Santander’s massive, dangerous American dream | USAEMALL.com

One thing to start: Apollo Global Management chief executive Marc Rowan says a wave of partnerships between alternative and big asset managers will shake up Wall Street.

And another thing: Delaware’s top court has ruled that a 2023 decision by internet company Tripadvisor to switch its incorporation to Nevada from Delaware should not face a strict judicial review demanded by some aggrieved ordinary shareholders.

In today’s newsletter:

• Santander pivots into the US

• Advisers rake in Thames Water fees

• EQT loses a big planned hire

Santander bets big on the USA

Over the years, foreign firms have tried to set up investment banking operations on American soil. It has basically never ended well.

Banks like Goldman Sachs and JPMorgan have dominated the market for more than a century, leaving little room for challengers.

Yet Banco Santander is boldly ploughing ahead anyway. The Spanish lender has embarked on a major expansion of its corporate and investment bank in the US, hiring across M&A, leveraged finance and equity capital markets.

In recent decades, European megabanks have come to US shores professing that their size was an advantage. How can we forget, Barclays’ “big-boy” balance sheet or Deutsche Bank as a “flow monster?”

But defeat has come in all flavours. In some respects, it’s being recycled now.

Santander has snapped up Credit Suisse leftovers after the Swiss lender was forced to merge with UBS in a shotgun marriage in 2023. It has hired some bankers by promising about $4mn in pay for the first year of employment.

Santander executive chair Ana Botín’s bet on expansion is unlikely to help it punch into the top tier.

Rivals like HSBC and Citigroup have retrenched from markets where they were underperforming. HSBC last week unveiled it was shutting its investment banking in the UK, US and Europe, while Citigroup axed its UK retail bank.

Botín’s bet seems based on an assumption that Santander will grow faster in a more dynamic US market, where M&A and private capital-fuelled dealmaking is revving up. She has lowered Santander’s ambitions in the moribund UK economy.

Even though Botín insists publicly that the UK business is “not for sale”, bank executives have said privately that it’s still on the cards.

Potential bidders are circling, and the bank last year rejected a “low ball” offer for the business from Barclays, a person familiar with the matter told the FT.

Santander’s stock price has flailed over the past decade, and unlike its peers, it hasn’t taken that as a sign to reduce a global footprint of 10 “core markets” and 210,000 employees. Some analysts are unconvinced with the US push.

Yet Botín has at least one powerful fan. At Davos last month, she reminded US President Donald Trump via video link that Santander boasted more customers than the two biggest US banks combined.

“Congratulations, I know very much about your bank and you’ve done a fantastic job,” Trump responded.

Impressing Wall Street will be a harder sell.

The big winners from Thames Water’s crisis

Who are the winners in the battle for Thames Water? One answer, it was revealed in court, was the company’s lawyers and restructuring advisers.

The UK’s largest water utility, which supplies about 25 per cent of the population in England, was now spending £15mn a month on lawyers and other advisers, the company’s chief financial officer Alastair Cochran told London’s high court on Tuesday.

The cash-strapped company, with a habit of overspending, could see its eventual bill for a restructuring top £200mn, he said.

The law firm Linklaters, advising Thames, and Rothschild & Co, overseeing a process aimed at raising equity, would take large chunks of that figure.

Thames’s complex path to restructuring is being thrashed out in court as it seeks to push through up to £3bn in planned loans from its top-ranking creditors, which include US hedge funds such as Elliott Management and Silver Point.

The loan that its lawyers are being paid to pursue is a necessary bridge to a wider restructuring, Thames says, and will give it time to raise equity from new investors and renegotiate its debts.

But that financing won’t be cheap either.

Other potential winners in the Thames Water mess, if the company’s application is successful, are its senior creditors who are attempting to lend it that lifeline at a near 10 per cent annual interest rate, along with other fees.

If Thames manages to repay the loan ahead of its 2.5-year maturity, the group stands to gain a further windfall.

