On June 26, 2024, the Federal Reserve notified Santander Holdings USA, Inc. (“SHUSA”) of an updated stress capital buffer (“SCB”) requirement, effective October 1, 2024. The revised SCB for SHUSA will be set at 3.5% of its Common Equity Tier 1 capital (CET1), resulting in an overall CET1 capital requirement of 8.0%.
This adjustment aligns with SHUSA’s robust capitalization strategy, supporting planned capital actions while maintaining adherence to long-term capital efficiency goals.
As a Category IV firm under the Federal Reserve’s tailoring rule, SHUSA underwent the 2024 Supervisory Stress Test. SHUSA ranks among the top performing firms in terms of the minimum forecasted CET1 capital ratio and the change from initial to minimum CET1 capital ratio. As of March 31, 2024, SHUSA holds $5.1 billion in excess CET1 capital over the 8.0% requirement.
The increase in SHUSA’s 2024 SCB, up from the current 7.0% requirement, reflects heightened projections by the Federal Reserve regarding potential declines in CET1 under severe adverse scenarios, updated since the 2022 cycle, as well as planned dividend distributions.
SHUSA conducts its own stress tests, integrating internally developed scenarios alongside those provided by the Federal Reserve. In the 2024 stress testing exercise, SHUSA demonstrated strong capital resilience across all projected scenarios, including exploratory stagflation scenarios introduced this year. Internal stress scenarios encompass variables such as reduced interest rates, elevated unemployment, and substantial shocks to used car and commercial real estate markets.
Santander Holdings USA, Inc. (SHUSA), a wholly-owned subsidiary of Madrid-based Banco Santander, S.A. (NYSE: SAN), is part of one of Fortune Magazine’s most admired companies in 2024, serving approximately 166 million customers across the U.S., Europe, and Latin America. SHUSA acts as the intermediate holding company for Santander’s U.S. operations, overseeing a diverse portfolio that includes Santander Bank, N.A., Santander Consumer USA Holdings Inc., Banco Santander International, Santander Securities LLC, Santander US Capital Markets LLC, and other subsidiaries. With over 11,800 employees and assets exceeding $165 billion as of fiscal year 2023, Santander US ranks among the top 10 auto and multifamily bank lenders, while expanding its wealth management services.
