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It's the latest this morning. The ECB and Federal Reserve on diverging past. The ECB looking to count rates as soon as this summer in the United States. Fed officials are warning cuts may not come at all this year and about saying it's looking to navigate these challenges and more as share of Bank of Santander and theif ANA joint us in Washington this morning, and a good morning to you, Good morning, thank you so much for being with us today. We had a guest with us about five minutes ago.
It was pretty depressing, very down beyond cooperation in Washington, the future for growth outside of the United States, how down beating you and your team about the same things.
Well, you know, first of all, we are at war. We have two wars, which is a human tragedy, and our thoughts of with all the people that are suffering. But aside from those very important issues which obviously we must deal with first, the economy does not look bad. So you know, we have managed to bring down inflation. Remember we were around nine ten percent, were around three to four in most countries. Really important. That's the one thing we cannot allow to get out of control. We
have growth, yes, lower growth, but growth overall. And third, we have very high employment levels. If I think about sometimes there's Europe and America's footprint. Every single one of our countries is at historically high levels of employment. So you know this is not bad. A year ago you had asked many people where are we going to be? Anybody that said soft landing, you would say, oh, you're being too optimistic. We have a super soft landing. So far, so far, so good.
The growth profile is certainly much better than we thought it would be, not just twelve months ago, but maybe even three months ago. Though we still have two wars. We also have increased protectionism. It's but a key feature of the meetings this week, as you well know, a backslide towards industrial policy in places like the United States. Can I ask you, as someone who leads a bank, does that make it more difficult to be an international bank against that backdrop?
The key thing we're all looking to, and this is not different from what everybody is saying, is that the most difficult and you know the key risks now are geopolitical. As I said, the macro looks much better at least
for now. So as we think about what is happening and what these geopolitics mean for supply chains for our business, understanding that this is going to mean more structural inflation because you know you're going to have higher cost Understanding that you need to prioritize the defense or national security or in the case of companies, you know, diversification, which again is a key asset at least for us, and this is really very valuable. So these are the things
you need to think about. How do I protect my business at the time when the world is increasingly volatile where you're having a big shift in terms of we want secure supply chain. Yes, we want it to be affordable, good prices, but security is paramount. And of course we also want to ensure that we can manage the green under climate transition.
If geopolitical rests are in number one concern and I can potentially meet as spike in inflation, do you expect the EASYB to then what's been pretty much forecasted by everyone, go ahead of the fad and have this rate cut in June.
So you know, what we are thinking about is what is the terminal rate? Where does this end up? That is the key question and of view and as an institution is that that terminal rate is not going to be the same in Europe as in the US. It's probably be around if you top the most economist four percent in the US around three percent in Europe. What it means is that let's say rates will end up around those levels, around three percent four percent, And that
is really what we That is what allows us to plan. Again, that is not a bad thing for commercial banks for the sector. Negative rates were unsustainable risky for the system. Very high rates kill the economy. You know, low rates, maybe we are going to have too low growth. And that is the one thing we need to focus on.
How do we manage an economy where terminal rates are a bit higher because all the structural factors not just defends demographics, the carbonization, so you have structural trends that are more inflamation than before slow growth. What do we do about it?
So I know that you're in a quied period, so you can't talk directly about the financials, but can you help me understand how do you plan for things like net interesting income when you're across so many different regions, with so many different policies and so many different so called terminal rates. How do you plan for that kind of thing? What does that look like?
Look sometimes that is a global bank, but basically it's Europe and the Americans. We have one hundred and sixty six million customers. First thing is the versification is key, not just for us, for anybody. And we have the versification by businesses five global businesses, and by regions and countries. So that means that if something doesn't go well in one country, usually it gets compensated by another. And so what you try is to really have a context for
risk appetite. Do we take more risk? Less risk? We don't manage interest rates right? As I said, the context is really good for financial institutions, especially commercial banks like ours. Why because negative rates meant that with a big retail base, you're not charged. But you were being charged by the central banks for twenty percent of our deposits and we couldn't charge. So positive rates, low growth, high and employment is a not a bad scenario for commercial banks.
So some other banks have pulled bank from the United States. International banks I'm thinking specifically of HSBC being preparable are still there. They still have a presence. You've been leaning in a little bit more. Could you develop that for us this morning? What are you planning in the United States? How big is your presence going to be going forward from here.
We're very excited about the opportunities in the United States. We're very confident we'll reach the fifteen percent return on tangible equity, and we're keeping it simple. Play to our strengths. Where do we have global scale that helps us in this market, make sure that we're leveraging our network. And so in the biggest business, which is the consumer, we have something none of the other foreign banks have or had, which is at scale auto business. We're number five in
the US, we're number one in Europe. We bring our OEMs here and second, we have scale to invest in our own technology. So we're going to deploy our own technology to launch a digital bank to make sure we can fund the auto business competitively.
Simple and this was brilliant. I know you've got a super busy morning, so we appreciate you carving out some time for us here at Bloomberg. Thank you so much. Great to be here. And what's in there? The bankos Santander Chairman