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FACULTAD DE TURISMO Y FINANZAS

GRADO EN FINANZAS Y CONTABILIDAD

POSITIONING OF A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

Trabajo Fin de Grado presentado por Marta Domnguez Macas, siendo el tutor del mismo
Borja Sanz Altamira.
V. B. del Tutor:

Alumno:

Borja Sanz Altamira

Marta Domnguez Macas

Sevilla. Mayo 2014.

GRADO EN FINANZAS Y CONTABILIDAD


FACULTAD DE TURISMO Y FINANZAS
TRABAJO FIN DE GRADO
CURSO ACADMICO [2013-2014]

TITTLE:
POSITIONING OF A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)
AUTOR:
MARTA DOMINGUEZ MACIAS
PROFESSOR:
DR. D. BORJA SANZ ALTAMIRA
DEPARTMENT:
MARKETING
KNOWLEDGE AREA:
MARKETING AND ECONOMICS
SUMMARY:
The aim of this report is to analyze how the four main banks deposits are positioned in
the market. To a better comprehension of where the deposit is positioned is necessary
to analyze the economic situation not only in Spain but also in Europe with all the future
perspective; all these factors will make interests change Due to the economic situation,
Spain has noticed a drop in interest rates, so that, deposits in general are not the most
attractive product that banks are offering. However, this product also has advantages
such as guarantying profitability pre-established that makes clients have confidence
and security about their money and no risk.
In the positioning process it will be analyze the main competitors and the strategy that
Santanders bank uses to be one of the most outstanding banks in the world. Before
that, it will be done the segmentation process in order to see where banks have to
focus their attention on.

KEY WORDS: Deposits; Positioning; Spanish Banks; Interest rates.

INDEX

1. MODULE I. BACKGROUNDS AND ACTUAL SITUATION OF BANKS ECONOMY


1.1. INTRODUCCIN ....................................................................................... 1
1.2. ECONOMIC CRISIS EFFECTS ................................................................. 3
1.3. FUTURE ECONOMIC VISION .................................................................. 5
1.4. BACKGROUND AND GENERAL INFORMATION ABOUT CLIENTS....... 6
1.5. REQUIREMENTS FOR EFFECTIVE SEGMENTATION ......................... 10
2.

MODULE II. DEPOSITS ATTRIBUTES AND HOW ARE POSITIONED


2.1. GENERAL ATRRIBUTES OF A DEPOSIT .............................................. 11
2.1.1. Interests ....................................................................................... 11
2.1.2. Commissions ............................................................................... 13
2.1.3. Guarantees .................................................................................. 13
2.1.4. Customer rights and obligations .................................................. 14
2.2. COMPETITIVE ADVANTAGE: COMPARISON BETWEEN SANTANDER,
BANCO POPULAR, CAIXA and BBVA .......................................................... 16
2.3. SANTANDERS BANK HISTORY ........................................................... 18
2.4. SANTANDERS BANK POSITONING STRATEGY ................................ 21
2.5. ATRRIBUTES OF SANTANDERS BANK DEPOSIT .............................. 23
2.6. ATTRIBUTES OF COMPETITORS DEPOSITS ...................................... 27
2.7. INFORMATION FOR CUSTOMER VIEWPOINTS .................................. 33
2.8. POSITIONING MAPS .............................................................................. 34

3. CONCLUSION .............................................................................................................. 38
4. BIBLIOGRAPHY ........................................................................................................... 39
5. ANNEX ......................................................................................................................... 41

TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

MODULE I
BACKGROUNDS AND ACTUAL SITUATION OF BANKS
ECONOMY
1.1.

INTRODUCTION

The aim of this report is to analyze how four of the main banks in Spain are
positioned in the market after this phase of crisis in which Spain all Europe are involved
in. These four banks are; Santanders bank, Caixa bank, BBVA and banco Popular. It
will be done a deep study of Santanders bank deposit and it will be compared with the
other three.
To analyze the positioning process of Santanders deposit is important, first, to
analyze how the brand is consolidated and positioned in the market, so that, it will be
explained the actual situation and the future vision of Santanders brand according to
the financial and economic situation, not only Spain of but also Europe. After that, it will
also be important to analyze how banks segment their clients in order to know where
and how their products will be positioned in the market.
As written above is essential to take into account the financial situation to a better
comprehension of how a bank is positioned in the market, or how could the bank be
positioned in a new market. So, how the financial situation affects the financial products
offered by banks? Due to the financial crisis situation in which banks and society, in
general, are involved; they notice that they have to adapt themselves to customers
new lifestyle needs. They are adapting themselves by offering not only new products
and services but also by changing the characteristics of the products and services
offered by the moment.
In times of crisis it is particularly important to pay attention to the volatility of the
macroeconomic environment. Geographic diversification protects the groups results,
minimizing the impact of volatility, and enables a medium-low risk profile to be
maintained. Taking into account all these factors is what makes banks being positioned
in a better position in the market in comparison with competitors.
According to Santanders bank, nowadays, customers are more critics and
demanding with the products and services demanded and they also demand major
exigency of professionalism to their bankers. Moreover, what customer really takes into
account is that these banks offer them a good relationship between benefit-cost and
personal products that could be adapted to their real situation. All these factors are
taken into consideration by banks and all these points is what make banks being
positioned in one side or another.
Being adapted to new times and new needs is what makes Santanders bank being
positioned as one of the first four banks in the world and also one of the best. A deep
study of their customers or potential customers is what makes Santanders bank
having a differentiating strategy, if we compare it with other Spanish banks. To analyze
how one of Santanders bank products is positioned in Spain is necessary to analyze
competitors, considering positioning definition as the relative competitive comparison of
a product and service that occupies and are perceived by your target audience. In
other words, you are always positioning against your competition. (Amstrong; Kotler
2013.

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Knowing how competitors work is important in order to establish our segment and
positioning strategy. The analysis of the competitors includes a strict study of the first
banks in Spain such as; BBVA, Popular Bank and Caixa Bank. It will be compared the
profitability offered by these banks and why during the last years the situation have
changed that much.
Apart from profitability, interests rates offered by banks are different among the
entities and this is an important factor that will make customers decide which bank is
more convenient to them. According to the official Santanders bank information;
Santanders bank main objective is to get more clients as possible, so that, the
segmentation process is essential when they launch their products to the market
because it helps them to decide what do people want and need. Depending on the
country or region they will segment people in different ways, but in this particularly
case, Banks normally do the segmentation process according to geographic and
demographic classification.
Making reference to Santander Bank, in 2013, lots of things happened and one of
the most outstanding was the merger of Santander, Banesto and Banif. The mergers
underway in 2013 in Spain (Santander, Banesto and Banif) implied cost synergies,
which will increase in the coming years, and bolster the competitive position in these
markets. This merge enable Santanders group to develop the business strategy and
strengthen efficiency and productivity. In advance, Santander bank captured EUR
191,000 million of deposits and reduced its liquidity gap by EUR 149,000 million. The
loan to deposit ratio was 109% for the group and 87% in Spain at the end of 2013.
Nowadays, Santanders bank can presume of; The Banks strategic position is
much better now than at the start of the international financial crisis. (Emilio Botn,
2013.)
Probably, all these new changes in Santanders bank and the already coming
success in terms of profitability is what makes Santander s bank one of the most
attractive and safe banks to deposit the money at. The reasons will be explained in the
following report; which a detailed description of how Santander can reach this
successfully position and how they outstand in comparison with their competitors;
BBVA, Popular bank and Caixa Bank. In Spain there are more banks, however these
are the more outstanding Spanish banks that can be compared in the same scale. After
mentioning the positioning strategy, it will be drawn a positioning map where it will be
located in four axes according to where are they positioned in the market.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

1.2.

