Santander Exits German Mortgage Market, Cuts 500 Jobs

Spain's banking giant Santander announced it will cease mortgage operations in Germany and reduce its workforce by 500 positions by 2026. This strategic shift aims to prioritise more profitable activities amidst Germany's challenging real estate market.

Germany's Real Estate Downturn

The decision comes as Germany experiences its most severe real estate crisis in recent history. After a long period of growth, interest rate hikes designed to combat inflation have significantly cooled the mortgage lending market, discouraging potential buyers. While recent data suggests some stabilisation, the market remains uncertain.

Streamlining Operations

Santander plans to manage the staff reduction through natural attrition, voluntary departures, and early retirement schemes. The bank's 189-branch network will remain intact. A Santander spokesperson confirmed that all German employees have been informed of the changes.

Market Trends

Santander's move mirrors a trend in the German banking sector. Competitor Deutsche Bank has also streamlined its mortgage operations, resulting in job cuts. Santander's outstanding mortgage loan holdings in Germany stand at roughly 2.5 billion euros ($2.66 billion).

Profitability Concerns

Santander Consumer reported a 41% drop in net profit in Germany last year, with a return on equity (ROE) of 7.8%, lower than the group's overall ROE of 11.91%.