Regional banks have come under major stress in recent months, and while the situation appears to have stabilized, they face challenges ahead. That includes grappling with rising interest rates, attracting and keeping deposits amid tough competition from money market mutual funds and a potential recession. To gain a better sense of how regionals are navigating the current environment, I recently spoke with Tim Wennes, CEO of Santander US, for an episode of Banking with Interest. We discussed deposit competition, whether federal regulators will raise capital requirements, the bank’s approach to auto lending, how to target Gen Z customers and much more. What follows is our conversation, edited for length and clarity. The past few months have been challenging for banks between $50 billion and $250 billion in assets. Santander US is in that category. What has been your experience? We’ve navigated the challenges quite well. As a wholly owned subsidiary of a global systemically important bank, our capital and liquidity requirements are similar to those of large global U.S. banks, so we're in a strong position. Also, our deposits have been relatively stable, as nearly two-thirds are FDIC-insured, and we have a very diversified deposit base. That’s important because deposits are going to contract under quantitative tightening. This already started happening last year. Deposits are even more competitive today than they were pre-March, which means liquidity will become increasingly important. That’s going to constrain loan growth — not just for regional banks, but for all banks. By Rob Blackwell, Chief Content Officer, IntraFi From a deposit standpoint or a credit card standpoint, getting in early is important. But in the auto business, when somebody needs a car, they’re going look for a loan that may or may not come from where they typically do business. Same with a mortgage. SANTANDER US CEO TALKS BUSINESS STRATEGY, INDUSTRY CHALLENGES 22 NEBRASKA INDEPENDENT BANKER
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