ECONOMIC CRISIS EFFECT

In 2013, the economic situation changed too much and one of the main consequences
for customers was the change in interest rates offered by banks. Throughout 2013
savers have been witnesses of the long agony of term deposits. The penalties to the
extra-rate from bank of Spain in January, the descents of types announced by Draghi
in March and November, and the lack of competition between less and less numerous
banks have achieved that 2 % is the new one 4 % TAE offered by banks.
In January of 2013 bank of Spain decided to stop the extra rates. At the beginning of
the year, banks were offering a rate of 4.00% T.A.E. However, this situation changed
when the Bank of Spain published that these interest rates could not be applied any
more, at least in the coming years, it had to be changed to 1.75% TAE in a deposit of
12 months, 2.25% TAE in a deposit of 24 months and finally 2.75% TAE in a 36
months deposit. The problem was that foreign banks did not change their interests
rates, so Spanish banks had to think what strategy to follow in order to survive in this
competitive market.
In May Mario Dragui, president of the ECB, lowered the price of the money of
0.75% to 0.50%, which did have an effect to the fall on the mortgage index Euribor and,
also on the term deposits. Until June, customers could not find big differences between
short and long term deposits: however, since that month, the profitability obtained
between a 6 months deposit and a 25 months deposit was much higher. It can be
concluded that due to the financial crisis in which Europe is involved, Spain and other
countries members of the European Union had the need to take actions. Carrying out
actions imposed by the government is what have make banks changed their interest
nearly to half of what had been offered in previous years.
To informative and statistical effects, the credit institutions have to inform monthly
the Bank of Spain of the interest rates that they should apply to diverse types of loan
functions and passive (credits and personal lendings up to one year up to three years,
mortgage to more than three years, current accounts, savings accounts, temporary
transfers, etc.)
This informative obligation of the entities has his origin in the article 5.1 of the
Bylaws of the European System of Central Banks and of the European Central Bank
(ECB), who gathers the obligation from the latter - represented by the central national
banks - of compiles the statistical necessary information slant of the economic agents.
For it, the ECB adopted the Regulation (CE) n 63/2002, of December 20, 2001, on
statistics of the interest rates that the financial monetary institutions apply to the
warehouses and to the lendings opposite to the homes and the not financial
companies; and from there the Bank of Spain, across his Circular letter 4/2002, of June
25, it gave the obliged fulfillment to the content of the Regulation, in order to be able to
obtain of the credit institutions the requested information.
In the following table it will obtain information about the added (average interest
rates weighted by the principal one of the operations, so much in terms of annual
equivalent rate, since of effective type - restricted definition, which is equivalent to
annual equivalent rate without commissions) of some of the operations more
significant. The effected selection understands so much active types (those that
receive the entities when they give the money) as liabilities (those that pay to
remunerate the money received of the clients). ( Spanish central bank information)

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Interests Rates applied by credit entities:

Table 1.1. Interest rates applied by credit entities.


Source: Spanish Central Bank

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

However and despite the financial crisis in which Europe in general is involved, the
chief man of Santanders bank stated in the annual report of last year (2013): The
Banks strategic position is much better now than at the start of the international
financial crisis, both in terms of geographic diversification and balance sheet strength.
The bank deposits of the Spanish residents rose in 3.931 million Euros in March and
they placed in 1,446 trillions, which supposes an increase of 0.27 % with regard to the
previous month (1,442 trillion in February). According to the information of the Bank of
Spain published on the 29th of March 2014, with the increase of the deposits in March,
this balance stops behind three consecutive months in negative. If the information of
March is compared with the same month of 2013, it is observed a fall of 3.68 %, since
the balance at the time was 1,501 trillion. In absolute values, in one year the balance of
deposits has gone down in 55.216 millions. On the other hand, the residents in other
States of the Economic and Monetary Union have bank deposits in Spain as an
amount of 37.688 million Euros in March, below the previous month (39.031 millions).
This way, the total quantity of deposits in Spain both of residents and of foreigners
placed in March in 1,484 trillions, 0.17 % more than in February.

1.3.

FUTURE ECONOMIC VISION

Four months ago, it did a year of the famous recommendation realized by the Bank of
Spain with regard to the profitability of the deposits, which was translated in a sudden
descent of the same one, from nearly 4% to a 1,50% more or less depending on the
bank.
Summarizing, the result of this year cannot be better, for the banks clearly because
to customers it has implied a loose of profitability if they contract this product. Not only
they have lowered his types, which have adjusted even of rapid and majority form to
the decrease of November of the price of the money decreed by the BCE, gaining
important margins, but even they have seen how the deposited money grows. in the
third and fourth trimester, the balance is clearly positive: the first trimester with a slight
descent but the second one, closed with a growth of the rate of saving (in spite of the
fall of the revenue) up to 14,9 %.
All this probably has helped in the last months because has given a new return of
nut lowering the remuneration. If the money enters, why not to continue lowering
types? The decrease of the price of the money of November led that between this
month and the take-off of December was diminishing the remuneration of more than 70
products of saving, and 2014 has started of similar form. As little it has used that the
Euribor "spends" of that the price of the money is in 0.25 % and in December it has
risen with regard to November and is over 0.50 %.
The profitability of the products of saving continues lowering and to obtain better
numbers the requirements they are every time major.
With all this, the saver does not have to discourage and what is most important, they
have to compare and look for deposits which offer the maximum profitability. The
perspective in the short term is of stability and in the half term they will be very marked
by the economic situation in general. If the economy is reactivated in the European
Union, the logical thing is that the BCE moves card in the opposite sense, raising the
price of the money, and that as the descents have moved rapidly to the deposits, it do
also the raises

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1.4.

BACKGROUNDS AND GENERAL INFORMATION ABOUT CLIENTS.

The Spanish financial market has suffered over the last years a deep transformation
due to factors like the globalization, desregulations, aplication of new techonolies and
privatizations, Storbacka (2010). All these factors added to a better economic-culture of
people is what make the segmentation process very important. All these changes have
made that entities have the need to change ,in some way, the way they operate.
Nowadays, banks find more and more difficult to present their products to the desire
public.So that, is why banks consider so important to segment their market. The best
way to do the segmentation process is by using efficient techniques that guide them
the way they should follow.
As the society vary among the years, life is longer and preferences and attitudes
changes, is important to revise concepts about segmentation in order to have a real
and actual information about customers.
Due to all these factors commented above and to the high level of comepetition in
the banking sector, makes the segmentation process more than important in order to
understand where the banking deposits are positioned in the market.
To a better understand of where a product is positioned in the market is important
first to to the segmentation process. Armstrong; Philip (2000), Market segmentation
consist of dividing a market into disticnt groups with disticnt needs, characteristics or
behaviours who might require separate products or marketing mixes or can also
understood as the starting point is the is the identification of the relevant market
,Guiltinan and Paul (1991) that the company is serving and the partitioning of the
market into groups (segments) with similar needs and or characterisitcs with similar
purchase behaviour.
The adoption of segmentation strategies within the financial services industry is one
of the signs of the development of marketing within financial services companies. The
adoption of these strategies means that companies are now carrying out segmentation
research for themselves, and that academic segmentation research must move forward
if it to contribute to industry practice. Market segmentation has been recognised as a
powerful strategy, by concentrating on meeting the needs of homogenous groups
within a larger, heterogenous maket, companies have been able to increase profitability
and reduce the competition they face. The customers get a product better suited to
their requirements. Speed; Smith (2006).
There is no single way to segment a market. A market has to try different
segmentation variables, alone and in combination, to find the best way to view the
market structure.In almost all the banks, the first segmentation they do is the
geographic distribution because according to where they want to position their products
and services they will make things in one way or another.
The first criteria banks uses to segment is Geographic distribution; Geographic
segmentation calls for dividing the market into different grographical units such as
nations, regions, states, countries,cities or even in neighborhoods. The geographical
segmentation is very important to companies because it helps to decide not only where
to operate but also how to do it according to people needs.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

In the following picture it is shown how Santanders bank in located in different parts of
the wold (10 different countries), acting and positioned in a different way depending on
the continent and country. As it is shown in the picture, Santanders bank in spain
represents 2% of the global market, however is one of the most consolidated one.

1.2. Geographical Diversification


Source: Santanders bank official page
On the basis of the aforementioned segmentation,in Santanders bank the geographic
segmentation distribution and situation of the porfolio is shown in the following charts.
The distribution is as follows:

1.3. Santanders Bank Geographical distribution.


Source: Santanders bank official page.
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The second criteria is demographic segmentation; which divides the market into
groups based on variables such as age, gender, family life cycle, income occupation,
and nationallity. Demograpihc factors are the most popular bases fro segmenting
customer groups. One reason is that customer needs, wants, and usage rates often
vary closely with demographic variables. Another is that demographic variables are
easier to measure than other types of variables.
Age and Life-Cycle Stage variables; customers needs and wants change with age,
so that is important for banks to take into account these factor because depending on
the age they will want one product or another. After some researches made by
Santanders Bank, it has been verified that customer who contract deposits are
between 25 and 50 years old. Depending on the age the amount deposit proportianlly
change,normally being higher when they are getting older.
Some banks use age and life-cycle segmentation, offering different products or
using different marketing approaches for different ages and life-cycle groups. However,
the variety of deposits offered by banks have decreased considerably being quite
similar to all the public. Despite age is not a factor that affect at the time of contracting
a deposit, for banks it is a very important data.
Making reference to income segmentation, which is referred to dividing a market into
different income groups, is a very useful information for banks. Knowing their income is
what helps banks to know how much money will they have availble to contract a
deposit. Porportionally the more money you earn, the more money you could apart for
a deposit. In some cases, like in Caixa Bank, when you contract a deposit you need to
set uo your salary. For some banks it is a kind of a guarantee and also a way of
capturing new clients.
Segmentation process:
1. Which is my Target market?

