Britain and the United States.
Ana Botín cut Banco Santander’s planned annual dividend by two-thirds in January 2015, four months after succeeding her father as executive chair. She also announced a 7.5 billion euro capital raise to strengthen its finances, sending Santander shares down about 10 percent the following day. The previous dividend had relied heavily on shares rather than cash, but the decision marked an early break from the payout policy she inherited.
Eleven years later, Botín is overseeing another dividend streak. On Sept. 29, Santander raised its interim cash dividend by 10 percent to 12.7 euro cents per share, marking its fifth consecutive year of double-digit increases. The payment is due Nov. 2. The payment is now 162 percent higher than in 2021. Together with a share buyback launched in August, Santander plans to return approximately 3.7 billion euros to investors from its first-half 2026 earnings, split roughly evenly between the cash dividend and the buyback.
Botín, 66, is the fourth generation of her family to lead Santander. She began her career at JPMorgan in New York before joining the bank in 1988 and helping expand its operations across Latin America. She later ran Santander’s British business before succeeding her father, Emilio Botín , in 2014. This year, her capital allocation decisions have included selling a profitable Polish banking business, acquiring two lenders in Britain and the United States, and returning billions through share repurchases.
Santander says approximately 9 billion euros in completed and ongoing buybacks count toward its commitment of at least 10 billion euros tied to 2025 and 2026. The tally includes the program still underway; it is not all cash already spent.
The payouts are backed by rising profits. Santander’s results released Oct. 28 showed underlying profit of 11.176 billion euros in the first nine months, up 16.1 percent from a year earlier. That follows record reported earnings of 14.1 billion euros in 2025.
Reported nine-month profit was higher at 12.405 billion euros, up 20 percent. It included a 1.895 billion euro gain from the Polish disposal, partly offset by 666 million euros in acquisition-related integration charges. Santander excludes those items from its underlying result.
Botín has also been cutting expenses. Through its ONE Transformation program, Santander is consolidating technology platforms, automating services and reducing duplicated operations across its international businesses. Nine-month costs fell 2 percent in constant currencies excluding TSB and Webster ; the group’s underlying cost-to-income ratio improved to 42.6 percent.
Those improvements support Santander’s policy of returning approximately half its underlying profits through dividends and buybacks. Repurchases reduce the number of shares outstanding. Underlying earnings per share rose 20.7 percent in the first nine months , faster than underlying profit.
Investors have benefited from more than dividends. Santander said its share price rose over 250 percent between 2023 and 2025, although the gains coincided with a broader rally in European banking stocks. The STOXX Europe 600 Banks gross-return index gained 78 percent in 2025 alone. That index includes reinvested dividends, unlike Santander’s share-price figure, but the sector’s performance shows that the bank was benefiting from more than company-specific improvements.
The dividend comparison also begins in an unusually weak year. European banks were emerging from pandemic-era restrictions on shareholder distributions in 2021. Santander’s full-year cash dividend has nevertheless increased from approximately 10 euro cents per share against 2021 earnings to 24 euro cents against 2025 earnings.
Botín has also freed up capital by selling businesses. In January, Santander completed the 7 billion euro sale of a controlling stake in Santander Bank Polska and an interest in its asset management business to Austria’s Erste Group .
The Polish lender was profitable, and the transaction valued it at 2.2 times its tangible book value. Selling control freed approximately 6 billion euros in regulatory capital, allowing Santander to devote around 3.2 billion euros to an extraordinary buyback. The bank retained a minority stake in the Polish lender and full ownership of a separate consumer finance business, maintaining a presence in the country while releasing capital for other investments.
Those investments included Britain’s TSB , acquired April 30 for approximately £2.9 billion, and Connecticut-based Webster Financial , acquired Aug. 20. The completed Webster transaction’s consideration was $12.5 billion , compared with the $12.2 billion value announced in February.
Webster is the larger investment for Botín, who has long considered the United States important to Santander’s international expansion. Its American operations have struggled to match the profitability of some of its other markets. Webster brings a substantial deposit base and an established commercial lending business, which Santander expects will lower funding costs. Management projects its U.S. return on tangible equity will reach approximately 18 percent by 2028; it stood at 13.2 percent in the first half of 2026 , before Webster joined.
But Botín’s decision to acquire Webster has raised questions about whether the expected returns justify the investment.
During Santander’s February earnings call , Morgan Stanley analyst Álvaro Serrano questioned why the bank was pursuing an acquisition with a projected 15 percent return on invested capital when management had previously discussed a 20 percent threshold around the Polish disposal. He also raised concerns about the risks of expanding in the United States, where Santander had delivered mixed results.
Botín disagreed with his assessment of the American business and defended the purchase by comparing its expected return with what Santander could earn from buying back its own shares. With Santander’s stock trading higher, she estimated repurchases would generate a return of approximately 9 percent, compared with Webster’s projected 15 percent. The six-percentage-point difference, she argued, was consistent with the advantage Santander had previously sought from acquisitions.
That calculation depends on savings the bank has yet to deliver. Santander expects Webster to generate approximately $800 millio n in annual pretax savings by the end of 2028, largely through consolidating administrative operations and technology systems. Management also expects substantial one-time integration costs, roughly equivalent to a year’s projected savings.
Britain presents a similar calculation. Santander expects at least £400 million in annual savings from integrating TSB but anticipates approximately £520 million in restructuring expenses across 2026 and 2027. Both acquisitions could improve profitability, although much of their expected financial benefit remains unrealized.
Botín’s dealmaking has also complicated Santander’s buybacks. The bank issued nearly 330 million new shares to help finance Webster’s acquisition, even as it canceled approximately 463 million through a separate repurchase program. The new issuance partly offset the canceled shares; registered capital and the weighted-average share count used for earnings per share are different measures.
The acquisitions also consume capital. Santander’s core capital ratio fell from 14 percent in June to 12.7 percent in September , including a 1.47-percentage-point reduction from Webster. The bank still expects to finish 2026 between 12.8 and 13 percent, within its operating target range but with less excess capital than before the acquisition.
Botín is counting on stronger earnings to support future distributions. At its February investor day , Santander outlined plans to generate more than 20 billion euros in annual profit by 2028. Beginning with 2027 results, it also intends to direct approximately 35 percent of underlying profits toward cash dividends and 15 percent toward buybacks, compared with a roughly equal split today, subject to corporate and regulatory approvals. The bank expects its annual cash dividend per share to more than double by 2028 compared with 2025.
Santander reaffirmed its 2026 targets on Oct. 28 . Its Nov. 2 interim dividend payment remains ahead, following the Oct. 29 ex-dividend date.
In 2015, Botín asked shareholders to accept a smaller dividend while she strengthened Santander’s finances. Today, she is returning billions while buying banks she believes can earn more than another round of repurchases. Whether those purchases deliver the returns she expects will determine how far Santander can extend its dividend streak.