Santander blames capital rules as profit slides

Santander UK warned yesterday that new rules forcing it to hold more capital to protect against future financial crises were behind a 9 per cent fall in profits, and revealed the trading impact was likely to be felt until 2013.

The UK’s fifth biggest bank – which has swallowed the former Abbey, Alliance & Leicester and Bradford & Bingley brands in the past decade – said regulatory costs had increased by £253 million as profits in the nine months to September slipped to £1.65 billion.

Santander’s net profits for the nine months fell to £659m from £1.28bn after a £538m provision for mis-selling payment protection insurance announced earlier in the year.

The group, which was the third most complained about bank in the first half of this year, revealed it had recruited 1,100 customer‑facing staff, but said it had more to do to improve customer service.

Santander boosted net lending to small and medium‑sized businesses by £1.7bn, or 27 per cent, in the period and said it was on target to meet its commitment under the Project Merlin lending agreement between the government and banks.