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Santander aims to lend £25bn

Santander has regained its appetite to break back into the top three UK lenders and is planning to lend up to £25bn next year, Mortgage Strategy understands.

Over the past two years the Spanish bank has been conducting a huge deleveraging exercise in an effort to restructure its balance sheet, shrinking its balance sheet from £173bn in 2011 to around £150bn now.

This led to its mortgage lending tailing off dramatically and saw it slip from the second biggest mortgage lender in the market in 2011 to fifth last year.

In 2011 it advanced £23.7bn to borrowers, giving it a market share of 16.8 per cent. However, in 2012 it advanced £14.6bn to borrowers, a fall of 38 per cent, which saw it share of the market shrink to 10.2 per cent.

In the first half of 2013 Santander advanced £8bn to borrowers, down 9 per cent on the £8.8bn advanced in the first half of 2012.

But Mortgage Strategy understands the bank wants to lend around £23-25bn in 2014, roughly the same as it did in 2011.

Santander would not give its exact lending plans for 2014 but promised a “significant” uplift in lending.

In an interview in this week’s Mortgage Strategy, director of retail products and services Phil Cliff said: “If you were to look at the pound level of lending we did in 2012, we’d like a significant uplift on that in 2014.

Lloyds Banking group has the biggest mortgage book in the UK, at £324bn as at 31 December 2012, with Santander in second. Cliff says he wants to retain the market’s second largest book.

He added: “We definitely want to retain the number two spot in terms of a mortgage book perspective, being the second largest mortgage lender. We have got no aspirations of being number one. With the combination of brands Lloyds Banking Group have, it would be foolish to try and get there and we wouldn’t want to.”

Lentune Mortgage Consultancy managing director Stuart Gregory says: “It is positive news because if Santander is planning to pick up lending by this much it is a good indication of where it thinks the market is heading. Santander is normally the first lender to move and the others tend to follow after.”

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