Steps for Effective Case Analysis Adapted from Harvard .docx

Steps for Effective Case Analysis
Adapted from Harvard Business Publishing
It's useful to think of a case analysis as digging deeper and
deeper into the layers of a case.
You should make sure to follow these general steps in addition
to answering the questions
from the case.
1. You start at the surface, Getting Oriented and examining the
overall case
landscape.
2. Then you begin to dig, Identifying Problems, as well as
possible alternative
solutions.
3. This is the section where you will spend most of your time.
Digging deeper, Performing Analyses you identify information
that exposes the issues,
gather data, perform calculations that might provide insight.
"Analysis" describes the
varied and crucial things you do with information in the case, to

shed light on the problems
and issues you've identified. That might mean calculating and
comparing cumulative
growth rates for different periods from the year-by-year
financials in a case's exhibits. Or it
might mean pulling together seemingly unrelated facts from two
different sections of the
case, and combining them logically to arrive at an important
conclusion or conjecture.
Analysis usually doesn't provide definitive answers. But as you
do more of it, a clearer
picture often starts to emerge, or the preponderance of evidence
begins to point to one
interpretation rather than others. Don't expect a case analysis to
yield a "final answer." If
you're accustomed to doing analysis that ends with a right
answer, coming up with a
possible solution that simply reflects your best judgment might
frustrate you. But
remember that cases, much like real-world business
experiences, rarely reveal an
absolutely correct answer, no matter how deeply you analyze
them. Typically, you'll do
qualitative analysis based on your reading and interpretation of
the case. Ask yourself:
What is fact and what is opinion? Which facts are contributing
to the problem? Which are
the causes?
Qualitative factors should be prioritized and fully developed to
support your argument.
Make notes about your evolving interpretations, always being
careful to list the evidence or
reasons that support them. Qualitative information in a case can
be a mix of objective and

subjective information. For example, you may need to assess the
validity of quotations from
company executives, each of whom has a subjective opinion.
Reports from external
industry analysts or descriptions of what other companies in the
industry have done might
seem more objective; no one in the case has a vested interest in
this information. A
company's internal PowerPoint presentation should be
considered separately and
differently from a newspaper article about the company. Cases
mix firsthand quotations
and opinions with third-person narratives, so you need to
consider the reliability of
sources. As in real life, you shouldn't take all case information
at face value.
Quantitative data—such as amounts of materials, money, time,
and so on-might be
embedded in the text or provided in tabular form in the exhibits
(often both). It can be
difficult to know which calculations to do, what formulas to
apply, and how to interpret the
results. Don't sweat this. Try a few simple calculations such as
ratios and growth rates over
time. If some of those provide insight, great; if not, nothing is
lost but a little time. Use
simple calculations to determine what other things you might
want to assess quantitatively.
Quantitatively rich cases may seem intimidating; some people
don't enjoy calculating or
relying on math to reach conclusions. You might need to
calculate, say, a net present value

in a finance case, or the capacity of a production system to
locate the bottleneck in an
operations case. Don't be fooled into thinking that just applying
those standard analyses is
the point of a case. Be prepared if the professor asks, "How is
that number relevant to this
situation?" or "How would you incorporate it into your decision
in favor of one approach
over another?" or "Is that number even relevant in this
situation?"
As conclusions or evidence in favor or against certain
alternatives begin to emerge, you
might spot connections to principles, frameworks, and theories
that you've already covered
in your program of study. It's often worthwhile to try applying
what seems like a relevant
framework to the raw data or to data that have been transformed
in some way by your
analysis. Once you've begun interpreting your analyses in the
context of a framework,
you'll often start to see more opportunities for analysis,
suggested by the framework itself.
It's usually a good idea to follow these paths, although not all
will prove to be fruitful.
4. Finally, you begin Action Planning to outline short-,
medium-, and long-term well-
defined steps.
Recommended action plans should state what would be
objectively best for the case
company given its goals, resources, and situation. But they
should also outline possible

implementation objectives and hurdles. Action plans should
include short-, medium-,
and long-term steps that will concretely carry out
recommendations like these. Real-life
situations often have hidden agendas and nuances that can affect
how an action plan is
crafted. These elements are also relevant in the analysis of a
full case, except perhaps
for cases that are purely or primarily quantitative. At some
point, you might need to
develop your favored case action plan in a degree of detail that
exceeds that of
alternative plans. If you're operating with space constraints (on
a word-limited case
exam, for instance), you may need to explore just one
alternative in full detail, rather
than developing all alternatives at the same level of detail. The
following are important
steps for your Recommendations section.
Step 1: Identify Tasks
Brainstorm all of the tasks that you need to accomplish your
objective. It's helpful to
start this process at the very beginning. What's the very first
action you'll need to
take? What comes next? Should any steps be prioritized to meet
specific deadlines,
or because of limits on other people's availability?
Step 2: Analyze and Delegate Tasks
Now that you can see the entire project from beginning to end,

look at each task in
greater detail. Are there any steps you could drop without
compromising your
objective? Which tasks could you delegate to someone else on
your team or to a
freelancer? Are there deadlines for specific steps? Do you need
to arrange additional
resources?
Step 3: At this point, stop to list a few possible
recommendations for the case and think
about possible action plans. These deliverables are, after all, the
ultimate objectives
of your analysis. Try not to restrict yourself to one solution.
Let your conclusion
emerge from the evidence; don't force the evidence to fit your
conclusion. Remain
open-minded as you proceed to the next step. List possible
recommendations or
actions based on your analysis of the case.
Typically, you'll need to repeat these four processes multiple
times, and as you do, you'll
discover new analytical directions, evolving your assessment of
the case and conclusion.
Pak Sang LO

Professor Parypinski
English 101
12 May 2019
MONTEREY PARK, CA CRIME ANALYTICS, 2018.
https://www.neighborhoodscout.com/ca/
monterey-park/crime
The source focuses on the crime rates in the neighborhood of
Monterey Park. The
site has its sources based on the FBI crime data, based on 2017
but released in 2018. The
site has structured the findings in both data and description. The
data part is filled with
charts, graphs, and other statistical diagrams to explain the
crime rates in the area. The
descriptive part describes the represented data for easier
understanding. The site is
essential for research as it dwells on one of the biggest
determinants on the image of a
city, its crime rates. It tells us about the crime rates of
Monterey Park and how it
compares to other cities and neighborhoods. It also talks on the
most common types of
crime.
https://www.montereypark.ca.gov/1056/Data-Demographics
This is the Monterey Park official website. It is established by
its government. It
gives firsthand information on data of the city. The information
is also credible as it is
done by the city team, who provide an unbiased review and
data. The site also shows
other basic information such as its government, services,
residents and help to visitors

who are looking to visit the city. The Monterey Park website is
arguably the most
accurate on the city stats. They conduct routine checkups on the
state of the city. This
makes this site an important go to when writing in the city. Its
downside is that it does not
give some necessary information such as its history and culture
events.
Sonksen, Mike. "On Location: Monterey Park" 1 November
2013. https://www.kcet.org/history-
society/on-location-monterey-park
The author is a well know scholar as well as a performer. He
has explored plenty
of Los Angeles history. The article dwells on the history of
Monterey Park, near past and
in the old times. It talks on its start, from when it was known as
the "Mexican Beverly
Hills" to it becoming Monterey Park. It goes deep to how many
roads it started with its
growth. The author also talks about common practices the area
had including agriculture.
It speaks on past relations with its neighbors such as Alhambra
and Pasadena. To write an
article on the city, its history holds high importance. It can help
understand the city more.
https://www.neighborhoodscout.com/ca/monterey-park/crime
https://www.kcet.org/history-society/on-location-monterey-park
datausa.io Monterey Park, CA
https://datausa.io/profile/geo/monterey-park-ca/

