Santander UK Group Holdings plc operates as a financial services holding company. The company is a subsidiary of Banco Santander SA.
The company provides a range of banking and financial services to personal, business and corporate customers. The company serves 14 million customers through 450 branches across the United Kingdom.
Segments
Retail Banking segment
This segment consists of two business units, Homes and Everyday Banking. Homes provides prime U.K. mortgage lending to owner occupier...
Santander UK Group Holdings plc operates as a financial services holding company. The company is a subsidiary of Banco Santander SA.
The company provides a range of banking and financial services to personal, business and corporate customers. The company serves 14 million customers through 450 branches across the United Kingdom.
Segments
Retail Banking segment
This segment consists of two business units, Homes and Everyday Banking. Homes provides prime U.K. mortgage lending to owner occupiers and buy-to-let landlords with small portfolios. Everyday Banking provides banking services and unsecured lending to individuals and small businesses, as well as wealth management for high-net-worth clients.
This segment delivers products through the company’s omni-channel presence, including branches, ATMs, telephony, digital and intermediary channels. The types of credit risk mitigation, including collateral, across each of the company’s portfolios is:
Residential Mortgages: Collateral is in the form of a first legal charge over the property. Before the company grants a mortgage, the property is valued either by a surveyor or using automated valuation methodologies where its confidence in the accuracy of this method is high.
Unsecured Lending: There is no collateral or security tied to the loan that can be used to mitigate any potential loss if the customer does not pay the company back.
Business Banking Services: Business banking lending is unsecured. When lending to incorporated businesses, the company typically obtains personal guarantees from each director, but it does not treat these as collateral.
Corporate & Commercial Banking (CCB) segment
This segment provides banking products and services to small and medium-sized businesses (SMEs), mid-sized and larger corporates, typically with annual turnovers of between £2m and £500m, as well as to local authorities and housing associations.
Corporate and Commercial Banking expertise is provided by relationship managers, product specialists and through digital and telephony channels, and cover clients' needs both in the U.K. and overseas. The types of credit risk mitigation, including collateral, across each of the company’s portfolios are as follows.
SME and Mid Corporate: Includes secured and unsecured lending. The company can take mortgage debentures or a first charge on commercial property as collateral. Before agreeing the loan, it gets an independent professional valuation, which assesses the property. Loan agreements typically allow the company to obtain revaluations during the term of the loan. It can also take guarantees, but it does not treat them as collateral unless they are supported by a tangible asset, which is charged to it.
The company also lends against assets (like vehicles and equipment) and invoices for some customers. It values assets before it lends. For invoices, it reviews the customers' ledgers regularly and lend against debtors who meet agreed criteria.
The company considers the U.K. Government guarantee supporting losses on amounts lent under its Coronavirus Loan Schemes as collateral (80% for Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Recovery Loan Scheme (RLS), and 100% for Bounce Back Loan Scheme (BBLS)).
Commercial Real Estate: The company takes a first legal charge on commercial property as collateral. The loan is subject to strict criteria, including the property condition, age and location, tenant quality, lease terms and length, and the sponsor’s experience and creditworthiness. Before agreeing the loan, it visits the property and gets an independent professional valuation, which assesses the property, the tenant and future demand. Loan agreements typically allow the company to obtain revaluations during the term of the loan.
Social Housing: The company takes a first legal charge on portfolios of residential real estate owned and lets by the U.K. Housing Associations as collateral, in most cases. It revalues this every three to five years (in line with industry practice), using the standard methods for property used for Social Housing.
Consumer Finance segment
This segment provides prime auto consumer financing for individuals, businesses, and automotive distribution networks.
The type of credit risk mitigation, including collateral, is:
Consumer (auto) Finance: Collateral is in the form of legal ownership of the vehicle for most consumer (auto) finance loans, with the customer being the registered keeper. Only a very small proportion of the business is underwritten as a personal loan. In these cases, there is no collateral or security tied to the loan. The company uses a leading vehicle valuation company to assess the loan to value ratio (LTV) at the proposal stage to ensure that the value of the vehicle being lent against is appropriate.
Corporate Centre segment
This segment provides treasury services for asset and liability management of the company’s balance sheet, as well as management of non-core and legacy portfolios. The types of credit risk mitigation, including collateral, across each of the company’s portfolios are as follows.
Sovereign and Supranational: In line with market practice, there is no collateral against these assets.
Structured Products: These are the company’s High Quality Liquid Assets (HQLA) and Legacy Treasury asset portfolios. These assets are primarily Asset Backed Securities (ABS) and covered bonds, which benefit from senior positions in the creditor hierarchy. Their credit rating reflects the over-collateralization in the structure, and the assets that underpin their cash flows and repayment schedules.
Social Housing: The company manages the risk on this portfolio in the same way as for the Social Housing portfolio in Corporate & Commercial Banking.
Financial Institutions: The company uses standard legal agreements to reduce credit risk via netting and collateralization on derivatives, repos and reverse repos, and stock borrowing/lending. It also reduces risk by clearing trades through central counterparties (CCPs) where possible.
Legacy Portfolios in Run Off: The company often holds collateral through a first legal charge over the underlying asset or cash. It gets independent third-party valuations on fixed charge security in line with industry guidelines.
Crown Dependencies: The company manages the risk on this portfolio in the same way as for mortgages in Retail Banking.
Loans and Advances
As of December 31, 2021, the company’s loans and advances included loans secured on residential properties; corporate loans; finance leases; and other secured loans.
Deposits
As of December 31, 2021, the company’s deposits included demand deposits (including savings and current accounts), time deposits, and other deposits.
Regulation
As well as being subject to the U.K. regulation, as part of the Banco Santander group, the company and its subsidiaries are also affected by other regulators, such as the Banco de España (the Bank of Spain) and the European Central Bank (ECB), as well as various legal and regulatory regimes (including the U.S.) that have extra-territorial effect.
The company’s subsidiaries and associates are authorized by the U.K. Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), and regulated by the FCA or both the FCA and the PRA. Certain other companies within the company are regulated by the FCA and the PRA.
While the company operates primarily in the U.K., it is also subject to the laws and regulations of the other jurisdictions in which it operates, such as the rules of the Securities and Exchange Commission (SEC) for its activities in the U.S.
Within the Dodd-Frank Act, the so-called Volcker Rule prohibits ‘banking entities’, including the company and its subsidiaries, from engaging in certain forms of proprietary trading or from sponsoring or investing in certain covered funds, in each case subject to certain exemptions, including exemptions permitting foreign banking entities to engage in trading and fund activities that take place solely outside of the U.S.
The company is a public limited company incorporated and registered in England and Wales under the Companies Act 2006, with registered number 8700698. The company is subject to the information requirements of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act).
History
Santander UK Group Holdings plc was founded in 1849. The company was incorporated in 2013.
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