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Oops: Santander Accidentally Double-Debited Customers

Banco Santander double-processed transactions for 2,000 business accounts in the U.K., totaling 130 million pounds ($176 million).
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Giant Spanish bank Banco Santander  (SAN) - Get Banco Santander SA Report gave some people accidental Christmas gifts this year--to the tune of 130 million British pounds ($176 million).

But it looks like they won’t get to keep them.

Santander accidentally double processed 75,000 transactions for 2,000 of its business accounts in the U.K. So employees and vendors of these businesses got a double delight, while the businesses got a dose of double trouble.

"We're sorry that due to a technical issue, some payments from our corporate clients were incorrectly duplicated on the recipients' accounts," the bank said in a statement.

"None of our clients were at any point left out of pocket as a result, and we will be working hard with many banks across the UK. .to recover the duplicated transactions over the coming days," the bank said, adding that it is the process of recovering the funds through a process known as the “bank error recovery process.” 

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It added that it has started to work with other banks in accordance with the process and that these banks will look to recover the accidental payments from their customer’s accounts.

Santander recently traded at $3.34, up 1%, and Morningstar analyst Johann Scholtz puts fair value at $4.50.

But he didn’t offer much enthusiasm for the bank in a September commentary. “We give Santander a standard capital allocation rating,” he wrote.

“We do not believe that Santander has any competitive advantages in its U.S. retail banking operation or in its U.K. retail banking business. Both businesses also earn returns materially below their cost of capital.

“Santander, however, views these businesses as core to its operations. We believe Santander should exit these businesses. It could potentially free up capital to strengthen Santander’s weak balance sheet. In our view, Santander’s shareholder distribution policy is appropriate.”