The page delivers all the relevant data on the city. It has data
ranging from its
economy, health, diversity, education, housing, and living. It is
a long article discussing
in-depth aspects of the focused on elements of the city. It uses
graphs and charts to
further explain the statistical data. Elaborations of the graphs
are also available. This site
is a good option to write on Monterey Park due to its specific
details. The range of details
also covers most aspects of a city that need to be studied. This
makes the article an
important reference to writing in the city.
Brooks, Lorrie. “Guide to the Fun Things to Do in Monterey
Park, CA,” Trip101.com 3 August
2017. https://trip101.com/article/best-things-to-do-in-monterey-
park-california
The author is a degree holder in Bachelor of Journalism. She is
self-employed and
enjoys traveling, leading to the writing of the article. This
article simply is to advise
people on the best activities or best places that can be visited in
Monterey Park. The
activities also can explain the heritage of the city. It ranks the
places and activities from
most satisfying to the general ones. It also explains the nature
of the activities so as to
make it easier for people to decide. This article can be used to
write on Monterey Park as
it explains the city’s main cites. This makes the article
extremely relevant. It helps to
understand the city better.
https://trip101.com/article/best-things-to-do-in-monterey-park-

california
Works Cited
Brooks, Lorrie. “Guide to the Fun Things To Do in Monterey
Park, CA,” Trip101.com 3 August
2017. https://trip101.com/article/best-things-to-do-in-monterey-
park-california
datausa.io Monterey Park, CA
MONTEREY PARK, CA CRIME ANALYTICS, 2018.
https://www.neighborhoodscout.com/ca/
monterey-park/crime
Montereypark.ca.gov
Sonksen, Mike. "On Location: Monterey Park" 1 November
2013. https://www.kcet.org/history-
society/on-location-monterey-park
https://trip101.com/article/best-things-to-do-in-monterey-park-
california

San Gabriel Valley
Monterey Park
Monterey Park
Cascades Park
Sequoia Park
El Encanto
East Los Angeles College
Cantonese Dim Sum
Mama Lu Dumpling House Mp
Work cited

https://www.tripadvisor.com/Tourism-g32738-
Monterey_Park_California-Vacations.html
https://www.tripadvisor.com/Restaurant_Review-g32738-
d4796693-Reviews-Mama_Lu_Dumpling_House_Mp-
Monterey_Park_California.html
Copyright © 2011 Harvard Business School Publishing This
document is for use only with the Harvard Business
Publishing ‘Case Analysis Coach’.
Case Analysis Worksheet
This form can be used to organize your thoughts about a case.
As you perform your analysis remain
open to the fact that your interpretation of the facts may change
and therefore you should constantly
revisit your answers.
Define the Problem: Describe the type of case and what
problem(s) or issue(s) should be the focus for
your analysis.
List any outside concepts that can be applied: Write down any
principles, frameworks or theories that
can be applied to this case.
List relevant qualitative data: evidence related to or based on
the quality or character of something.

List relevant quantitative data: evidence related to or based on
the amount or number of something.
Describe the results of your analysis: What evidence have you
accumulated that supports one
interpretation over another.
Describe alternative actions: List and prioritize possible
recommendations or actions that come out of
your analysis.
Describe your preferred action plan: Write a clear statement of
what you would recommend including
short, medium and long-term steps to be carried out.
9 - 7 1 1 - 0 1 5
R E V : D E C E M B E R 1 3 , 2 0 1 0
_____________________________________________________
_____________________________________________________

______
Professor Gunnar Trumbull and from HBS Europe Research
Center, Research Associate Elena Corsi and Research Assistant
Andrew Barron
prepared this case. HBS cases are developed solely as the basis
for class discussion. Cases are not intended to serve as
endorsements, sources of
primary data, or illustrations of effective or ineffective
management.
Copyright © 2010 President and Fellows of Harvard College.
To order copies or request permission to reproduce materials,
call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163,
or go to www.hbsp.harvard.edu/educators. This publication may
not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted,
without the permission of Harvard Business School.
G U N N A R T R U M B U L L
E L E N A C O R S I
A N D R E W B A R R O N
Santander Consumer Finance
Centralization only makes sense if the final result is better than
the simple sum of the parts.
— Magda Salarich, CEO, Santander Consumer Finance
Introduction

On March 25, 2008, Magda Salarich Fernández de Valderrama,
the Chief Executive Officer (CEO)
of Santander Consumer Finance (SCF), a division of Grupo
Santander, looked out across the bank’s
shining new campus, the Ciudad Financiera, just south of
Madrid. Salarich had been appointed CEO
in January 2008 after working for 28 years for the French car
producer Citroën, where she had risen
through the ranks to the position of international marketing and
sales manager for Europe and CEO
for Spain. SCF had grown rapidly in the past five years under
its former CEO, Juan Rodríguez
Inciarte. Salarich’s job would be to chart the way forward for
the next ten years.
While the United States remained the largest market in the
world for consumer finance, the sector
had also been growing in the last 20 years within Europe.
Inciarte had captured this trend. Under his
helm (2002-2008) SCF had grown from a small group of units
operating in Spain, Germany and Italy,
into one of the largest consumer finance companies. Also, since
2006, Inciarte had invested outside
the EU: in the United States, Latin America and Eastern Europe.
In four months, Salarich would have to present a new strategy
and direction for SCF to
Santander’s Chairman and Executive Director, Emilio Botín-
Sanz de Sautuola y García de los Ríos, as
well as to the other members of the group’s Executive
Committee, including Inciarte himself.
Important decisions had to be made. Could the high profitability
of the consumer lending activities
be sustained? Was it time to focus more attention on
consolidation, or should she further invest in

new markets and products? There were also important questions
of organizational strategy to
address. Which functions should be led to national affiliates to
decide, and which should be
centralized at headquarters? What processes should be
standardized, and which left to local
initiatives? And all of these decisions would be set against a
background of growing concern about
the sustainability of household debt levels in Europe and the
United States.
711-015 Santander Consumer Finance
2
History of the Santander Group
The Santander Group was founded in 1857, when the Queen of
Spain authorized through Royal
decree the creation of a bank in the city of Santander, in
Cantabria, northern Spain. Seventy-two local
businessmen subscribed to the bank’s capital. Through the years
the bank increased its business in
Spain and in the 1950’s it opened offices in a few Latin
America countries and in London. Under the
leadership of Emilio Botín, who succeeded his father as
Chairman and CEO of the group in 1986, the
bank reinforced its position in Spain launching products such as
Supercuenta that doubled the bank’s
market share on deposits and with the 1994 acquisition of Banco
Español de Crédito (Banesto) and
the 1999 merger with Banco Central Hispano (BCH). Botín also
expanded to foreign markets,
acquiring banks and opening new offices in Latin America,

Europe and the United States.
To keep pace with its rapid growth, in 2004 the Group re-
located operations from downtown
Madrid to the Ciudad Financiera Santander, a 160-hectare
financial campus in the suburbs, with also
education and training facilities, sports facilities including an
18-hole golf course, on-site childcare
amenities and an art gallery. By 2007, when the Group
celebrated its 150th anniversary, the Santander
Group was one of the largest banks in the world in terms of
market capitalization and net profit. It
operated the largest network of retail banks in the western
world. (See Exhibit 1 for the Group’s
financials and breakdowns by business division.) The Group
also operated in the wholesale banking,
private banking, credit cards, asset management, and insurance
businesses and, through SCF, in the
consumer finance sector.
The History of Santander Consumer Finance
Santander Consumer Finance had its roots in 1987, when
Banco Santander acquired Bankhaus
Centrale Credit AG (CC Bank), a German bank operating since
the 1950s with 51 branches and
specialized in the vehicle financing business. One year later, the
Santander Group partnered with the
Royal Bank of Scotland to jointly control, strengthen and
expand CC Bank. New branches were
opened and in 1994 CC Bank also launched Direkt Bank, a
branchless, direct telephone bank that also
offered credit card services. The shared ownership agreement
with Royal Bank of Scotland continued
until 1996, when Santander bought out its partner and assumed
full control of CC Bank.