DOMESTIC
BANK

BUSINESS
BANK

PRIVATE
BANK

Young people
University people

Business
Clients with high
revenues and heritage

Domestic economy
Inmigrants

Self-employed

Personal bank
1.5.Target market
Source: Own production from Santanders bank annual report

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

2. Variable used to do the segmentation : socio-demographic

DOMESTIC BANK
Young people

Age

University people

Age and level of education

Domestic economy

Cycle-life in a domestic economy

Inmigrants

Nationality

Personal bank

Rent level

1.6. Domestic bank


Source: Own production from Santanders bank annual report

BUSINESS BANK

Business

Profession

Self-employed

Economic activity

1.7.Business bank
Source: Own production from Santanders bank annual report

The private banking areas offers integral solutions for high income clients financial
needs. It includes santander private banking offices jointly managed with local banks.
The business model combines market knowledge at the local level wirh a global vision
that requires professional investment management.
The private banking goals for 2014 are to deppen client linage, increase the volmeof
manage assets, strive for a greater share of wallet and strenghten the capturing of new
clients. The strategies that they have developed during the last year are: strengthen
commercial activity with the younger generation and design and new digital strategy to
satisfy clients needs.
All these measures are part og the objective of developing a specialized and
differentiated business model. Which makes santander one of the worlds leading
private banks.
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1.5.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

Customers of banking services are changing and becoming more demanding in


products and services. Also, they are being more critic when they have to decide which
entity they should use.
During the last decade, the increase and change in the competitive advantage,
technology changes, socio-cultural development , markets internacionalization and all
the social process transformation has contributed direct and indirectly to improve and
extend the financial culture of banking customers. As a consequence os this process,
the customer of these products or / and services provoked that banks take into
consideration all these characteristics by the time of launching their products and
services.
The characteristics that customers are demanding more and more during the last
decades and that are making banking changes some points of their structure are the
following;

Major exigency of professionalism of the employees of banks and savings


banks
Importance to felixibility
Importance to the relationship between benefits-cost
Improve the demand of products from the distance
Customers consider very important the speed (rapidity)of the operations.
Preference for timetables that are flexible for workers.
Looking for personal products that could be adapted for each single person.
Dont have enough time to visit entities or personal bankers
Need of a cordial and personalized treatment
Minor tendency of saving up and increase in the levels of debt.
Search of major quantity of informations services and advices
Recent realized studies show that 98 % of the Spanish consumers uses banks
though 40% of the users uses an only one product, whereas only 10 %
demands four or more bank products.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

MODULE II
DEPOSITS ATTRIBUTES AND HOW ARE POSITIONED
2.1. GENERAL ATTRIBUTES OF THE PRODUCT (TERM DEPOSIT)
The term deposits are products in which you deliver a quantity of money to a credit
institution during a certain time. Passed this term, the entity returns it to him, close to
the remuneration agreed (it is to say, the interests), except that one reminds with the
entity the periodic collection of interests while the operation lasts.
The advertising and contractual documents of depositsit must include a reference to
the Guaranty fund of deposit to which the entity is adhered. When it it is not to the
Spanish Guaranty fund, with the information of contact from that one to the one that is
adhered. Habitually, the contracts of term deposit include the possibility of extracting
money of the deposit before the approved term happens, in exchange for a penalty or
of a commission that they will have to be gathered in the contract.
It is a criterion of the Bank of Spain that is a penalty or a commission, his amount
must not be superior to that of interest brute earned since the warehouse was
contracted up to the date of cancellation.
Therefore, the fundamental difference between this type of warehouses and the
deposits "at sight" (current accounts and passbooks of saving) consists of the fact that
in these the client can have the money of immediate form without any type of penalty.
In exchange, the remuneration of the term deposits is in the habit of being a Superior.
These are the traditional deposits, but there are other types of deposits in which the
profitability is linked to the evolution of an index, to the value of a basket of actions or
even to that it takes place or not a future event, warehouses that do not allow the early
cancellation or if they allow it it is in a few conditions very different from those of the
traditional deposits.

2.1.1. Interests
2.1.1.1 Interests rates applied to deposits
The commissions are the fundamental element of the cost of the current accounts and
of saving. For it, they will have to be born in mind very at the moment of comparing the
different offers.
The interest rate offered by the entities as remuneration of the warehouses (current
accounts, of saving and term deposits) is free, and can be fixed or variable. The fixed
interest rate does not change during the term of the warehouse, for what you assure
certain profitability himself. On the contrary, the warehouses to variable interest rate
have an uncertain remuneration, which depends on the future evolution of the indexes
or interest rates used as reference.
The profitability that you can obtain of the savings deposited in a credit institution
depends principally on the time during which it promises not to use them. Normally, the
longer it is the term, major it will be the obtained remuneration.
Precisely because of it, if you have a current account or a passbook of saving, and it
can extract therefore money at any time, the interest rate that will offer him the entity
will be minor that if it has a term deposit. The type can manage to be so low as a zero.
Because of it if you are not going to need the money of an immediate way, it him will be
more profitable to put it in a term deposit.
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Example of interest applied to a deposit:


Your entity offers you a fixed deposit which conditions, which must be gathered in the
contract, to be the following ones:

Amount of the imposition 30.000 Euros


Term 3 years
nominal annual Interest of 4 %, payable at the end of every year.
Commission for early cancellation: 5 % on the amount of the deposit, without
they could exceed the interests earned from the beginning of the operation.

This way you will obtain:


A few brute interests of 1.200 Euros paid once in the year. On this amount the entity
will realize the retention that the fiscal legislation establishes, at this moment 18 %, for
what he will pay a cash of 984 Euros, being the rest, 216 Euros, the amount that the
entity will deposit in his moment in the Public Estate in his name.
If you needed the money before, for example passed one year, and it was
requesting to cancel the warehouse, the commission that it should pay if we attend to
the approved thing would be 5 % on 30.000 Euros of the warehouse, or 1.500 Euros.
Nevertheless, these commissions in the traditional warehouses have a limit: they
cannot exceed the amount of the brute interests earned from the beginning of the
operation, for what since only there have been earned from the beginning of the
operation 1.200 Euros that they him have paid, you would have to pay to the entity as
commission not 1.500 Euros, but only 1.200 Euros.
2.1.1.2.

T.A.E

T.A.E. is an indicator that, in the shape of so much per cent per year it indicates the
effective profitability of a warehouse, including the interests, the commissions and
expenses, which facilitates the comparison between different offers.
It is important bear in mind is the T.A.E. in the short-term warehouses, for example
in the warehouses to one month. The calculation of the T.A.E. is based on the
hypothesis of which the full interests return to invest to the same interest rate of the
deposit; nevertheless the entity is not compromising itself to this reinvestment, for what
in the short-term deposits the T.A.E. it loses meaning.
2.1.1.3.

Remuneration

Some entities can offer him diverse goods and products as compensation for his
depsoit (it is what is called a remuneration in species), instead of be interested in cash.
This offer him can turn out to be attractive, but before be deciding is advisable that
compares what costs the product received with the interests in cash that it would obtain
if it was contracting a deposit in the same conditions.
It must bear in mind that the remuneration in species is a performance subject to
taxation in the Income tax of the natural persons.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

Since in any other deposit, it is necessary to report of the annual equivalent rate of
the operation. But if in a traditional warehouse the interests are directly a money, for
what it seems to be clear how to calculate the T.A.E., here what they deliver him is a
product.
To calculate the annual rate of the operation it is necessary to give him some value
to the good that they deliver him. The value that is in the habit of being in use is the
same that the bank company bears in mind to do the revenue to account in the Public
Estate (this revenue to account is equivalent to the retention that is effected in the
warehouses when they pay interests to him in cash). The fiscal regulation indicates
how there must be calculated the above mentioned value, which is obtained applying a
certain percentage to what it has cost to the bank company the product that gives him
you as interests.
2.1.2. Commissions
2.1.2.1.

