During the past year or so, Banco Santander has been one of the few banks with enough cash to take advantage of its rivals' troubles. It is bigger today, after the financial crisis, than ever before; and now the acquisitive Spanish bank has its sights set on Asia.
Santander set up a small Asia head office in Hong Kong in 2008 and now has around 120 staff in the region, based in offices in Australia, China, Japan and South Korea. At the moment, the bank's Asia team is mostly kept busy servicing cash and trade flows between Asia and Latin America, where the bank has a formidable network and client base. But its long-term ambitions are considerably grander than that.
"In the future, not to have a presence in Asia would not be wise," said Manuel Varela, Santander's Asia head. "We are not here to stay as we are; we are learning more about the way to do business here. Our intention is to grow."
Having made numerous acquisitions in Europe and Latin America, it is natural to expect that Santander will take the same approach in Asia, but Varela insists that while expansion is its long-term ambition, it plans to grow in a more cautious manner in this region.
"We have great experience doing business outside Spain and practically all new expansion was done by buying things, but in Asia we are doing it organically for now," he said. "Why? We're number one in Chile, but it took 25 years. In Brazil it took us 20 years to create a leadership position and that's in a big client country for Spain. Asia probably needs a long time too. I don't see a big acquisition in our foreseeable future."
Varela knows that Santander has a lot to learn before it is ready to make a big investment in Asia, but he is also aware that the region's growing trade with Europe and Latin America in particular gives it a chance to set up shop on the ground here to get to know more about the Asian end of those trade flows and to use its contacts to start winning regional business.
"It's not necessary to be here for trade flows between China and Latin America," said Varela. "But you have to be here for intra-Asian trade flows. I think if we are able to have good customers here in relation to other parts of the world, why not to other Asian countries?"
Analysts too aren't betting on a big acquisition for Santander in Asia, but many are picking the bank to make big profits again in 2010 on the back of strong growth forecasts for Latin America, where it is the region's biggest bank. Brazil, in particular, is attracting a huge amount of new foreign investment in the run-up to it hosting the football World Cup in 2014 and the Olympic Games in 2016.
Its core business will remain focused on these traditional markets, but Santander is on a mission to become one of the leading worldwide banking franchises within the next few years -- and that inevitably means the bank will be wielding its cheque book in the region eventually.
But not yet. Varela is careful to stress that Santander is here only to win cross-border business for now. "I can't compete with HSBC as a local bank here in Hong Kong," he said. "But I can compete with (it) globally."