But the company and its senior lenders face opposition. A group of Thames’s lower-ranking “class B” bondholders have proposed their own relatively “cheap” £3bn loan, which comes with a measly 8 per cent interest rate.

Meanwhile, the company and its advisers have been quick to dismiss any potential merits of being temporarily nationalised, a situation in which Thames could be financed by the UK government at a rate of its choosing.

Either way, British taxpayers will be left to foot some of the bill.

EQT nearly lands the ‘Trump whisperer’

It’s not often Nordic politics feature heavily in the pages of this newsletter. But earlier this week, DD picked up some murmurings that developments in Norway had left a trail of heavy hearts at Swedish private equity giant EQT.

The Stockholm-listed buyout group, which manages €269bn of assets globally, was this week due to announce that the former Nato head and two-time prime minister of Norway, Jens Stoltenberg, was joining the firm.

Commanders at EQT were excited at the prospect of the major hire generating headlines for their newly formed EQT Council, a group that will be advising the firm’s dealmakers on how to navigate the creaking tectonic movements under way in the climate change, AI and global security landscapes.

DD’s ears pricked up at the appointment, given Stoltenberg was known at Nato as the “Trump whisperer” for his good relations with the US president during his first term.

Could that have been the rationale for EQT paying him a presumably vast salary?

The firm has pinned itself to the mast of the renewable energy revolution — recently launching a strategy dedicated to transition infrastructure — only to see a newly sworn-in Trump poo-pooing efforts to tackle climate change with even more gusto than in his first term.

But no sooner had the ink dried on Stoltenberg’s contract and the press release been signed off, the coalition government in Norway collapsed last week over EU energy policies. Stoltenberg was asked to return to the remaining Labour government as finance minister.

“I can confirm that I was going to join the newly formed EQT Council and work with EQT on the energy transition and climate investments,” Stoltenberg told the FT’s Richard Milne yesterday. “This agreement has now been terminated.”

His public service duty appears to have overpowered the pay cheque. For now, at least.

Job moves 

• Standard Chartered has appointed Maria Ramos as its new chair in what is expected to be the first part of a leadership transition at the London-based bank. She was formerly chief executive of South African bank Absa.

• Weil, Gotshal & Manges has appointed Sanjay Wadhwa as a partner in the firm’s securities litigation and white collar defence practice. He was formerly acting director of the US Securities and Exchange Commission’s division of enforcement.

• Morgan Stanley has named Pradyut Pratap and Usman Akram co-heads of Middle East and North Africa investment banking, a source tells DD. 

• Rowan Brown, who managed international corporate communications for SoftBank over the past seven years, has left for a new role as global head of communications and marketing at private capital firm Campbell Lutyens, a source tells DD.

Smart Reads

Old-school conglomerates Critics of America’s great industrial giants say that fragmented ownership, weak culture and a fixation on financial results have harmed innovation, the FT writes. But have these age-old giants forgotten what they are for?

Banker brawl Court fights over breaching non-solicitation contracts rarely reach public trials, the FT’s Sujeet Indap writes. But the battle between Perella Weinberg and a former partner has finally reached its day in court — offering a raw glimpse at the fractious world.

Tilted skyscraper The new condo construction at 1 Seaport was touted as a luxury oasis on the Manhattan waterfront, The New Yorker writes. Until its developers discovered the building was leaning.

News round-up

China targets Google, Nvidia and Intel as Trump’s tariffs bite (FT)

Citi bucks back-to-office trend and embraces hybrid working (FT)

Microsoft poaches DeepMind staff behind AI podcasting feature (FT)

Palantir surges 24% as group predicts windfall from Elon Musk’s government cost-cuts (FT)

Google parent Alphabet slides after sales miss Wall Street estimates (FT)

UK state-backed pension fund pledges £5bn to Australia’s IFM (FT)

UBS warns $3bn buyback plan is hostage to Swiss capital overhaul (FT)

Amundi ‘in the market’ for more deals, says chief (FT)

BNP Paribas reaps gains from investment banking revival (FT)

Housebuilder Crest Nicholson issues going concern warning after ‘very tough’ year (FT)