Remembering those years, Inciarte, at the time CFO at
Santander, explained:
Under the terms of the shared ownership agreement Emilio
Botín and I sat on Royal Bank
of Scotland’s board. This partnership was very influential on
the development of Santander’s
consumer finance business. It helped us to understand the
growth of the consumer finance
market in the United Kingdom and gave us many useful insights
into this business. What was
happening in the United Kingdom, we believed, could spread to
the rest of Europe.
Subsequent mergers gave them more exposure to consumer
lending. In 1997, Santander entered
the Italian market by assuming joint control with the bank
Banco San Paolo IMI of Finconsumo—a
consumer finance company. In 1999, Santander’s merger with
BCH brought to the group Hispamer
Banco Financiero and Hispamer Financieros. In the meantime,
CC-Bank had expanded into Hungary
and Austria. In 2002, the collection of national consumer
lending groups was brought together under
a new division within Santander, SCF.
Santander Consumer Finance 711-015
3
Expansion of SCF
Under the leadership of Inciarte, Santander Consumer Finance
focused on growth. He recalled,

“When our Chairman and Chief Executive asked me to head up
the new division, I was afraid that
the Group wanted to get rid of me because it was a very small
business. It did not even have a
common global brand.” Inciarte first moved to expand the
business to the major European markets.
He explained:
Germany, the United Kingdom, Spain, France, Italy, and Poland
are the European markets
that count in terms of GDP and population. It’s like in the
United States: if you are not in
Texas, Florida, New York, Chicago and California you are not
there. We wanted to become
European. All Europeans drink Coca Cola, buy furniture from
IKEA, and like cars. It seemed
relatively easy to create a pan-European franchise for financing
consumers. We were already in
Germany and Spain, we looked at Italy, and we bought a stake
in San Paolo IMI in 2003.
Between 2003 and 2006, other acquisitions followed in other
European countries. In 2006, SCF
started investing outside the European Union (EU), first in the
United States with the acquisition of
Drive U.S., then, in 2007, in Mexico and Russia. In 2007
Inciarte also invested in a Greenfield
operation in Chile, which started operations in 2008. (See
Exhibit 2 for a summary of SCF’s
acquisitions.)
As SCF’s geographical coverage expanded, Inciarte turned his
attention to the organization of the
division and the impact of their brand. Javier San Félix, SCF’s
former Chief Operating Officer and
now the head of one of SCF’s business areas, explained:

When I joined in 2004, SCF was a mere sum of different units
placed in different countries,
with different business models, operations, IT platforms and
marketing approaches. We
wanted to make it worth more than the sum of the parts. First
we integrated the different
brands. The SCF brand was not known outside of the
[Santander] Group as each affiliated
company maintained its name. We changed their names into
SCF. Secondly, we centralized the
decisions concerning funding, and thirdly we centralized the
customer data centers.
By June 2008, SCF operated in 20 countries. Within Santander,
SCF accounted for 5% of the
Group’s total workforce and generated almost 8% of the bank’s
total profits. The largest market
remained Germany. (See Exhibit 3 for SCF’s financials.)
The European Market for Consumer Finance
There are still big differences between European countries in
terms of consumer credit market size,
consumer credit to GDP ratios (penetration) and consumer
product mix. These differences are due to different
levels of market maturity, economic developments, local
regulations and cultural factors.
— Salarich
Consumer finance included any kind of lending to finance
consumer’s purchases outside of
mortgage for real estate. It was certainly not an invention of the
20th century. Stores in the 19th century
had offered sales credit to their regular customers; and pawn

shops had been active in Europe since
the middle Ages. But it was the growth of the consumer
durables manufacturing sector in the
interwar and post-World War II era that made consumer credit
an accepted feature of modern
society. Innovations in risk assessment, data processing, and
financing all contributed to a boom in
consumer lending starting in the late 1980s. By the end of 2007,
retail lending to consumers—
excluding mortgages—accounted for $6 trillion in outstanding
balances, of which 51.5% was in the
4
Americas, 30% in Europe and 18.6% in Asia.1 The United
States long had been and remained the
largest market, with $2.5 trillion in outstanding loans. (See
Exhibit 4 for U.S. market figures.)
Since the 1980s, Europe’s consumer lending sector had grown
in economic importance and
sophistication.2 (See Exhibit 5 on consumer credit in Europe.)
San Félix described this change, “The
main driving force is that Europeans are becoming more like the
Americans in terms of consumption
patterns. We are consuming more and this leads to the growth of
consumer credit. Yet, in Europe the
penetration of consumer lending started from a much lower
level than in the United States. It is hard
to predict if we will reach 100% of America’s levels”. As SCF’s
Director of Investment Analysis,
stressed, “The average American still has more than twice the

amount of consumer debt than the
average European (EU15).”
By the end of 2006, consumer lending in Europe represented
roughly €1 trillion of outstanding
loans.3 While smaller than in the United States, the European
consumer credit market also had
distinctive features that made it qualitatively different. First,
the average default risk on consumer
loans in Europe tended to be lower. One area manager
commented, “Compared to the United States
we are like in a dreamland in Europe. We can sleep well every
night because our risk is very
predictable.”
Second, consumer lending in Europe was based less on sub-
prime borrowers. Interest rates were
not commonly adjusted to account for individual risk, and a
smaller share of lending was on
revolving accounts.i An area manager explained, “Europeans do
not play with interest rates.
Revolving credit tends to be applied only to credit cards and to
current accounts’ overdraft facilities.
Personal loans (and mortgages) tend to have fixed rates. This is
fair to the client. We want to give the
client who has to face 16 months of instalments a clear picture.
We do not want surprises.”
Institutional features of Europe’s national credit markets also
limited the possibilities for
managing risky products. Credit bureaus worked at the national
level, and each country imposed
different standards about how data could be collected,
processed, and distributed. None of the
national bureaus offered credit scores. Some countries, like
France, had centralized credit rating

databases that recorded only negative credit episodes. New
loans could be checked against this ‘black
list’, but no centralized positive data, including total volume of
outstanding loans, was available.
Germany provided slightly more information, but not enough to
assess the riskiness of new
customers. An area manager said, “The agency tells you if the
customer is overdue and if he has not
finished paying his past loans. It does not give us current and
positive information. It is thus hard for
us to adjust the price of the loan to the customer’s risk profile.”
In the United Kingdom, where
consumer lenders provided credit to riskier borrowers than in
most other European countries, three
private credit reference agencies provided lenders with positive
information.4 Yet, by contrast, they
were explicitly banned from creating a lending black list, and
could not themselves process the raw
data to generate a credit score. This left lenders to determine
the riskiness of potential borrowers
based on their own internal risk models.
Other features of national economies drove dramatic differences
in national consumer credit
markets.5 The cost of credit varied from 6% in Finland to 12%
in Portugal; outstanding loans to GDP
ranged from 3% in Hungary, Switzerland, and the Check
Republic to more than 10% in Germany,
Norway, Sweden and the United Kingdom (2004);6 default rates
ranged from around 7% in Eastern
Europe to around 1% in Germany, Denmark, Austria and the
Netherlands.7 While the German and
i Sub prime lending was lending at a higher rate than the prime
rate, a reference interest rate used by banks to lend to clients.

Risk based pricing was the practice of determining the interest
rate on a loan, also by looking at the credit risk profile of the
borrower. Revolving credit was a type of credit which did not
have a fixed number of payments.
5
the UK markets seemed to be approaching maturity, others
markets, in Greece and Scandinavia, were
now booming. (See Exhibit 6 for country comparisons.) A
former SCF Business Area Manager added:
European consumer credit markets are very different from each
other also in terms of
products. For example in Germany there are no credit cards and
Germans tend to rely heavily
on bank overdraft facilities, which are instead rare in Spain and
France where credit cards are
mostly payment cards. In the UK, where debt is more of the
unsecured type (with variable
rates), credit cards are mainly of the revolving type. Italy and
Belgium instead are markets
where credit cards are less used. Here people tend to buy less on
credit and save more.
While the 1992 Single Europe Act formally removed barriers to
capital flows within Europe, cross-
border consumer lending remained tiny; it was estimated at
between 2% and 5% of all European
consumer loans in 2002.8 Banks and institutions that operated
in foreign markets had done so by
acquiring local institutions, opening local branches, or through

joint ventures.
The low level of intra-European lending had been attributed to
cultural, natural and regulatory
barriers.9 On the demand side, customers seemed to place
greater trust in national, proximate
providers with which they shared the same language and
culture. National differences in consumer
protection standards and remedies across Europe reinforced
customers’ preference for local
providers in so far as it raised the uncertainty of comparing
credit offers across different countries.
On the supply side, cross country regulatory differences led to
high market entry costs and
complicated the organization of the business for consumer
credit companies with global aspirations.
One manager explained, “In some countries, like France, the
government sets interest rate caps. Thus
here we would not be able to aggressively promote our personal
loans as we could not compensate
for the higher risks. You need to adapt to the field.”
The Consumer Credit Directive
The sooner the integration process advances the better for us. At
present, we operate in several European
countries and that positioning would allow us to offer... pan
European products.
— Salarich
In an effort to promote integration, in 1987, the European
Commission introduced the first
European Union (EU) consumer credit directive. Its goal was to
set some basic standards regarding

