Adds detail on Santander's U.S. presence throughout

By Jesús Aguado and Arasu Kannagi Basil

MADRID/BANGLORE, Feb 3 (Reuters) - Santander SAN.MC will buy U.S. regional lender Webster Financial WBS.N in a $12.2 billion deal to create a top-10 retail and commercial bank in the U.S. by assets, the Spanish bank said on Tuesday.

Santander first entered the U.S. market in 2005 when it bought Sovereign Bank and is currently one of the biggest lenders in its auto lending business.

It expanded into corporate and investment banking in 2023 after hiring more than a hundred staff from collapsed lender Credit Suisse.

"This transaction is strategically significant for our U.S. business, while remaining a bolt-on for the overall group," Santander Chairman Ana Botin said in a statement.

Botin said the acquisition would allow the bank to strengthen scale and profitability, improving the bank's funding mix and economics, including lower funding costs.

Santander has offered 2.0548 of its shares and $48.75 in cash for each Webster share. The deal is expected to close in the second half of 2026.

Centerview Partners, Goldman Sachs and Bank of America advised Santander on the deal.

The acquisition will put the bank on track to deliver a return-on-equity ratio of about 18% in the U.S. by 2028, among the top five for profitability within the 25 largest U.S. commercial banks, with a target of more than 20% by 2028 at group level.

On Tuesday, Santander also announced a rise of 12% in its 2025 net profit to 14.1 billion euros, above forecasts of 13.77 billion euros.

"Importantly, we can achieve this while maintaining all of our shareholder remuneration commitments, including the 5 billion share buyback we approved today and our broader distribution commitments," Botin said in a statement.