Banco Santander SA's appointment of Héctor Grisi as its next CEO suggests Europe's biggest retail lender is intent on making its corporate and investment bank a larger part of its business.

The elevation of Grisi, a former investment banker, from head of Santander's North America region follows the lender's abandoned attempt to have current UniCredit SpA CEO and former star-investment banker Andrea Orcel fill the same role in 2019. Before joining Santander in 2015, Grisi spent 18 years at Credit Suisse, where he held a range of positions, including head of investment banking for Mexico, Central America and the Caribbean.

Spain-based Santander's corporate and investment bank, or CIB, made up around a sixth of group revenues, at €5.7 billion, and around a quarter of its profits, at €2.2 billion, in 2021, up from less than 10% of profits in 2016. The bank said on its first-quarter earnings call that it wanted to become "one of the leading investment banks in Europe, consolidating our leadership in Latin America and continue to accelerate growth in the U.S."

"What is interesting is that he seems to have lengthy experience in investment banking, like Andrea Orcel," Gilles de Bourrousse, fixed income analyst at Octo Finances, said in an email. "It is maybe a sign that Santander will continue to push its CIB business in the future in Europe, the U.S. and Latin America."

Santander faces stiff competition to grow its CIB, particularly from U.S. investment banks such as JPMorgan Chase & Co. and The Goldman Sachs Group Inc.., which have reinforced their dominance of the industry since the eurozone sovereign debt crisis almost a decade ago.

JPMorgan's CIB generated more than $9.8 billion in revenue from fixed income, commodities, currencies and equities in the first quarter of 2022, S&P Global Market Intelligence data shows. Santander's entire CIB business generated around $1.8 billion during the same period.

Grisi's success in recent years in improving the performance of Santander's North American business, which covers the U.S. and Mexico, is also likely to have been a key consideration in his appointment. In 2021, Santander's U.S. business, Santander Holdings USA Inc., became the bank's largest source of profits for the first time, two years after Grisi was appointed head of the region. The U.S. unit achieved its highest return on average equity since 2014, at 15.6%, in the process, Market Intelligence data shows.

This was boosted by the best performance since 2010 at the lender's U.S. retail bank, Santander Bank NA, which analysts have long questioned the value in retaining, as it recorded an ROAE of 4.2% in 2021, the data shows.

Grisi's leading of Santander's Mexico business, Banco Santander México SA Institución de Banca Múltiple Grupo Financiero Santa, since 2015 has seen it grow active customers by nearly 50% to almost 10 million. At the same time, it took up leading market positions in small and medium-sized enterprises, mid-market corporations, mortgages and project finance, Santander said in its announcement of the new CEO.

Net profit from Mexico grew from €757 million in 2014, the year before Grisi was appointed, to €945 million in 2019, Market Intelligence data shows. Mexican profits fell in 2020 to €778 million due to the COVID-19 pandemic, before recovering to €867 million in 2021.

"The choice highlights how much of a success story Mexico and North America are for Santander," said Chiara Romano, associate director, financial institutions, at Scope Ratings.

Santander's promotion of an in-house candidate suggests that there will be no significant shifts from the bank's three-pillar strategy it laid out in 2019, Maria Cabanyes, senior vice president, Europe, the Middle East and Africa banking at credit rating agency Moody's, said in an email. Santander's three pillars were technology, talent and scale.

"We don't think this appointment should drive any change in [these] ambitions," said Cabanyes.