procedures and reporting. In January 2008, after six years of
negotiation, a new and more complete
EU directive on consumer credit was approved. Covering all
types of consumer loans between €500
and €50,000,ii the directive made three steps toward market
integration. It harmonized the method
used for calculating the annual percentage rates (APR) applied
to loans, thereby allowing consumers
easily to compare the cost of one loan with another. It gave
consumers the right to receive
information on fees, monthly repayments and APR before
signing the contract, and the right to
withdraw from any credit contract within the first 14 days. It
banned prepayment fees, which
imposed an additional cost on consumers who wished to repay
loans before they reached maturity.
Finally, it gave consumers the right to withdraw from credit
contracts if the purchase they were
associated with was canceled.
The EU directive generated negative reactions. The Bureau
Européen des Unions de
Consommateurs (BEUC), a European consumer’s organization,
welcomed the steps taken in the
ii Loans secured on property (house purchase or home
improvement) were excluded as they would be dealt with
separately in
a Mortgage Credit Directive.
6

directive to improve transparency, but regretted that it did
nothing to address consumer over-
indebtedness.10 Eurofinas, the European federation representing
the national associations of consumer
credit providers, claimed that the new EU Directive was a
missed opportunity for integration.11 The
European Banking Federation criticized the new legislation as it
introduced a heavy burden of
bureaucracy but did not improve consumer choice.12
The EU directive also received a mixed reaction at SCF. They
were disappointed that it did not do
more to integrate Europe’s credit markets. One manager
remarked, “Since SCF operates in so many
countries, an integrated market for consumer credit would
deliver commercial, tax and operational
benefits. We could establish a single platform for doing
business.” Transparency could only go so far.
The head of the German operation noted:
Providing consumers with more information does not
necessarily improve things. The
consumer wants to know: the prices of his new and old car, the
number of instalments, the
interest rate, the amount of the loan, and perhaps the option of
life insurance. Any other
information does not increase protection, but generates
confusion. You arrive at a situation
where you need to trust that the Porsche you want has 6
cylinders if the salesperson says so.
For the near future, SCF would make its plans based on the
assumption that Europe’s credit
markets would remain fragmented. One former business
manager summarized:

An integrated market remains for now a distant reality. I would
even question the figure
that cross-border lending accounts for 2% of total consumer
lending. It probably only reflects
the lending of English people to buy homes in France or Spain.
I am skeptical about how far
European consumer credit markets can be integrated. Consumer
credit companies need to be
near their customers. Therefore, I really cannot see any capacity
for cross-border activity.
Santander Consumer Finance’s Business Model
Santander Consumer Finance’s largest lending activity was auto
finance: the provision of loans
for car dealer’s clients to acquire cars (i.e. retail car loans),
sometimes tied to loans for dealers to
finance stock. (See Exhibit 7 for a breakdown of SCF’s sales by
product.) In a few markets, SCF
served also retailers by financing credit for their clients (i.e.
durable loans)iii and, sometimes, for their
stock.iv In addition to these core products, and depending on
the market, SCF provided related
financial services: payment-protection insurance, credit and
debit cards, co-branded credit cards, on-
line banking, personal loans, deposits, debt-consolidation
servicesv and mortgages. (See Exhibit 8 for
SCF’s product portfolio by country.)
SCF’s approach to the market varied depending on the product.
For the retail car and consumer
durable loans, SCF used an indirect approach and relied on car
dealers and retailers—including
supermarkets, electronics shops, and jewelers—to attract new
customers and market its credit. This
point of sale (POS) strategy kept SCF one step removed from

individual consumers, but it also placed
a lot of emphasis on their POS clients. One , “It is very
important for us to find good partnerships
iii Consumer durable loans were loans to finance consumer
products that were expected to last at least three years and to be
purchased in a store (such as televisions, fridges and so on).
iv Stock finance loans were loans to finance dealers and
retailers’ inventories of cars or long term (i.e. durable)
consumer
goods.
v Debt-consolidation services enabled consumers to take out a
new personal or secured loan to cover their several existing
debts incurred for example from credit cards, store cards, or
personal loans
7
with car dealers and retailers. First of all it is through them that
we offer our car and durables loans.
It’s the car dealer or the retailer who proposes to the client our
loans, not our sales team. POS clients
do not even know that we are behind their loan.”
For all of their other products, SCF had a direct approach that
relied on its own sales teams. Their
primary strategy was to sell direct products mainly to its
indirect car loan and durable goods loan
clients. (See Exhibit 9 on SCF’s business model.) SCF referred

to this process as ‘conversion’. “Once
the first (indirect) contact is established,” said José Luis
Castañeda, former SCF’s Director of
Investment Analysis, “then we start contacting the customer to
offer our other products.”
SCF had developed a credit-approval system that car dealers
and retailers could access online. The
process worked in one of two ways. In the first arrangement,
dealers entered information on line
about the client, the purchased car or durable, and the desired
loan. SCF then allowed dealers to view
in real time the commission they would earn from different
variation on loan contracts they might
conclude with the client. In the second approach, SCF and the
dealer agreed only on a baseline
interest rate: if the dealers secured loan agreements with
interest rates exceeding the set baseline, they
received the difference as commission; if it was below, they
paid the difference to SCF.
In both arrangements, SCF paid the commissions upfront. This
created room for manipulation by
dealers. Thomas Hanswillemenke, Director of Importer Business
& Dealer Care Centers in Germany,
commented, “If customers terminate their auto loans early we
bear the losses. If dealers develop a
business model that encourages customers to pay back early, we
ask them to stop or we put an end to
our collaboration.”
Once dealers had filled out their customers’ loan application,
the data was sent to SCF for
processing. Typically, an individual loan request could be
approved or rejected by SCF in just over
three minutes. Francisco J. Gimeno Jiménez, former SCF Chief

Information Officer, explained, “Speed
is crucial in the auto-loan business. If dealers cannot process
loan requests quickly, customers will
walk off their car lots and take their business elsewhere.”
Converting Indirect to Direct business
In a few cases, with the car or durable loan, the car dealer or
retailer would also offer other
complementary products, such as insurance. Yet, explained one
area manager, “Auto dealers and
retailers’ sales personnel sell to their own interests and to their
abilities. We provide them training,
but dealer and lender interests are not always aligned. We need
face-to-face contact with customers.”
In addition, the POS would ask for an extra commission to sell
the other products which were also
more profitable for SCF. (See Exhibit 10 on the profitability of
SCF’s products.) Castañeda
commented:
Competition in the POS business is very fierce, with dealers
continually demanding higher
commissions. This is why our margins are low there. Thus, once
we have reached the clients
through the POS and tested that they are good clients, we try to
convert them from indirect to
direct ones by proposing our other products with higher
margins.
Once the customer signed the car or durable loan, SCF’s would
start sending promotional
mailings about other products. The former head of the German
operation explained:
Each car dealer or retailer is a multiplier, capable of providing

us with up to 5,000 sales
tickets per year. Through our indirect sales channels, we secure
over 100,000 new clients every
month. We have a clause in the car loan contract asking
permission to send promotional
mailings. If they agree, then we send letters every four to six
weeks to inform the customers
8
about our other products. We send out around 30 million
mailings per year. In the past, we
preferred to have little contact with our clients, as we thought it
increased costs. We were
almost relieved when the loan reached maturity. Today, we see
the typical 60-month lifespan
of a car loan as an opportunity to build a relationship with our
clients.
According to one area manager, it was often easy to decide
which type of complementary
products to offer indirect customers. He said, “For example, if
customers borrow money to buy a TV,
they automatically set themselves out as loan customers. Their
behavior suggests that it would not
make sense to offer them savings products.” Locally-engaged
data analysts also mined the data
collected by dealers and retailers to rate indirect customers as
either prime, near-prime or sub-prime
customers.
In Spain and Germany, SCF was also using their networks of