Commission for early cancellation of the term deposit

Commission for early cancellation of the term deposit: The contracts of term deposit
are in the habit of allowing the early cancellation of the warehouse on the part of the
client, in exchange for a commission freely established by the entity. Also there might
be agreed, instead of a commission for early cancellation, which is called a penalty.It is
a criterion of the Bank of Spain that in the traditional depositis a penalty or a
commission, his amount must not be superior to that of interest brute earned since the
depositwas contracted up to the date of cancellation.
In case of not traditional deposits, since they would be those in which the profitability
is linked to the evolution of an index, of the value of a basket of actions or even of that
it takes place or not a future event, the entity probably will not allow his early
cancellation and, I marry of allowing it, it will be in a few conditions very different from
those of the traditional deposits
2.1.3. Guarantees
To relieve the hurts that could happen to the individuals as consequence of the
bankruptcy of a bank company or similar situation, which can happen in spite of that
they are supervised, they are born losFondos of Guarantee of Warehouses, organisms
promoted by the public power and to that the bank companies stick fast.
A Deposit guarantee fund serves in order that the depositors or investors recover his
money, up to certain limit, in case an entity adhered to the bottom is declared in
creditors' contest (the former procedures of bankruptcy and suspension of payments)
or have any other problem that it prevents him - after declaration of his supervisor from facing his payments and obligations. The above mentioned limit is 100.000 Euros
for depositor.
The guarantee covers:

The money that exists in the accounts of the clients of the entity, as well as the
nominative certificates of warehouse.
The negotiable values and financial instruments that have been entrusted to the
credit institution for his warehouse or record or for the accomplishment of some
service of investment.

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Domnguez Macas, Marta

There must be born in mind that the guaranty funds do not cover the losses of value of
an investment.
The adhesion to the Deposit guarantee fund of Credit institutions is obligatory for:

All the Spanish bank companies inscribed in the Special Records of the Bank of
Spain corresponding to banks, savings banks and credit cooperatives.
The bank companies' branches authorized in a country not member of the
European Union, if the warehouses or guaranteed values entrusted to the
branch are not covered by a system of guarantee in the native land, or if the
above mentioned coverage turns out to be insufficient, in order to cover the
difference

On the other hand, the adhesion of the bank companies' branches authorized in
another country member of the European Union is voluntary, because the guarantee of
the warehouses and values remains covered in his native land
The guaranteed maximum amount of the warehouses is 100.000 Euros for every
holder, with independence of the number and class of warehouses that has in the
entity. The guaranteed maximum amount of the values or financial instruments
entrusted to the entity is independent from the previous one, and reaches equally
100.000 Euros for every investor, to the margin of the number and class of values.

Example:
Let's suppose a marriage that has in a bank a current account with a balance of 3.000
Euros and a term deposit of 40.000. In case the bank between in crisis and it had to
control the Deposit guarantee fund:

If figure as titling only one of the spouses, the guarantee of the bank deposits
ascendera to a total of 100.000 Euros;
If both appear as holders, it would imply a coverage of 200.000 Euros. In both
cases, they would recover his warehouses: 43.000 Euros.

The financing of the Deposit guarantee funds comes from the annual contributions
that must do the adhered entities. In case of need, the entities will have to realize
assessments (it is to say, extraordinary contributions). Exceptionally, a bottom can be
nourished of extraordinary contributions of the Bank of Spain, which quantity will be
fixed by law.
2.1.4. Customers rights and obligations
2.1.4.1.

Rights

Referring to rights, The bank of Spain established that the customer have to receive
the document of the contract with all the details of the product contracted. Also, the
customer should be given the documents of liquidation.
The customer have the right to know the remuneration of the deposit with the interests
agreed initially or later modified by the entity, previous communication to the client.
Another right that customers who acontract a deposit have is the return of the quantity
deposited in the form and moment reminded.
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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

In case of early cancellation of the deposit before his maturity, if it has been
agreed;this cancellation can take prepared the payment of commissions or penalties, if
this way it was agreed in the contract. It will be different depending where the
customer contract the deposit.
2.1.4.2.

Obligations

According to what the bank of Spain says, some banks establishes that customers
have to pay , puctually, agreed commissions. These commissions will depend not only
on the bank, but also on the procuct demanded. In many cases, the customer have the
obligation to pay maintainence commissions.
In case of overdraft, to return the funds, together with the interests and the bank
commissions agreed. Also, the information Facilitates that the entity requests customer
to identify the customer and finally the customer must know that normally the contracts
include a forecast on compensation of balances between the different accounts that the
same holder could have in the entity.

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Domnguez Macas, Marta

2.2.

COMPETITIVE ADVANTAGE: COMPARISON BETWEEN SANTANDER,


BANCO POPULAR, CAIXA and BBVA.

BBVA is the bank that loses more profitability in 2013 among the biggest financial
entities in Spain. BBVA has been affected by Clausulas suelo.
The noticeable profits that almost every big bank have obtained during 2013,
contrast with the situation of BBVA which has been witness of how their profits didnt
increase as the others.
And it is that the minor realized forecasts, the appreciations for disinvestments or
the income obtained with the sale of national debt have been the people in charge of
the improvement of results without the entities could have recovered even the
profitability lost during the crisis.
Within the big banks, BBVA has been the one with less margin of interest in relation
to the total assets, in their business in Spain. In 2012 the ratio was 1.37% the
percentage went down to 1.21 % at the end of last year.
The bank which is headed by Francisco Gonzalez has been affected in 2013 by the
elimination of Clausulas suelo hipotecarias, which make them had 425 millions of less
income. All this joined to the decrease of the credit activity has provoked that his
margin of interests contracts in 19.3%.

BBVA
1,4
1,3
1,2

BBVA

1,1
2012

2013

At the end of 2013, Banco popular was the most profitable because their interest
margin was 1.65% of the total assets. However, the situation is not as good as
previous years, when it was 1. 72%.

BANCOPOPULAR
1,74
1,72
1,7
1,68
1,66
1,64
1,62
1,6

BANCOPOPULAR

2012

2013

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

The second more profitable in Spain is Santander Bank with 1.57%, and as happens
with Popular Bank it has not been able to compensate the bad behavior of margins.

SANTANDER
1,58
1,57
1,56

SANTANDER

1,55
1,54
2012

2013

Caixa bank is the only financial entity that has been able to get more profitability during
2013. It can be seen in the graph that in 2012 the interest margin was 1, 12% of the
total assets and 12 months later the percentage raised to 1, 16%.

CAIXA
1,18
1,16
1,14

2012

1,12

2013

1,1
2012

2013

2.1.Tables of competitive advantage


Source: El economist article.
The improvement in profitability is the major priority of all financial groups this year. In
the last quarter, the sector already has observed a slight improvement of the margin of
interests, encouraged by the clipping of the profitability of the deposits, which with a
cycle of short life manages to improve with rapidity the financial costs.

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Domnguez Macas, Marta

2.3.

SANTANDERS BANK HISTORY

To a better understating is required to talk about Santanders bank, which is


considered not only one of the largest banks in the euro zone but also one of the
largest in the world. Santanders bank is a global, multinational bank which was named
the Best Bank in the World, in 2012 in the annual Euro money ranking for the third time
in recent years. At the close of the latest fiscal year, Santander was the largest bank in
the euro zone and one of the thirteen leading banks in the world in terms of market
capitalization: 63 billion Euros. It offers a full range of products that includes day-to-day
accounts, deposits, investment funds, pensions, mortgages, loans, cards, and
insurance.
Based on a business model that focuses on retail banking products and services for
private customers, SMEs, and companies, Santander currently serves more than 100
million customers through a global network of 14,400 branches, the largest in the
international banking sector. It has 1.388 billion Euros in managed funds in all
customer segments, more than 3.3 million shareholders, and 187,000 employees.
Making reference to the history of Santanders bank, it was Founded in 1857 in the
Spanish town of Santander by 76 businessmen linked to regional economy and to the
Spanish colonial trade with the Americas, the 155-year old Santanders bank climbed
all the rungs in the financial ladder throughout the 20th century until in the 21st century
it became a leading world bank, a reference in good management and competence in
the sector, with a solid presence in ten countries in two continents, Europe and
America, and businesses in more than forty markets. Santander is currently the main
financial group in Spain, its country of origin, and in Latin America, a continent where
its main markets are Brazil, Mexico, Chile, and Argentina. It also holds a significant
position in the United Kingdom, Germany, Portugal, Poland, and the north-east of the
United States. In addition to these main markets, it also offers consumer finance
services in Scandinavia, the Netherlands, Austria, Italy, and Belgium.
About liquidity, it is considered as the most liquid shares in the stock market.
Santander shares are the most liquid in the Eurostoxx, and are listed in the Madrid,
New York, London, Lisbon, Mexico, So Paulo, Buenos Aires and Milan stock
exchanges. They are listed in 63 different stock exchange indices.
Santanders bank has the Capacity to generate profits and sound capital. Santander
holds a unique position in the international banking sector, which allows it to increase
its profits year after year, generating value for its shareholders, clients, and all of
society.
In 2012, in the midst of a severe global financial crisis, Santanders profit
provisions grew to 23.559 billion Euros, one of the three largest figures
international banking sector. Santander closed the year with a 10.33% core
ratio, and easily passed the strictest financial soundness tests required by
competent national and international authorities.

