... but global diversification cushions the blow and saves the day! Banco Santander, the largest bank in Spain and a component of the C-I Financial Index, reported that a 98% drop in Q4 net profits, leaving the bank with a quarterly net profit of $62mn.  Bank operations were dragged down by the decline in the Spanish real estate market and the European debt crisis.  For the year, Santander's profits fell 35%.

[C-I Note: On a positive note, the bank managed a profit for the quarter and year - which is more than can be said for many other financial institutions.  The positive results are not an accident.  For the past several years, Santander management has actively acquired or built up businesses throughout the world - including the U.S., the U.K. and Latin America.

As you read below, this preserved a profit for the bank.  Yet, during that period, Santander's stock price has been stagnant, at best.  We've tracked the stock and have never understood why shares were not stronger than they were.  Which may explain why we report on compliance and legal news, rather than on market performance.  Over the past 12 months, the share price has fallen 33%.]

Diversification Cushions the Fall. While its operations floundered in Spain and in the bordering country of Portugal, Santander’s operations in other parts of the world became increasingly important to the bank's ts bottom line.  For the first time, earnings from its Latin American division accounted for more than half of the bank’s profit in 2011 - even though its profits in this fast-growing market fell 1%. Continental Europe represented almost 1/3 of Santander’s earnings in 2011, while earnings from operations in the U.K. and the U.S. totaled 12% and 6%, respectively.  Santander’s large deposit base and diversified worldwide operations have helped it to remain profitable despite the Continent’s debt crisis.   As one of Europe’s largest banks, Santander has also been able to access financing from Europe’s capital markets.   [DealBook, 1/31/12]