branches to convert indirect clients
to direct ones. The head of the German group explained, “It is
very important to sit down with
potential customers in one of our 81 branches and give them
face-to-face contact with our sales
personnel.” Other tools were developed to assist the conversion.
In Germany, for example, the
company developed the AutoDispoPlus, a co-branded credit-
card, which provided auto-loan
customers with credit facilities for spare parts, vehicle
inspections, repairs, and insurance and could
also be used to withdraw money. The card was offered as a gift
by the dealer to the less risky clients.
As one manager explained, “The dealer offers the card to the
customers after having filled in the
online loan request. The first time the clients use the card they
become direct customers. We do not
really make money with this card, but we establish a link.
Dealers also see the advantage of
distributing this card”.
Conversion rates differed depending on the business and the
country. “For example, in Germany
we manage to convert roughly three out of every 100 car-loan
customers into direct ones. Among
durables-loan customers, the conversion rate is closer to six out
of 100”.
Main Competitors
SCF’s main competitors in Europe were the American GE
Money, and the French BNP Paribas
(Cetelem), as well as the consumer-finance divisions of Crédit
Agricole (Sofinco and Finaref). (See
Exhibit 11 on SCF’s competitors.) The division competed also
with local banks and financial

institutions and, in some countries, with Santander’s own
network of retail banks. A former manager
explained, “Nothing prevents a British consumer from obtaining
a loan from Abbey, a bank part of
Santander Group, and using that money to buy a car rather than
securing auto financing from the
British SCF. Similarly, Spanish customers are free to finance
their auto purchases either through SCF
España, or with loans from a Santander retail bank.”
In the auto financing business, the company operated in parallel
with car manufacturer’s
captives—finance companies usually wholly owned by the car
manufacturers and used to provide
credit to car dealers for acquiring stocks and financing
customers (such as Volkswagen Bank, GMAC
Bank, FordBank or Peugeot Financement). Hanswillemenke
explained, “In the car industry, captives
are marketing tools. For the car manufacturers it is very
expensive to reduce capacity in production
or to take back an unsold car. Captives thus provide dealers
with incentives such as cheap loans or
sales premiums to boost sales of new cars or less requested
models.”
Another area manager explained, “Take a Ford dealer that sells
around 500 new cars and 5,000
used cars per year. Each year Ford has to convince the dealer to
buy its new cars and needs to come
up with incentives. Through their captives, car manufacturers
can offer very interesting stock-finance
arrangements to the car dealers.”

9
Faced with this competition, SCF’s goal was not to replace
captives but to be the number two
financer of new cars after captives, and the number one financer
of used cars. One area manager
explained, “We encourage dealers to take full advantage of car
manufacturers’ incentives to finance
their stock of new cars if the offer is economically interesting.
Dealers should turn to us only after
having exploited such incentives, or if they are not interested in
acquiring new cars”. Similarly, SCF
did not compete with captives in the new cars retail financing
business. He continued:
In this business, captives can offer the POS client loans at very
low rates. We cannot
compete against them. This is a sort of subsidized credit. Yet
these offers are usually limited to
specific car models and ask the customer to provide a down
payment. The dealer will present
our offer to a customer who cannot afford the deposit or does
not like that particular car.
In the used car business, SCF competed directly with the
captives. “Car manufacturers are less
interested in this market. Here captives use weapons similar to
ours”.
SCF’s Structure
To be close to the local markets, Santander Consumer Finance
had adopted a decentralized
structure. A manager explained:

We build on the strengths of diversity and avoid a business
model that offers the same
identical product to everyone. From a marketing and pricing
perspective, we need to adjust to
the local territory. Of course, we can supervise, give advice and
provide capital and technology
from Madrid. But a critical factor for success is having people
who understand local needs. It’s
difficult to identify local needs from Madrid.
The importance of focusing on local needs was echoed by a
former manager:
SCF’s growth has been driven by acquisitions and joint ventures
with local companies, with
the result that our national teams are staffed by local
employees. We would not have been able
to grow so quickly if we had headed up our local operations
with Spanish people who would
have needed at least a year to get to grips with the local
environment and regulations.
SCF was organized in four geographical areas, each headed by a
manager: Spain, Portugal, Chile,
and Italy; Eastern Europe and the Scandinavian countries,
United Kingdom and Mexico; Germany
and Austria; and North America. Still, the local branches
enjoyed considerable autonomy.
Each local branch had a person in charge of legal issues to
monitor local regulations and data
collection centers. Recently, SCF had introduced in most of the
local branches a manager in charge of
promoting the insurance business. Local branches were also in
charge of product development. If a
new product entailed new risks, it needed the approval of a

central committee. Collections were
treated differently depending on the setting: “soft” collections
were outsourced in Spain but kept in-
house in Germany and Russia. “Hard” collections, for which
national legal standards differed
considerably, were always outsourced.
Despite the local branches’ large autonomy, certain functions
were centralized: risk management,
cost control, the IT platform, monitoring of customer’s (i.e.
dealers’) satisfaction and funding.
Customer information databases had been partly centralized, but
the process was complicated by
differences in national data privacy standards. Gimeno
remembered, “In 2004, SCF centralized the
European data-center operations by relocating its 11 data
centers to two new locations in Madrid and
London. It took us quite a long time and lots of paper work.”
Provisions of the 1995 EU Data Privacy
10
Directive blocked European companies from sending customer
data to countries without adequate
data protections. This would make it hard for SCF’s Latin
American, U.S. and Russian databases.
Funding
To finance its loans, Santander Consumer Finance drew on a
number of sources, including senior
debt, commercial paper, asset-backed securitization, and

customer deposits. (See Exhibit 12 on the
sources of funding.) When possible, SCF encouraged funding
from local deposits. By 2006, customer
deposits—from banking operations in Germany, Spain, Portugal
and Italy— represented the
division’s largest source of funding. SCF’s Chief Financial
Officer (CFO) explained that, “Local
funding is cheaper because we can avoid doing currency
swaps.”
SCF also securitized pools of car loans, and this was becoming
an increasingly important source of
funding for the division. Here again, though, the European
market remained fragmented. The CFO
explained, “Owing to regulatory restrictions, loans can be
securitized on a country-by-country basis
only; we are not allowed to perform cross-country
securitizations, even if this would be better for us
as it would allow pooling risk across different countries.”
SCF’s country offices also obtained funding from the Santander
Group. The CFO argued,
“Securing funding from the Group provides SCF with an
advantage over our local competitors in
terms of cost of funding. The cost of funding would be higher
for local operations if the branches did
not belong to the Group”. Interest rates for country branches
were adjusted based on business and
country risk criteria: whether it carried the Santander brand
name; the size of the market in relation
to SCF’s business; per capita GDP; and the country’s sovereign
credit rating.
SCF’s Approach to New Countries
Santander Consumer Finance’s wide geographical coverage

allowed it to spread risk. In addition,
SCF hoped to learn from its different businesses. San Félix gave
the example of the United States:
We are exporting know-how from our U.S. operations to
Europe. Not only do we learn how
to price the product to the consumer’s risk, a practice that Drive
has been doing for years and
that it is something that Europeans are starting to do just now.
We also learn that the business
model needs to be well aligned to the needs of the segment of
risk that we are serving. If you
build a business focused on a particular segment of risk-- if you
have clear ideas about your
likely rate of default, the number of cars you are going to
repossess, and how you will
remarket the cars—then you will make a lot of money. If your
business model does not make
sense, even if you price your products high, you stand to lose a
lot, even in the United States.
SCF’s approach had been to cover the main European countries
in terms of GDP per capita and
population. Castañeda explained, “SCF invests in countries with
a large population or with high GDP
per capita growth rates (or good expectations of growth). Of
course countries that meet both of these
prerequisites are better, but here competition is in general
higher.”
A former manager noted that the entrance into the new EU
member states had not posed any
major difficulties for SCF:
In Eastern Europe credit is something new. They still have the
mentality that if you owe

something you have to give it back. In addition, they want to be
part of the EU. They want to
11
catch up and be good citizens. If you go to Poland or the Czech
Republic today, you can see
that they are less rich than Western European countries, but
they’ve adopted a similar financial
culture.
Yet, the fact that credit was new in former communist countries
also meant that some institutions
were missing. He continued, “Institutions as important as
collection agencies did not exist or were
less developed. So in some cases we had to do it in house, like
for example in Poland or Russia. But
just for the first years.”
Efforts to gain a footing in countries outside the EU posed
additional challenges. When Santander
entered Russia, in 2007, the banking sector was still in
transition. Under Russian financial regulation,
the banking authorities had the right to revoke the license of
any bank that lost money for three
consecutive months. For a new consumer lender, this provision
posed clear problems, and Santander
chose to enter Russia as a financial firm rather than a bank.
Despite these challenges, SCF saw Russia as a market with
strong potential. Most Russians owned
their apartment in the wake of post-Communist privatizations.

