Santander gets Fed nod for $12.3B Webster deal

Banco Santander received the Federal Reserve Board's approval Tuesday to buy Webster Financial, clearing the last regulatory hurdle for a $12.3 billion merger that will make it the 19th-largest U.S. bank.

The Fed's sign-off came two weeks after the European Central Bank approved the deal. The Office of the Comptroller of the Currency gave its go-ahead in mid-June. Santander will end up with $253.6 billion in assets, the Fed said.

Santander executives have said they expect the transaction to close in the second half of the year. The exact date was not announced Tuesday.

The merger is central to Santander's push to gain scale in the U.S. The Madrid-based bank entered the country in 2006 with a 20% stake in Sovereign Bank, bought the rest in 2009, and renamed it Santander Bank four years later. That bank operated in nine Northeastern states.

Webster, based in Stamford, Connecticut, has roughly $86 billion in assets and about 195 branches in Connecticut, New York, Massachusetts and Rhode Island. Santander Group Executive Chair Ana Botín called the acquisition "a final step change" for U.S. growth after years of trying to build profitability.

The deal diversifies Santander's U.S. loan book, which has historically leaned on consumer finance. Webster brings commercial-and-industrial and commercial real estate loans. On the deposit side, Santander executives said the deal would add a stable source of low-cost deposits from Webster's consumer bank and its health savings accounts business.

In April, the two banks named leaders for specific business lines, drawing from both Santander U.S. and Webster management. Two senior Santander U.S. executives are leaving: Swati Bhatia, head of Openbank and the retail bank since 2024, and Michael Lee, head of commercial banking.

Webster shareholders approved the deal in May, according to a securities filing.

The merger proceeded despite political tension. President Trump threatened to cut off trade with Spain earlier this year after Madrid refused to let the U.S. use its airfields to launch attacks on Iran. Trade between the two countries has continued without interruption since the Iran war began.

During its review, the Fed received two negative comments from one person who raised concerns about potential branch closures and reduced lending access, according to the Fed's approval notification. Santander has not outlined any branch closures that may follow.