Expanding Santander

Europe has too many banks. Now that it has a single currency, the fact that each country is dominated by its own national banks is looking increasingly old-fashioned. And so it makes sense that, sooner or later, a genuinely European bank will emerge - one with substantial presence in all of Europe's major markets. And it's increasingly clear that if and when that happens, the name of that bank is likely to be Banco Santander.

Christian Kraemer reports that Santander is looking to buy Germany's Dresdner Bank, now that it has been severed from Dresdner Kleinwort and put up for sale by its owner, Allianz. I hope this deal happens: it would definitely help to shake up Germany's inefficient and sclerotic retail banking system. The alternative - a takeover by Commerzbank or Deutsche Bank - would only consolidate ownership among a few lumbering organizations who have displayed no real imagination or aptitude when it comes to retail banking.

That said, if I were Emilio Botín, I think I might be more interested in Deutsche Postbank than in Dresdner. Shaking up a bank based in the state-owned postal system is harder, to be sure, than shaking up a privately-owned commercial bank like Dresdner. But it probably wouldn't be harder than turning around Banespa, the state-owned bank in Brazil which Santander bought in 2000.

Santander has dominated the retail banking scene in Latin America for some years now, owning top banks in Argentina, Chile, Brazil, Venezuela and Mexico. In Europe, it has a pretty strong presence in Italy and the UK, as well as its domination of Iberia. If it gets a foothold in Germany - and that seems likely, with Citibank up for sale along with Dresdner and Deutsche Postbank - then only France would be left, among the major European economies.

Retail banking is hard, and Santander is one of the few big global banks which does it really well. HSBC is the other one. I do hope the two never merge: the resulting bank would be far too big and powerful, and pretty much beyond effective regulation.