before
in the
capital
all the

The Santanders brand centralizes the groups identity and values expresses a
unique international positioning that is consistent and coherent throughout the world.
This positioning is reflected in the corporate slogan Santander, a bank for your
ideas. This slogan transmits that Santander is a bank with a clear retail vocation that
listen to clients in order to understand their needs, and has the capacity, resources and
experience to offer them the right solutions. It values ideas, as the engine of society,
and people who have goals, challenges and dreams.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

The objective of Santanders bank is to offer their customers a brand experience


that is different from others, significant, homogenous, and memorable and aligned with
the banks corporate values.
Santanders bank purpose is to make people feel that is a bank that not only offers
the best products and services, but also has a simple and personal way of doing
banking, is a trustworthy institution and one that base its success on helping its
customers achieve their goals and projects.
The pillars of Santanders model are:

Focus on the customer and on retail business


Geographic diversification and the model of subsidiaries
Discipline in risks, liquidity and capital. Strengthening the three variables was a
priority in the Groups management during 2012
The continuous effort in improving operational and commercial efficiency.
The Santander brand, recognized as one of the main ones in the banking world:
fourth financial brand according to top Banking Brands 2012, fifth by leadership
according to the Hay Group published by Forbes and the worlds best global
bank according to euro money
Santander staff. The Group's 186,763 professionals are a key element in its
business model.
Sustainable business development.

Santander developed in 2012 a wide range of measures in order to keep on


advancing in improving the groups global positioning since the onset of the crisis.
The following steps, among others, were part of this strategy; Adjustment to the
competitive environment in Spain. Within the restructuring framework of the financial
sector in Spain, the Group will strengthen the Santander brand by integrating Banesto
and Banif into Santanders Bank.
The single brand and new structure, with 4,000 branches under the same corporate
identity, will enable Santander to better take advantage of the opportunities to gain
market share in Spain, by providing a wider range of products and a better quality of
service.
The operation also offers significant synergies of integration, is a low risk one and
will have a positive impact of around3% on earnings per share over consensus by the
third year.
The legal merger, operational and brand integration was accomplished before the
end of 2013. All these operations enabled the Group to end 2013 in a position of great
growth potential in the coming years.
The priorities to Santander Bank were mainly risk quality and management of Npls;
the focus on customer funds in order to gain market share and narrow the commercial
gap; support for sMes and exporters through specific programmes to grant credit;
management of spreads and control of costs. All of this while maintaining the target of
capturing and linking customer under the Queremos ser tu Banco strategic plan,
launched seven years ago.
This dynamism was also seen in customer linkage, strengthened by the line
Queremos ser tu primer banco, whose objectives are to increase transaction banking
and loyalty to the brand. Within this line, the programme Ahorra con Queremos ser tu
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Domnguez Macas, Marta

Banco was launched, which provides new advantages to those benefiting from the
plan in the form of offers and discounts on the products and services of the main
brands in the Spanish market.
As a result of this strategy, on-balance sheet customer funds, this registered a
favorable evolution. This growth came from various products (increased in demand and
time deposits and in retail commercial paper) and business segments (all of them
registered growth), enabling the cost of funds to be maintained at very acceptable
levels (1.49%) and below that of the sectors average. This evolution enabled to gain
market share in deposits +retail commercial paper in Spain rose above 200 b.p. in
2012.
The Santander Branch network is maintaining its active policy of tending to the
financing needs of its customers and boosting the most dynamic economic sectors.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

2.4.

SANTANDERS BANK POSITIONING STRATEGY

Today, after a phase in which Santanders bank concentrated on strengthening the


balance sheet, liquidity and strategic positioning, the bank is ready to begin a new
cycle of profitability and improving results.
Santanders bank is closely involved in building a more stable, solid and efficient
financial sector, focused on financial sector, focused on financial sustainable economic
growth. Santanders bank economic model, based on lasting and profitable relations
with customers, increasing their linkage with the bank and maintaining prudence in
risks and discipline in the financial and capital sphere, has been vindicated by the
crisis and is very regarded by regulators and rating agencies.
Santanders bank is in a unique position to face the new cycle of growth in the
global economy. It has a potential market of 600 million people in 10 core markets. The
challenge for this next future is to focus on our customers and also focus in those who
are not clients yet.
In the next three years, Santanders bank expects to regain our pre crisis profit
levels, which would enable them to maintain an adequate remuneration for
shareholders. However, the economic recovery will not be enough for the banking
sector to return to the pre- 2008 levels of profitability. There have been introduced a
new regulation as a result of the international economic crisis that are having and will
have a structural impact on banks profitability. This is particularly the case with the
higher requirements, new long and short term liquidity and leverage ratios, the higher
cost of deposits as a result of new bank resolution mechanisms, as well as the cost of
compliance itself in the new regulatory environment.
Santanders bank comfortably meets all the new regulatory requirements:

Its core capital ratio has risen since the start of the crisis and it has
strengthened its balance sheet, which will provision and has high levels of
coverage.
The loan-to-deposit ratio improved to 109%

According to the letter of the chief man, he says that is highly likely that the
Spanish economy will consolidate its recovery in 2014. This upturn is firmly
anchored in competitiveness gains.
The structural reforms undertaken in the last few years have laid the foundations for
more sustainable growth and contributed to reactivating the solvent demand for loans
that is beginning to be seen in SMEs and companies.
The commercial networks of Santander, Banesto and Banif were successfully
merged during 2013. The personal banking, companies and corporate banking
businesses in the country were re-grouped under the new Santander Spain unit in
June, enabling us to develop the business strategy and strengthen efficiency and
productivity.
The main priorities in the coming years are:

Continue to gain profitable market share in attractive businesses such as


companies, SMEs, high income and deposits, for which we will maintain a
strategy of segmentation, differentiation and improvement in the quality of
service. All this will improve customer linkage.
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Domnguez Macas, Marta

Progress in generating synergies, both from the merger as well as from the
enhanced efficiency.
The gradual return to a normal level of loan loss provisions will have a positive
impact on the income statement in 2014.
Reducing the costs of deposits. The cost of new time deposits dropped by 100
points.
Attracting and retaining customer funds. In the last two years the bank has
gained two percentage points of market share.
The improvement in liquidity. The loan to deposit ratio improved to 87%.
In 2013, it captured 606,663 new customers. The We want to be your Bank
plan, which exempts linked customers from service charges, was extended to
include 804,025 customers from Banesto.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

2.5.

ATRRIBUTES OF SANTANDERS BANK DEPOSIT.