Salaries were still not high, but the
property gave them a high level of wealth. And borrower risk
seemed to be low.
One manager added, “Each European country presents SCF with
its own specific set of regulatory
constraints. We have to be extremely flexible: we cannot apply
the exact same model in all countries.
When deciding whether or not to enter a country, we consider
what we can and cannot do, and then
work out which business model to apply.” (See Exhibit 13 on
SCF’s product sales by country.) In
Germany for example, SCF was less focused on mortgages.
Hanswillemenke explained, “Mortgages
are not convenient for us. Interest rates are low. Also, they limit
our possibilities to sell other products
as mortgage clients have to pay large installments and for a long
time”.
Looking to the Future
Consumer Finance is a cyclical business. You see that in the US
and in Europe. The consumer business goes
up and down. We are in a down period. We see liquidity
problems worldwide, , automobile sales are flat or
descending and we will soon have a new EU directive. There is
a pressure on margins, decreasing financing
volumes and worsening of credit. But SCF sees good
opportunities vs. competitors in this environment due to
know-how and belonging to a large and solid financial group.
--Salarich
As Salarich contemplated the future of Santander Consumer
Finance, three big questions laid
ahead. The first dealt with expansion. New consumer credit

markets were emerging around the
globe. Should Santander move to operate in these new markets?
A manager at SCF had noted both
the promise and the challenge these new markets might pose for
SCF:
Some people look at GDP per capita to understand where
consumer finance will go. I look
at cars per inhabitant. In Brazil you have 4 times the population
than in Spain but the same
number of cars. Growth will come from emerging countries such
as Brazil, India, and China.
[See Exhibit 14 for some figures]. Yet they are very different
from the countries where we are
now. Before investing here we need to make sure that our core
business is strong enough.
The second challenge was in consolidation. Which functions
should be centralized in order to gain
efficiencies, and which should be left decentralized? A manager
noted:
12
Inciarte managed to find all these new opportunities and make
the bank’s board accept
them. We identified four areas that need to be improved: stock
finance, client’s conversion,
payments’ collection, and insurance. The discussion is how do
we do that? Do we set up a
central department that tells local managers what to do or
should we hire them locally? Some

countries already complain that HQs exercise pressure on them.
Yet, products succeed when
you have someone dedicated to them and we have a lot to learn
at a cross country level.
Finally, Salarich had to decide on SCF’s product mix.
Historically, its strength and competitive
advantage was in the auto loan business, a low risk business but
with lower margins. Yet recent
experiences both in the United States and with non-auto
consumer lending had shown potential for
expanding into higher-return businesses. To what extent should
they move into direct personal
lending? And could they apply the loan pricing strategies they
learned from their US subsidiary,
Drive, to European car markets? Salarich had four more months
to decide.
13
Exhibit 1 Santander Group Key Data
a) Santander Group’s Balance Sheet, Income Statement and
Employees 2005-2007
Data in € million unless otherwise
specified
2005 2006 2007

Total assets 809 107 833,873 912,915
Customer loans 435 829 523,346 565,477
Customer funds under management 651 360 739,223 784,995
Shareholders’ equity 35 841 40,062 51,945
Total managed funds 961 953 1,00,996 1,063,892
Net interest income 10,324 12,076 14,882
Commercial revenue 17,541 20,184 24,096
Gross operating income 19,076 22,333 27,095
Net operating income 8,765 11,218 14,842
Net profit from ordinary activity 5,411 6,674 8,518
Attributable profits to the group 6,220 7,596 9,060
Number of employees 120,047 123,731 131,819
N° Branches in Continental Europe 5,389 5,772 5,976
N° UK 712 712 704
N° Latin America 4,100 4,368 4,498
Total N° of branches 10,201 10,852 11,178
Notes: all data was in € million unless otherwise indicated.
b) Santander Group Key Data by Geographical Area, 2007
Group Key Data by Geographical Area Gross
Operating
Income
(€million)
Net
Operating
Income

Profit to the
Group
Employees Branches ROE
Continental Europe 12,843 7,736 4,423 47,838 5,976 21.3
Santander Branch Network 4,747 2,863 1,806 19,392 2,887
22.7
Banesto 2,282 1,312 668 10,776 1,946 18.3
Santander Consumer Finance 2,638 1,867 719 7,221 285 34.1
Portugal 718 672 511 6,405 763 28.6
United Kingdom (Abbey) 3,780 1,913 1,201 16,827 704 32.3
Latin America 10,386 5,308 2,666 65,628 4,498 29.1
Financial Management and Equity
Stakes
86 (665) (180) 1,526
Total Group 14,842 8,111 131,819 11,178 19.61
Source: Company data.
14
Exhibit 2 Santander Consumer Finance's Key Dates
1987 Acquisition of Bankhaus Centrale Credit AG (CC-Bank)-

Germany
1990 Acquisition of Hispamer following the merger Banco
Santander / Banco Central Hispano
1996 Full control of CC-Bank
1997 Joint ownership of Fininconsumo- Italy- with Banco San
Paolo IMI
2001 Creation of the Santander Consumer Finance Division
from Hispamer, CC Bank and Finconsumo
2002 Acquisition of AKB-Germany
2004 Acquisition of Finconsumo – Italy (remaining 50%)
2004 Acquisition of Elcon & Bankia- Norway
2004 Acquisition of PTF-Poland
2004 Acquisition of Abfin- Netherlands
2005 Acquisition of SC-UK (start-up)
2006 Acquisition of Unifin-Italy
2006 Acquisition of Interbanco- Portugal
2006 Acquisition of Drive-USA
2007 Acquisition of Mexico (start-up)
2007 Acquisition of Extrobank- Russia
2007 Chile (start-up, operative 2008)
15
Exhibit 3 Financial Information on Santander Consumer Finance
(Total €26.7 billion)
a) Distribution of Business by Geographical Area

b) SCF’s growth
16
Exhibit 3 (continued)
c) 2007 Balance Sheet and Income Statements (€ million)
Balance Sheet 2007
Loans and Credits 45,731
Due from credit institutions 2912
Intangible Assets 839
Other 1,781
Total Assets 51,263
Customer Deposits 13,883
Marketable debt securities 18,080
Due to credit institutions 14,493
Shareholders’ equity 2,079
Other 2,728
Total liabilities 51,263
d) Key Figures (December 2007)
Costumers
Customers More than 10 millions
Number of Dealers 106,904
Cars financed 1.3 million cars
Employees 6,573
Branches 282
Total Outstandings €46 billion
PBT 1.05 billion

Net Profit €737 million
Cost of Income 29.6%
ROA Before Taxes 2.42%
Note: Delinquency ratio stands for: Delinquency (90 days)/
Total Loans.
Income Statement 2007
Net Interest Income 2,085
Gross Operating Income 2,638
Operating Costs (803)
Net Operating Income 1,867
Net Loan Loss Provisions (842)
Income Before Taxes (ordinary) 1,052
Net Consolidated Income (ordinary) 737
Attributable Income to the Group 719
17
Exhibit 4 Consumer Credit in the United States
2003 2004 2005 2006 2007
Consumer Credit Outstanding (seasonally adjusted)
% Change at annual rate
Total 5.3 5.5 4.3 4.5 5.5
Revolving 2.9 3.8 3.1 6.1 7.6
Non-revolving 6.7 6.4 4.9 3.6 4.2

Amount:
Total 2 078.0 2 191.3 2 284.9 2 387.5 2 517.6
Revolving 770.5 800.0 825.0 875.4 941.8
Non-revolving 1 307.5 1 391.3 1 459.9 1,512.1 1 575.7
Terms of Credit at Commercial Banks and Finance Companies:
not seasonally adjusted
Institution, terms and type of loan
a) Commercial banks:
Interest rates (in %) for:
48-mo. New car 6.9 6.6 7.1 7.7 7.8
24 mo. Personal credit card plan 11.9 11.9 12.0 12.4 12.4
All accounts 12.3 12.7 12.5 13.2 13.4
Accounts assessed interest (%) 12.7 13.2 15.6 14.7 14.7
b) New car loans at auto finance
companies
Interest rates (%) 3.4 4.4 5.5 5.0 4.5
Maturity (months) 61.4 60.5 60.0 62.3 61.0
Loan to Value ratio 95 89 88 91 93
Amount financed (dollars) 26 295 24 888 24 133 25 958 27
911
Source: “Consumer Credit”, U.S. Federal reserve statistical
releases, Federal Reserve’s Web site,
http://www.federalreserve.gov/releases/g19/Current/, accessed
on July 16, 2008.

