Spain's Santander has agreed to acquire US regional lender Webster Financial for $12.2 billion in a transaction that will propel the bank into the top ten retail and commercial banks in America by assets and marks a major expansion whilst European rivals retreat from the market.

The deal, announced on Tuesday, values Connecticut-based Webster at $75 per share through a mix of $48.75 in cash and 2.0548 Santander American depositary shares, according to Reuters. Webster shareholders will receive approximately 65 per cent cash and 35 per cent stock. The transaction represents a 14 per cent premium to Webster's three-day volume-weighted average share price of $65.75.

Executive chair Ana Botín described the acquisition as a "historic step" comparable to last year's £2.65 billion TSB purchase, the Financial Times reported. The combined entity will hold approximately $327 billion in assets, $185 billion in loans and $172 billion in deposits, creating what Botín called the scale needed to compete profitably across all Santander's markets.

Investors responded coolly to the announcement, with Santander's US-listed shares closing 6.4 per cent lower at $12.23, though Botín attributed the decline to merger arbitrage trading.

The acquisition strengthens Santander's commercial banking capabilities in the affluent northeastern United States, where Webster operates nearly 200 branches across New York, Massachusetts and Connecticut. Christiana Riley, Santander's US chief executive, told the company that the deal would "meaningfully expand our commercial franchise, resulting in a more balanced business mix".

Santander expects the combination to generate approximately $800 million in annual cost synergies by 2028, equivalent to roughly 19 per cent of the combined cost base. The bank is targeting an 18 per cent return on tangible equity in the US by 2028, placing it amongst the top five most profitable of the 25 largest American commercial banks.

The transaction, subject to regulatory approval, is expected to close in the second half of 2026. Santander said its CET1 capital ratio would stand at 12.8 per cent post-closing, rising above 13 per cent by 2027 whilst maintaining its €10 billion shareholder remuneration commitment for 2025-2026 results.

The deal contrasts sharply with the retreat of European peers from US retail banking, including withdrawals by BNP Paribas and HSBC in recent years. Bloomberg noted that dealmaking amongst American regional banks has accelerated under President Donald Trump following expectations of looser regulatory oversight.

Botín stated the bank would pursue no further bolt-on acquisitions over the next three years. John Ciulla, Webster's chief executive, will lead the integration of Webster's businesses into Santander Bank NA, with Webster's Stamford headquarters becoming a core corporate office for Santander alongside existing sites in Boston, New York, Miami and Dallas.

Santander separately reported record fourth-quarter net profit of €3.76 billion, beating analyst estimates of €3.44 billion, with full-year profit rising 12 per cent to €14.1 billion.

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