Santanders bank in Seville (Spain) offer one of the most interesting and demanding
deposit in the market, it is called the increasing deposit with many characteristics that
makes this product one of the most attractive for customers.
A). The atrributes of the increasing deposit are;

Period of time : 25 months


Available since: 22 february 2013. New conditions 7th march 2014.
Start date: when customer want to contract the deposit.
Profitability: Increase each year due to the characteristics of the
deposit.
Minimum quantity: 10.000/ 50.000 euros
Cancelation: an anticipated cancellation without cost is possible if the
customer do it in quaterly or monthly windows.
Renovation: the renovation of the deposit could be automatic once it
comes to the maturity stablished. Once this happens, the bank can
offer to the customer new conditions.
B). What the bank offer to their customers with this deposit:

One of the major guarantees that offers the Santanders bank is


tranquility to his clients since it offers 100 % of the guaranteed
capital.
The second advantage that offers the bank is fixed profitability to all
the clients who contract this deposit. Besides this, the clients will have
the chance of knowing the profitability in advance
Quarterly credit of interest

INCREASING DEPOSIT
PERIOD OF TIME: 25 MONTHS
QUARTERLY LIQUIDATION OF INTERESTS
RENOVATION TO MATURITY
SINCE 10.000 EUROS
9

12 FIRST MONTHS
13 FOLLOWING MONTHS
QUATERLY WINDOWS.

SINCE 50.000 EUROS


9

12 FIRST MONTHS

13 FOLLOWING MONTHS
MONTHLY WINDOWS

0.69%
0.95%

0.82%
TAE

0.74%

0.86%

0.98 %

TAE

PENALTY 2% OUT OF WINDOWS PERIODS

2.2. Santanders Increasing deposit.


Source:Own produced from Banco Santander, Sevilla.

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Domnguez Macas, Marta

Santander made a profit of EUR 478 million in spain in 2013. It has a market share of
13.0% in loans and 15.6% in deposits. It has a retail and wholesale banking business
and online banking (openbank).

2.3. Santanders Balance Sheet and Income Statement 2013


Source: Official Santanders Bank Annual report

Santander made a profit of EUR 478 million in spain in 2013. It has a market of 13% in
loans and 15,6% in deposits. It has retail and wholesale banking businesses and onle
banking (openbank).
C). Period of time ( Maturity):
The period stablished by santanders bank for this increasing deposit is 25 months.
Since the first day, customers can know the profitsbility of their investments. The
customers can benefit themselves from very attractive interest rates, furthermore, they
assure a few good conditions during the term of investment.
D). Liquidity:
Santander funds most of its lending with customer deposits (loan-to deposit ratio of
109%, maintains comfortable access to wholesale funding and has a wide range of
instruments and markets through which to obtain liquidity.
The groups liquidity management principles are: high contribution and stability of
deposits, thanks to the retail nature of its business; a decentralized liquidity model; a
medium and long term liquidity needs must be financed by medium- and long term
instruments; high diversification of funding sources by instruments, investors, markets,
currencies and maturities; limited resource to short-term funding; and availability of a
comfortable reserve of liquidity, including discounting capacity at central banks.
The increasing deposit allows their customer an advance cancellation for the whole
quantity, without any cost added during the windows periods. The window have a
duration of 7 calendar days and it will be begin when every 90 days quarterly period
finish (amounts from 10.000 Euros) and monthly of 30 days (since 50.000 Euros)
counting from the date of the contract. The penalty will be 2% out of windows periods.
E). Interest rate:
Interest rate risk is the possibility that changes in interest rates coild adversely affect
the value of a financial instrument, a profolio ot the group as whole. It affects, among
others , loans, deposits, debt securities, most assets and liabilites of trading profolios
as well as derivatives.
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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

Table 2.4. Loan to deposit ratio


Source: Santanders bank annual report 2013

The capital and liquidity ratios are at very comfortable levels with core capital of
11.71% and loan-to-deposit ratio of 109%.
In this graph it is shown the central bank benchmark interest rate from July 2012 to
January 2014. It is important to have a look to this as usually, central banks make
loans to the commercial banks under their jurisdiction.
Moving the benchmark interest rate, the central bank is able to make an impact on
interest rates of commercial banks, inflation level of the country and national currency
exchange rate. Reduction of interest rates should bring increase in business activity, a
rise in inflation rate and weakening of national currency. In case of increase in interest
rates the level of business activity is likely to drop, inflation declines and national
currency strengthens.

EUROPEAN CENTRAL BANK / BENCHMARK RATE

Table 2.5. European Central Bank / Benchmark rate


Source: European central Bank official web-page

In the second graph it is shown an annual change in the Consumer price Index. The
customer price index measures how the price level of consumer goods and services
purchased by households has change over the last period.
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Domnguez Macas, Marta

As seen in the graph, Spanish consumers prices fell 0.2 % on the year in March of
2014. It has been considered the lowest rate since October of 2009.

2.6.Spanish Inflation Rates from 2012 to 2014.


Source: Bank of Spain official webpage

F) Deposit guarantee fund:


The Spanish legislation foresees a system of guarantee in order that the persons who
have bank deposits do not lose his savings in case an entity has problems and ends up
by failing. Not only in Spain, actually these systems are available along the world,
offering a guarantee to the depositors in case of problems.

The guarantee is applied to natural persons and to companies, but it is necessary to


bear in mind that is applied by depositor. That is to say, if a person has a warehouse of
80.000 Euros in an entity "A" and other one of 30.000 in an entity "B" (in total 110.000
Euros), only it would have cutlery up to 100.000 Euros in case it had to resort to the
Deposit guarantee fund. The maximum amount of the guarantee depends on every
system of guarantee of warehouses, being in Spain of 100.000 Euros and an identical
number in the European neighboring countries. The United States stands out, where his
system of warehouses covers up to 250.000 Euros his depositors.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

2.6.

ATTRIBUTES OF COMPETITORS DEPOSITS. BBVA, BANCO POPULAR


AND CAIXA BANK

2.6.2.1.

BBVA bank

Banking activity in Spain has been largely conditioned by the countrys economic
environment, which has led to a general deleveraging of the economy. Together with
early payments in November under the Supplier Payment fund, this has generated a
reduction of performing loans in the area of 10.2% in the last 12 months to 165,813m
at the close of the year.
Customer deposits under management increased by 10.4% year-on-year. By type of
product, time deposits have reported the highest growth over the last 12 months (up
18.9%). All this data, added to an adequate commercial strategy in the area and the
high capillarity of the network, as well as the promotion of multi-channel banking, have
enable BBVA to cope with a very demanding year in terms of maturities, and achieve
deposit renewal rates over 80% every month. It also gained 39 points in market share
in customer funds over the year, according to the latest available information of
December 2013.
The results in lending and on-balance-sheet customer funds have cut the loan-todeposits ration in the domestic sector to 124%, according to data of 31-dec-2013, from
134%of 31-dic-2012.
In off-balance sheet finds, BBVA has performed well in both mutual and pension
funds, which increased by 16.6% and 10.0%, respectively, over the year. In an
environment of very low interest rates, BBVA is actively selling diversified mutual fund
catalog to customers with the right investor profile. In addition, the bank continues
committed to offer customer pensions saving products with the aim of promoting longterm savings for retirement designed as a complement to retirement pensions.
Lastly, more and more customers using alternative channels other than branches
are increasing significantly over the last years. This is a consequence of an ambitious
transformation plan designed to improve the value offer of products for customers,
optimizing a multichannel relational model that is a clear advance in operational
process and makes BBVA an easier bank that is close to customers in their needs.
Taking into account the financial crisis in which all banks are involved, BBVA plans
for consolidated is to attract more customers in developed markets as shown in the
following graph:

2.7. BBVA plans for consolidated leadership in the world.


Source: BBVA official page.

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Domnguez Macas, Marta

The following graph shows the perception that people have about BBVA bank.
Perception includes the awareness and reputations they have about how they are
consolidated and how do they act in the financial market in comparison with
competitors of other countries. Awareness is a percentage of people who mention
being aware of the BBVA brand spontaneously.

2.8. BBVA customers awareness


Source: BBVA official page.

Reputation is a grade from 0 to 100. The data for awareness and reputation are
for the first nine months (January to September) for 2013.
Statistically significant changes: positive in green and negative in orange.
Awareness data source: Advance Tracking Programme, MillwardBrown.
Reputation data source: RepTrak, Reputation Institute.
Spain competitors: Santander, La Caixa, ING Direct, Bankia, Banco Popular,
Bankinter and Banca Cvica

A). BBVA INCREASING DEPOSIT


The increasing deposit allows clients to raise their savings with an increasing
profitability year by year. It is called increasing because the profitability start from an
interest rate of 0.40% and in the third year it finishes with an interest rate of 2.10%.
First year:

0.40%

Second year: 1.25%


Third year:

2.10%

What are the advantages of the deposit? It offers a wide range of advantages, but
the main one is the profitability that offers this deposit at the end of the last month of
the third year. The deposit offer a profitability after 3 years of having the money deposit
in the bank with an increasing interest rate that raises year by year.
The minimum amount that a customer can deposit is 3000, and it can be obtained
whenever they want as it does not have any penalty having the money back.The
interest liquidity is annually or at the end of the 3rd year.