18
Exhibit 5 Consumer Credit in Europe
a) Development of Consumer Credit in Europe since 1995
(outstanding loans in € millions)
Dec
1995
Dec
1996
Dec
1997
Dec
1998
Dec
1999
Dec
2000
Dec
2001
Dec
2002
Dec
2003

Dec
2004
Austria 14,810 16,525 23,927 23,310 22,143 20,610 23,535
Belgium 9,321 9,532 10,149 11,180 11,958 12,739 13,231
13,505 13,723 14,078
Cyprus 499 604 675 729 875 964 952 960 925 936
Czech
Republic
150
496 622 561 828 1,675 1,902 2,231
Denmark 9,103 9,363 9,862 10,855 11,308 12,496 12,243
11,877 12,339 13,084
Estonia 96 75 111 29 54 75 95 172
Finland 3,256 3,275 3,014 3,123 6,386 6,706 7,324 8,048
France 63,757 69,333 74,859 80,836 90,708 97,848 103,006
105,719 110,716 115,507
Germany 197,198 200,713 202,181 216,145 215,695 222,554
222,405 224,343 230,913 236,957
Greece 5,511 7,852 9,755 12,050 17,054
Hungary 658 565 619 724 1,131 1,546 2,209 2,883 3,190 4,431
Ireland 2,995 3,336 3,752 5,040 6,811 7,751 9,300 10,462
11,330 14,701
Italy 21,557 23,828 27,139 32,312 37,112 41,181 45,244
51,298 60,980
Latvia 51 84 107 148 220 282
Lithuania 31 30 29 41 94 218
Luxembourg 500 700 1,091 1,250 1,301 1,360 1,185 1,269
Malta 50 88 83 102 120 133 121 104 84 187
Netherlands 9,365 9,893 10,864 12,266 12,848 13,831 13,903
18,647 20,442 22,523

Poland 2,926 4,080 5,044 6,878 9,757 11,115 10,369 9,199
11,209
Portugal 5,013 6,191 6,770 8,177 8,074 7,872 8,691 9,059
Slovakia 91 75 119 160 217 509
Slovenia 1,100 1,086 1,073 1,174 1,410
Spain 29,182 36,652 43,326 48,498 48,739 53,733 55,529
62,269
Sweden 22,725 20,992 22,558 22,146 26,310 29,843 29,090
31,828 32,327 34,462
UK 79,186 101,954 130,585 146,134 183,016 209,506 225,388
244,558 239,063 259,987
Source: “Statistics, Consumer Credit in the EU25 by member
states”, European Savings Banks Group (ESBG) Web site,
http://www.esbg.eu/uploadedFiles/Publications_and_Research_(
ESBG_only)/Statistics/08%20Consumer%20credit
%20in%20the%20EU.xls, accessed on July 15, 2008.
19
b) Consumer Credit per Capita in Selected Developed Countries
in 2007

20
Exhibit 6 Consumer Credit in Europe: Country Comparison
a) 2006: Market Penetration per Consumer Credit Product in
Europe
Source: Jean Coumaros, Enrico Sanna and Luca Zuccoli,
Consumer Finance in Europe: Back to Reality, Oliver
Wyman/Santander
Consumer Finance/ EFMA: London, 2008, available at
http://www.oliverwyman.com/ow/pdf_files/
OW_En_FS_2008_ConsumerFinanceInEurope.pdf.pdf, accessed
in September 2010.
b) Country grouped by consumer finance growth rates and type
of regulation
Note: These countries were classified as Dynamic,
Unrestrained, Constrained, Saturated and Dormant according to
their
consumer finance market growth rates and regulations.
Source: Jean Coumaros, Enrico Sanna, Mark Weil and Luca
Zuccoli, Consumer Credit in Europe: Riding the Wave, Mercer
Oliver
Wyman/ European Credit Research Institute: London, 2005, p.6,
http://www.ecri.be/new/system/files/Consumer+
Finance+Report+MercerOliverWyman+ECRI.pdf, accessed on

July 16, 2008.
21
Exhibit 7 Breakdown of SCF’s Sales by Product
a) Santander Consumer Finance's Breakdown of Sales By
Product Type from 2004 to 2006 (in € Million)
SCF’s Sales by Product 2004 2005 2006
Auto finance 9,615.2 11,684.8 13,779.9
Consumer loans 1,582.4 1,750.0 2,010.3
Credit cards 2,080.3 2,727.8 3,252.8
Direct finance 1,243.3 1,695.7 2,299.3
Mortgages 631.3 981.1 1,393.8
Others 137.1 146.3 234.6
Total new business 15,289.6 18,985.7 22,970.7
b) Breakdown of Santander Consumer Finance’s New Business
by Product in 2007 (Total = €26.7bn)

22
Exhibit 8 Santander Consumer Finance’s Product Portfolio in
February 2008
23
Exhibit 9 Business Model of Santander Consumer Finance
Exhibit 10 Profitability of Santander Consumer Finance’s
Different Products

24
Exhibit 11 Comparison between Santander Consumer Finance
and its Main Competitors, 1H’07
Outstanding Loans Net Income
25
Exhibit 12 Santander Consumer Finance’s Sources of Funding
a) Breakdown of Deposits from Credit Institutions by Type and
Currency (in € Thousands)
2006 2005
Type:
Reciprocal accounts 593,494 113,989
Time deposits 8,948,628 9,143,656
Other demand accounts 175,582 54,385
9,717,704 9,312,030
Currency:
Euro 5,117,470 6,446,610
Foreign currency 4,600,234 2,865,420
Total financial liabilities 9,717,704 9,312,030

b) Breakdown of Customer Deposits by Type, Geographical
Area, and Currency (in € Thousands)
2006 2005
Type:
Public sector – local government 11,833 263,788
Demand deposits
Current accounts 6,578,928 7,655,314
Savings accounts 2,323,685 2,666,719
Other demand deposits 31,035 5,954
Time deposits
Fixed-term deposits 4,350,917 2,811,435
Home-purchase savings accounts 65,743 55,673
Other financial liabilities associated
with transferred financial assets
- 20,347
Other time deposits 1,893 2,353,707
13,364,034 15,832,937
Geographical area:
Spain and Portugal 4,001,418 3,843,275
Germany 8,787,073 11,415,178
Italy 490,656 492,855
Scandinavia 74,234 75,953
Rest of Europe 10,653 5,676
13,364,034 15,832,937
Currency:
Euros 13,284,141 15,750,255
Foreign currency 79,893 82,682
13,364,034 15,832,937

