Skip to content

Editors

Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Federal Reserve orders governance overhaul at Banco Santander U.S. units

The Federal Reserve issued an order Tuesday requiring Banco Santander SA to change the way the board of directors oversees the management and operation of its U.S. subsidiaries.

The Fed said an inspection of Santander Holdings USA conducted by the Federal Reserve Bank of Boston identified deficiencies throughout the organization, including its “governance, risk management, capital planning, and liquidity risk management.”

Santander is based in Spain. Its U.S. units operate under Boston-based Santander Holdings USA. The holding company’s subsidiaries include Santander Bank N.A. of Wilmington, Delaware and Santander Consumer USA
Inc., based in Dallas, Texas.

The Fed order (pdf) gave Santander 60 days from July 2 to submit “a written plan acceptable to the Reserve Bank to strengthen board oversight of the management and operations of the consolidated organization.”

The plan has to cover “actions that the board of directors will take to maintain effective control over, and supervision of, the consolidated organization’s risk management, capital planning, and liquidity risk management.”

The Fed didn’t impose any financial penalties on Santander.

Santander’s consumer unit in Dallas is one of the biggest subprime auto lenders in the United States.

Last week, the founder and CEO of the consumer unit, Thomas Dundon, announced his resignation.

Santander said he’ll receive more than $900 million as part of his exit, according to the New York Times. Most of that payment is for about 10 percent of the consumer business that Dundon held.

The NYT’s report said the consumer unit has “faced regulatory problems, including federal investigations into its packaging and selling of subprime auto loans and a rebuke by the Federal Reserve for making an unauthorized dividend payment.”

The Fed order issued Tuesday required Santander’s U.S. holding company to describe “the duties and responsibilities” of its top officers and “actions that the board of directors will take to maintain effective control over, and supervision of, the consolidated organization’s risk management.”

_________

Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

Share this post

LinkedIn
Facebook
Twitter

Comments are closed for this article!