Santander Group

Martin Lewis: Santander rate cut is "slap in the face"

Martin Lewis reacts to Santander's plans to cut interest rates on it's 123 account
Santander announced it's to cut the interest paid on balances up to £20,000 in its 123 account from 1.5% to 1%. Back in 2016 the popular current account was offering a rate of 3%. Financial campaigner Martin Lewis told BBC Breakfast the cut was a "slap in the face" for consumers. Santander is also joining HSBC and Nationwise in raising the interest rate for arranged overdrafts in response to new FCA rules.

Santander slashes interest rate on 123 current account

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Millions of people with Santander's popular current account face a cut in the interest paid amid changes for savers and borrowers.

The bank has announced that, from 5 May, the interest paid on balances up to £20,000 in its 123 account will be cut from 1.5% to 1%.

The move has prompted one commentator to describe the account as a "dead duck" for savers.

Santander has joined other big brands in setting a 39.9% overdraft rate.

This will take effect on 6 April and comes in response to tough new rules from regulators designed to protect consumers.

Santander UK boss pension cut by £436,000

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Santander’s UK boss will have his pension allowance cut by £436,000 over the next two years, The Guardian reports.

Chief executive Nathan Bostock’s pay in lieu of pension is worth 35% of his £1.7m base salary, far above the 9% offered to the rest of staff.

But the Spanish lender will cut Bostock’s lump sum to about 22% of salary next year before bringing it in line with the staff allowance in 2021.

It will bring his pay in lieu of pension down to £218,000, based on his 2018 salary levels.

Santander UK is not expected to increase other parts of Bostock’s pay package to offset the loss. He was paid a total of £4.6m in 2018.

Santander snaps up Fintech stake

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Santander has bought a majority stake in Ebury - a UK fintech (financial technology) firm for £350m.

The provides small and medium-sized businesses (SMEs) with foreign exchange services, cash management and trade finance.

Ana Botin, executive chairman of the Spanish bank, said: "SMEs are becoming increasingly global and Santander is the best-positioned bank to play a leading role to help them access global trade finance.

"By partnering with Ebury, Santander will deliver faster and more efficient products and services for SMEs, previously only accessible to larger corporates."

Santander UK profits shrink 43%

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The UK business of Santander took a major hit from the PPI mis-selling scandal as profits dipped in the first nine months of the year.

Pre-tax profits at Santander UK fell 43% to £785m, as the bank took a £169m charge from PPI.

Meanwhile, economic uncertainty as Brexit and a trade war continue to weigh on the global economy also hit its bottom line.

"Our profitability for the first nine months of 2019 has been impacted by ongoing competitive income pressure, additional PPI costs as well as transformation programme investment," said boss Nathan Bostock.

CMA takes action against RBS and Santander

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The Competition and Markets Authority (CMA) has ordered both RBS and Santander to appoint independent bodies to audit their payment protection insurance (PPI) process, after the banks failed to send, or sent inaccurate, annual PPI reminders.

Loan customers who were mis-sold PPI have until 29 August 2019 to claim for compensation.

The CMA says that RBS failed to provide reminders to almost 11,000 of its customers for up to 6 years, meaning those affected were unable to fully assess whether they wanted to continue paying for PPI, and were stopped from shopping around effectively.

RBS has now written to those affected, providing a reminder of their right to cancel their policy and has so far paid out over £1.5m in refunds to customers.

As for Santander, the bank sent out annual reminders containing incorrect information to over 3,400 of its mortgage PPI customers from 2012-2017.

It must now appoint an independent body to review its PPI processes and continue to maintain its systems to prevent further breaches.