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TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

B). TRANQUILIDAD DEPOSIT


This deposit is called Tranquilidad as it offer 100% profitability at the end of the period,
and also an extra interest if you fulfill all the conditions pre-established.
Example:
If you have a deposit of 10,000 with interest liquidity obtained in maturity and
interest base of 0.50% nominal interest rate.
If you have a deposit of 10,000 with a 0.50% nominal interest rate liquidity and 395
days: (10,000 x 0.50% x 395) /365= 54, 11 of interests. But to this amount it has to be
applied the fiscal year (FY) of 21%, so the total amount will be 42, 75.
In case to maturity there is verified the fulfillment of the requirements of new
transactions; the client will receive an extra rate of 1.25%. So, (10,000 x 1.25% x 395)/
365 = 135, 28 of interests. As the previous one, it has to be applied the Fiscal Year
(FY) which is 21%, so the total amount will be 106, 87.
In case of fulfillment, the client will receive when maturity;
Total net amount (365 days) = 42, 75 + 106, 87 = 149.62)
(T.A.E. = 1,748)
Base Rate

42, 75

Extra Rate

106, 87

This deposit has some conditions that should be fulfilled in order to obtain the
interest rate;
Minimum quantity 3,000 until 500,000.
The Base rate is established at the moment the customer applies for the
deposit.
The liquidity can be applied monthly, quarterly or half-yearly.
What are the advantages offered by this deposit?

There is no penalty in case of cancellation


There is an ideal profitability, with the Tranquilidad deposit; the customer has
the possibility to increase their profitability reaching interest rates of 1.25% to
- 29 -

Domnguez Macas, Marta

maturity. This interest rate will be applied if the customer fulfill these conditions;
setting up the salary (equal or more than 600, pension or any payment in case
of unemployed.
Domiciling at least 5 receipts of any issuer or supporting a card it activates on 7
times having used it in trades or cashiers at least.

It is necessary that the account associated with the deposit does not fulfill the
requirements in 3 natural months previous to the contracting of the deposit.

2.5.2. CAIXABANK, Multi-Star


CaixaBank aims to lock in its leading position in the Spanish retail market, offering the
best possible service to customers, striving to create long-standing relationships and
working toward a balance in business throughout all regions. The objectives for this
priority are as follows:

Strengthen leadership in retail banking in Spain.


Complete regional presence with higher market share through organic growth.

In the following graphs; it is shown how pricing continues to reduce costs of new
time deposits in the last quarterly of the year 2014. Front book continues to decline
(>100 pbs April to date).

2.9. Reducing costs of new time deposits


Source: Caixa bank quarterly report (2014)

- 30 -

TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

Caixabank offers to their clients a deposit called deposit Multi-star with the following
characteristics;

1. CHARACTERISTICS:

Definition: the deposit has been established for duration of 18 months.


It can only be contracted for increases in the entities balance.

Ownership: Natural people.

Term: 18 months

Remuneration: the interest rate of the deposit is 1.50% T.A.E. You can
get an additional interest rate of 0.25% if all the conditions established
by the multi-star deposit have been carried out by the customer when it
expires. If all the conditions are carried out, the customer can achieve
until 2.00% T.A.E.
MULTI-STAR PROGRAMME

The conditions established by Caixa Bank if anyone wants this deposit


are;
Salary
Pension
Benefits (unemployed people)
Set up self-employed people (salary)
Set up three different invoices per month.
Minimum of three quarterly purchases with the Caixa credit card.

VINVULATION CONDITIONS
Among a wide range of products and services, to the maturity of the
deposit, having contracted an equal number o more than what
contracted initially.
Additionally, the customer should contract two products if the product
contracted initially is equal or below one. It should be contracted at least
one if the number of products contracted initially is equal or above two
or below to five.

Credit of interest: The customer can get their interests obtained by the
deposit in different ways; monthly, quarterly, weekly or when it expires.
Quantity: the minimum amount is 3000 and the maximum 100.000
Liquidity: the customer can cancel it totally or partially.
Risk: There is no any risk.
- 31 -

Domnguez Macas, Marta

2. ADVANTAGES OF THE PRODUCT


One of the main advantages that the deposit offers to their customer is an
attractive profitability that can increase if the customer carry out all the
conditions established above. Another advantage is that the deposit can be
totally or partially cancelled by the customer at any moment before it expires.
This product guarantees no risk to customers, and also is an easy way of
saving up your money. It also guarantees a fixed interest rate until the deposit
expires. If you also carry out with the extra conditions you will be able to get an
additional interest rate.

2.6.3. BANCO POPULAR ,GASOL DEPOSIT


Popular Bank now offers a new deposit called GASOL DEPOSIT that according to the
time you want to have your money deposited in the bank you will get more or less
interest rate for your money.
The first deposit offered is the one which takes 3 months, characterized because it
can be cancelled partially or totally and the customer does not have to assume any
penalty for it. Interest rates are different among the three months and it starts
increasing from the first to the last one.

First month
0.25%
Second month 1.00%
Third month
1.30%

The second choice is an increasing deposit which takes 6 months. It is also


cancellable partially or totally according to the customer interests. And the liquidity will
also increase month by month.

First month 0.25%


Second month 0.40%
Third month 0.65 %
Fourth month 1.00%
Fifth month 1.00%
Sixth month 1.33%

The third and last option is an increasing deposit that takes 25 months. As It takes
longer, the interest rate is higher in comparison with the other two. It is also
cancellable, partially or totally but the difference is that the customer will not have any
penalty from the 13th month.

First 13 months: 1.00%


12 other months: 1,82%

- 32 -

TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

2.7.

INFORMATION FOR CUSTOMERS VIEWPOINTS

Several are the factors to bear in mind at the moment of deciding to operate with a
bank or another one. The location and nearness of his offices, the facilities that it offers
to his users as the access to cards of credit or debit and the cashiers' network, his
politics of commissions, the services that he proposes as the operative one for the
electronic banking Are some of them.
It is not less importantly to value the solvency of the entity, factor that comes given by
the calculations and studies that realize the agencies of rating or qualification. Most
known they are Fitch, S*P and Moody's. And also, according to the operative one that
is going to be carried out, it should know on what Deposit guarantee fund the bank or
box depends with the one that one is going to work.
Another aspect to bear in mind they are the opinions that have the clients of the
financier. Not uselessly they are they those who do a daily use of the same one. Later
we show the results of a study on the Spanish banks.
Customers of financial products Bankimia, in collaboration with the institute of Targetempirical investigation of markets, realized the survey between 3.466 persons in
January, 2013.Between others, asked aspects had to punctuate as the attention that
they receive on the part of the entities, the profitability that offer them and the
commissions that they receive from them, the network that cashiers, the service for
Internet, the financial safety
The data taken from the study are the following shown in the table;

BANK

MARK
(Out of 10)

BANCO SABADELL

6.88

BANCO SANTANDER

6.77

BBVA

6.45

LA CAIXA

6.27

BANCO POPULAR

5.95

2.10. Ranking competitors


Source: Statistics of Bankimia.

- 33 -

Domnguez Macas, Marta

2
2.8.

POS
SITIONING MAPPING OF COMEP
PTENCE

The Following table


t
showss a wide ra
ange of dep
posits from four of the
e main ban
nks of
Spain offered now
n
in the market. De
espite thes
se banks have more deposits, in
n this
report there will
w only be
e analyzed
d the one with simiilar characcteristics. These
T
chara
acteristics are
a mainly based on maturity
m
and
d the amount needed to be deposited;
betw
ween 10.00
00 and 50
0.000 in most
m
of the cases. However, in ssome cases the
minim
mum amou
unt is 300
00. According to matturity; it va
aries from 3 months to a
maxiimum of 25 months. Th
he more tim
me you get your
y
moneyy deposited in the bank
k, the
highe
er interest the custome
er will get.
Ba
anking finan
ncial produccts (depositts) are map
pped togeth
her on a po
ositioning map.
m
This allows them
m to be com
mpared and contrasted in relation to each other.
This is the main strength of this too
ol. Marketerrs decide upon
u
a com
mpetitive po
osition
which enables them to distinguish
d
their own products from
f
the offerings of their
comp
petition (hen
nce the term
m positioniing strateg
gy).