26
c) Marketable Debt Securities by Type (in € Thousands)
2005 2006
Type:
Bonds and debentures outstanding1 956,169 5,565,655
Mortgage bonds2 - 1,193,952
Notes and other securities2 4,731,556 5,737,974
5,687,725 12,497,581
Add – valuation adjustments 46,368 122,103
Of which:
Accrued interest 46,368 152,768
Other items - (30,665)
5,687,725 12,497,581
1 Of this amount, €1.39 billion and €2.81 billion related to
bonds and debentures issued by Santander Consumer
Bank, S.p.A. and Santander Consumer Bank A.G., respectively,
in 2006 (€996 million and €6.1 million,
respectively, in 2005). Additionally, at December 31, 2006,
€1,350,000 thousand and €13,125 thousand related to
bonds and debentures issued by FTA Santander Consumer Spain
Auto 06 and Altair Finance, plc, respectively
(Appendix I).
2 Securities admitted to listing on the Spanish AIAF bond

market, fully issued by the Bank. The annual interest
rate on the mortgage bonds is 3.875% and the notes, which were
issued at a discount, bore average annual
interest of 2.80% in 2006.
27
Exhibit 13 Santander Consumer Finance’s Lending per Country
in 2006 ( € millions)
Germany Spain Italy Scandina
via
USA Poland Portugal Other
Units
Total
Total Portfolio 15,988 10,950 5,033 2,831 2,230 1,529 883
1,219 40,663
Auto Finance 10,676 6,101 3,635 2,546 2,230 645 706 950
27,490
New vehicles 4,145 5,520 3,146 1,448 361 385 526 405
15,936
Used vehicles 6,531 581 488 1,098 1,869 261 180 545
11,553
Cons. Loans & Credit Cards 1,054 1,045 544 112 0 0 53 20
2,827

Consumer Loans 937 500 364 0 0 0 44 1 1,845
Credit Cards 117 545 180 112 0 0 9 19 983
Direct 2,631 565 768 18 0 51 0 31 4,065
Mortgages 3 2,478 0 0 0 787 0 38 3,305
Others 108 492 80 155 0 0 1 7 843
Stock Finance 1,517 269 6 0 0 46 123 172 2,133
% of the Total (in %) 39.3 26.9 12.4 7.0 5.5 3.8 2.2 3.0 100
Source: Company data
Exhibit 14 Car sales and Purchasing Power in Emerging
Markets
28
Endnotes
1 “Global Consumer Finance”, Industry Profile, Datamonitor,
April 2008, accessed via OneSource on June 8,

2008. The Americas comprised Argentina, Brazil, Canada,
Chile, Colombia, Mexico, Venezuela and the United
States. Europe comprised: Belgium, the Czech Republic,
Denmark, France, Germany, Hungary, Italy, the
Netherlands, Norway, Poland Russia, Spain Sweden and the
United Kingdom. Asia comprised Australia, China,
Japan, India, Singapore, South Korea, and Taiwan.
2 ‘Paying the price of consumerism’, in El Pais, English
Edition, Herald Tribune, 25 July 2005, accessed via
Factiva on June 8, 2008.
3 Jean Coumaros, Enrico Sanna, Mark Weil and Luca Zuccoli,
Consumer Credit in Europe: Riding the Wave,
Mercer Oliver Wyman/ European Credit Research Institute:
London, 2005.
4 These were Experian, Equifax, and Callcredi
5 Karl Lannoo and Almudena de la Mata Muñoz (2003)
Integration of the EU Consumer Credit Market – Proposal
for a More Efficient Regulatory Model, Centre for European
Policy Studies: Brussels
6 Jean Coumaros, Enrico Sanna, Mark Weil and Luca Zuccoli,
Consumer Credit in Europe: Riding the Wave,
Mercer Oliver Wyman/ European Credit Research Institute:
London, 2005
7 Ibid.
8
“Cross-border lending promoted by EU plans”, International
Herald Tribune, January 14, 2008,
at<http://www.iht.com/articles/2008/01/14/business/credit.php>
, accessed April 9, 2008.
9 Karl Lannoo and Almudena de la Mata Muñoz (2004)

Integration of the EU Consumer Credit Market – Proposal
for a More Efficient Regulatory Model, CEPS Working
Document No 213/November 2004, Centre for European Policy
Studies: Brussels, available at
http://aei.pitt.edu/6647/01/1174_213.pdf , accessed July 2008.
10 ‘BEUC Statement on Consumer Credit’, 18 January 2008, at
<http://www.beuc.eu/Content/Default.asp?PageID=701&Langua
geCode=EN>, accessed April 14, 2008.
11 ‘Consumer credit’ EurActiv, January 21, 2008, at
<http://www.euractiv.com/en/financial-
services/consumer-credit/article-146529> , accessed April 14,
2008.
12 Ibid.
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Appendix C: Global Orientation SLO Scoring Rubric
Global
Dimensions

Does not meet
requirements ‐ 0
Developing ‐ 1 Adequate ‐ 2 Proficient ‐ 3
Exhibit knowledge
of the major
cultural economic,
social and legal
environments
faced by
multinational
organization
Exhibit little knowledge of
the major cultural,
economic social and legal
environment faced by
multinational organizations
Does not incorporate this
knowledge into analyses
and discussion
Exhibit little knowledge
of the major cultural,
economic social and
legal environment
faced by multinational
organizations
Sporadically
incorporate this
knowledge into
analyses and discussion
Exhibit adequate knowledge
of the major cultural,

economic social and legal
environment faced by
Incorporate this knowledge
into analyses and discussion
Exhibit a high level of
knowledge of the major
cultural, economic social and
legal environment faced by
Appropriately incorporate
this knowledge into analyses
and discussion
Identifies and
develops multiple
strategies for the
challenges of
doing business in a
global
environment
Equates expansion into
international markets
simplistically with expansion
nationally
Show some awareness
of the challenges and
differences with
expansion nationally
but does not
appreciate significant
challenges that apply in
doing so

Correctly identifies the scope
and a range of challenges in
expanding into international
markets
Does not fully appreciate the
need to pursue a dynamic
entry strategy that’s based on
learning from initial
experiences
Correctly identifies the scope
and a range of challenges in
expanding into international
markets
Fully appreciate the need for
learning when going in and
to proactively fine tune entry
strategy/strategies from
these initial experiences
Demonstrates
appropriate
responses to
global conditions
and cultural
diversity
Show little understanding of
cultural differences with the
other regions/markets; does
not correctly integrate this
in strategic planning and
operational details
Employs understanding

of a few obvious
cultural differences
with the other
regions/markets into
strategic planning and
operational details
Employ understanding of a
few obvious cultural
differences with the other
regions/markets and includes
this understanding into
strategic planning and
operational details
Employ a deep
understanding of all cultural
differences with the other
regions/markets and
incorporates it into strategic
planning and operational
details
Global
Dimensions
Does not meet
requirements ‐ 0
Developing ‐ 1 Adequate ‐ 2 Proficient ‐ 3

Identifies and
assesses the need
for and justify the
advantages
accruing from
expanding into
international
markets
Does not appreciate the
need from moving into
proactively
Considers expanding
into international
markets but is able to
realize the full scope
and potential;
generally inclined to a
“me too” strategy
mode
Analyze business
opportunities from global
perspective
Appreciate the need and
advantages of expanding into
international markets but is
conservative in estimates and
likely potential
Analyses business
opportunities from global
perspective

Correctly appreciates the
need and advantages along
with the risks that can
accrue from expanding into
Outstanding – 9‐12
Acceptable – 5‐8
Unacceptable – 0 ‐ 4
Appendix B: Global Orientation SLO Applied To
Case/Project/Research Report
Assignment
Requirements
GO Dimension 1
Description
GO Dimension 2
Description
GO Dimension 3
Description
GO Dimension 4
Description
Students will-> Exhibit knowledge of
the major cultural

economic, social and
legal environments
faced by organizations
(GL SLO 1)
Develop multiple
strategies for the
challenges of doing
business in a global
environment (GL
SLO 2)
Demonstrate
appropriate responses
to cultural diversity in
a global economy (GL
SLO 3)
Assess the needs and justify
the advantages accruing
from expanding into
international markets (GL
SLO 1, 2, 3)
Question 1 (7%)
Describe and
evaluate the
Country/Political Risk
5% 2%
Question 2 (8%)
1) Describe Santander

Consumer Finance’s
(SCF) lending
strategy.
2) Describe how they
manage risk and how
they finance their
loans.
5% 3%
Question 3 (15%)
Describe how SCF’s
lending strategy differs
from US commercial
banks.
10% 5%
Question 4 (30%)
Obtain, identify and
evaluate the data and
conduct a multi-
perspective analysis of
the evidence to make a
logical recommendation
for solving the problem
with a global perspective.

10% 5% 15%
Question 5 (40%)
Defend your
recommendation and
communicate your beliefs
clearly and accurately.
10% 15% 15%
TOTAL (100%) 20% of grade 30% of grade 20% of grade 30%
of grade

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