Santander says profitability hit short-lived

GENEVA (Reuters) - Spain's Santander (SAN.MC: Quote, Profile, Research, Stock Buzz) sees the hit from the global financial crisis on private banking profitability as short-lived, the bank's general manager for international private banking said on Wednesday.

"For most banks in 2008, profitability will be hit as clients go to cash or semi-cash. But it will be short-term. Structurally there will be no change," said Javier Arus Castillo at the Reuters Wealth Management Summit.

"Margins will begin to stabilize mid-2009," he added.

Santander's wealth management division currently manages 100 billion euros ($136.6 billion) in assets, and accounts for between 4 and 5 percent of group income.

In the past few weeks, the euro zone's largest bank has taken advantage of cheap pickings in the financial sector, snapping up British mortgage lender Bradford & Bingley's deposits and branches and buying out its U.S. affiliate Sovereign Bancorp (SOV.N: Quote, Profile, Research, Stock Buzz).

In the wealth management business, Santander is also "actively looking" for opportunities to grow its footprint, Castillo said, highlighting Britain, Italy and Latin America, particularly Brazil, as target markets.

"We are looking to expand where we already have a presence, and this could be through buying a bank or a client portfolio. Either of those deals would be friendly transactions with counterparts," said Castillo.

"We are also exploring the possibility of acquiring teams of professionals. There are much better opportunities in this area now than a few years ago," he noted.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Judy MacInnes; Editing by Jon Loades-Carter)