NAM
ME

INTER
REST

MATURIITY

CON
NDITIONS

-TRANQU
UILIDAD

0.50%BASE1,25%

13 MONT
THS

YES

-CRECIE
ENTE

0.40%/1.25
5%/2.10%

25 MONT
THS

YES

-CRECIE
ENTE

0.82
2%

25 MONTHS

NO

MULTI-S
STAR

1.50%
%-2%

18
HS
MONTH

YES

0.25%/1%
%/1.30%

3 MONTH
HS

0.25%/0.40
0%/0.65%

6 MONTH
HS

1%/1..82%

25 MONT
THS

GASOL DE
EPOSIT

(*): Not
N specified
d.
2.11. BA
ANKING INT
TERESTS DEPOSITS
D
DIFFERENCE
ES
Sourc
ce: Own pro
oduced from
m banks info
ormation.

In th
he first positioning ma
ap; the axe
e of more/le
ess produccts makes rreference to the
quan
ntity of finan
ncial produccts a bank offer
o
in com
mparison witth the comp
petence. Th
he list
of th
he different deposits is
i detailed at the end
d of the re
eport (attacched docum
ment).
Nowa
adays, ban
nks are offe
ering fewer deposits, probably
p
be
ecause the success of
o this
finan
ncial producct is less due
e to the deccrease on in
nterests.

- 34 -

TFG-FICO. POSIT
TIONING A FINANCIAL PROD
DUCT (SANTAN
NDERS DEPOS
SIT)

p, Santande
ers is not in
n their bestt position; however
h
it iss not releva
ant at
In this first map
T bad possition is beccause they only
o
offer on
ne deposit with
w this characteristics
s, but
all. The
it doe
es not mea
an that they do not havve more dep
posits of diffferent charracteristics in
i the
markket. Despite
e Santande
ers position
n in the ma
ap, BBVA have
h
reache
ed the best one
and this
t
is due to
t the deposits varietyy. They offer to the cusstomer two d
different kin
nds of
depo
osits; one called
c
Tranq
quilidad and
d the otherr one called
d Creciente
e. It also ha
appen
with Popular ba
ank that also offer morre than one
e possibility to their cusstomers an
nd the
intere
ests offered
d changes according
a
to
o maturity.
High Profitabilitty

ore
Mo

Less

Prod
ducts

ducts
Prod

w Profitability
Low
Table
e 2.12. Numb
ber of produ
ucts / profita
ability
Source: Own
O
produce
ed from Bank
ks personal in
nformation

BBV
VA and la Popular ba
ank are tw
wo of the Spanish
S
ban
nks that arre offering more
posssibilities if a customer is intereste
ed in contra
act a depossit, howeverr, in both cases,
c
the customer
c
w have to accept som
will
me condition
ns. Once you accept tthese conditions
and the maturity period is
i over, the
e customerr can see how their profitability
y can
incre
ease. Referrring to Santtanders bank, they do not offer high T.A.E.; they are offfering
nearly half of the interest th
hat they we
ere offering a year ago. This is all due to the crisis
conssequences. Despite the
e T.A.E. is not high, th
hey offer to the custom
mer a renov
vation
to ma
aturity that could increa
ase the inte
erest depending on the
e money dep
posited. The
ey do
not have
h
conditiions, so cusstomer can contract the deposit without
w
any requiremen
nt and
finally, the mostt important thing is tha
at Santanders bank iss a leader in deposits
s so it
make
es custome
ers have in their mind that having
g a deposit in Santand
der means being

- 35 -

Domnguez Macas, Marta

i the positioning map because itt was impos


ssible
safe.. Banco Popular is nott specified in
a deposit was
to ge
et informatio
on about if contracting
c
w linked to
o any conditions.
A de
eep analysiss of the ma
ap makes us
u have clear that San
ntanders ba
ank in that case
reach
h a good po
osition beca
ause despite
e they do not offer mucch depositss, what they
y offer
is no
ot linked to any con
nditions. It is one of the reaso
ons why cu
ustomers prefer
p
Santtanders de
eposit to an
nother bank. What is truth is th
hat some b
banks offere
ed to
custo
omer highe
er interests than othe
ers, sometimes the higher the m
more conditions
estab
blished.
onditions
Co

Less

More
duct
Prod

ducts
Prod

No Condittions

Table 2.1
13. Banking conditions mapping po
ositioning
Sourcce: Own prod
duced from banking
b
inform
mation

- 36 -

TFG-FICO. POSIT
TIONING A FINANCIAL PROD
DUCT (SANTAN
NDERS DEPOS
SIT)

t
and la
ast positionin
ng map is referred
r
to maturity.
m
Pro
obably this factor is the
e one
The third
which is gaining
g more relevvance durin
ng the last years.
y
This is because,, in this period of
crisiss, what people really ta
ake into con
nsideration is getting th
heir money back as soo
on as
posssible. Over the last years people have only focused on
n getting the
e higher inte
erest,
howe
ever , nowa
adays, it is not the on
nly factor to
o consider, because w
when to ge
et the
mone
ey is also im
mportant.
Longer
Maturity

Les
ss

ore
Mo
Prod
ducts

Productts

Shorter
Maturity

Table 2..14. Banking


g maturity mapping
m
pos
sitioning
Source: Own produced from banking inform
mation.

urity normally goes fro


om 18 to 25
2 months,, but there are some exceptions
s like
Matu
Bancco popular that offer maturity from
f
3 mo
onths. It makes
m
their products more
attractive to cu
ustomers, as nowada
ays, short maturity iss one of tthe more claim
cond
ditions.

- 37 -

Domnguez Macas, Marta

CONCLUSION
Over the last years Europe have been living a deep crisis and the Spanish economy
has been the focus of financial tensions, at their highest in spring 2012, when spreads
were at their widest, while access to wholesale funding from the different sectors was
severely restricted. However, important steps forward have also been taken. On the
one hand, measures have been taken to reach fiscal targets, through a combination of
tax hikes and reduced public spending. Evident progress has been made in the latter
part of 2012 and during 2013 though probably not sufficient to offset the accumulated
deviations. Secondly, the Spanish financial restructuring map is almost complete. For
that purpose, the Spanish economy has obtained an advantageous credit facility from
the ESM, enabling it to recapitalize institutions with solvency problems in stress
scenarios. All this added to critical structural reforms have also been implemented,
such as in the labor market, thereby increasing the growth capacity of the Spanish
economy. Spain has also benefited from decisions taken within the European
framework, particularly the start-up of the ESM and the ECBs commitment toward
supporting the financing of Spanish sovereign debt through the purchase of Spanish
public debt once the authorities agree to request funds from the ESM. Overall, with the
measures taken by the Spanish authorities and the support from Eurozone measures,
there has been a partial easing of financial tensions.
As forecast early on in the year, the economic environment improved gradually
throughout 2013 and tensions surrounding the sovereign debt crisis eased as the year
progressed. The eurozone as a whole and the Spanish economy in particular moved
out of recessionary figures in the second and third quarters, respectively.
Despite the improvement in the macroeconomic and financial context, the banking
system continued to operate against a complex backdrop. The widespread
deleveraging process in the Spanish economy, the decline in economic activity and the
drop in the Euribor all pushed net interest income down considerably. Likewise, greater
provisioning was required due to the deterioration of loan quality and to new
classification criteria for restructured transactions.
This phase of crisis has affected interest rates given by banks and so that; it has
affect customer savings. In less than one year, customers have seen how their
possibility of getting a high rate was becoming in such a difficult task. From 2012 to
2013 interests rates decrease nearly to half of the amount that was being offered. It all
made banks enter in a competitive market in which they compete with each other by
trying to offer a higher interest in less time. Due to all these changes, banks felt the
need of changing not only the interest rates but also the way to operate because their
objective public is more demanding and more critics.
The differences found once compared the four banks is that the position of
Santander bank as an international and nationally bank can not be better, however
they could improve lots of things when we talk about this specific product.
It has been trusted that in this period of crisis, where interest rates are so low,
people are more cristics and they demand more and better. Banks are losing good
image among their customer, maybe due to the corruption and also due to the crisis, so
that; they should focus more in providing a better- quality service to their customers.
What customers also really take into consideration is safety, and also having no
penalty in case they want their money back earlier. Maturity has become one of the
most important factor when someone contract a deposit, for that reason; changing 25
months into 18 months will be the perfect way in the case of Santander and BBVA in
order to gain more market.
- 38 -

TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

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Roger J.Best.(2007) Marketing Estratgico ,4 edicin. Segmentacion de


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- 40 -

TFG-FICO. POSITIONING A FINANCIAL PRODUCT (SANTANDERS DEPOSIT)

ANNEX

- 41 -