The parent of Webster Bank — the largest Connecticut-based bank by deposits — has agreed to be acquired by a Spanish banking giant with a small presence in the state, the biggest shake-up in the banking landscape in Connecticut since M&T bought People’s United in 2022.
A definite agreement was announced Tuesday in which Banco Santander will acquire Stamford-based Webster Financial Corp. in a cash-and-stock deal valued at $12.3 billion. If approved, the acquisition would catapult Madrid-based Santander into the top spot as the largest bank in Connecticut by deposit market share. Santander would surpass Bank of America — long at the top of the heap — based on market share in Connecticut tallied by the Federal Deposit Insurance Corp. as of June 30.
In Connecticut, the combination would join Webster’s network of 95 branches with Santander’s 13 with a merged balance sheet of $42 billion in deposits, according to FDIC data.
“This is an exciting combination that brings together complementary strengths and a shared commitment to excellence,” John R. Ciulla, Webster’s chairman and chief executive, said in a release. “As a larger organization, we will unlock greater scale, broader capabilities and new opportunities for growth, while remaining deeply focused on the people who define our success.”
“As a Connecticut-based bank with deep roots in the region, we also look forward to continuing our commitment to the communities we serve,” Ciulla said.
Webster Bank was founded in Waterbury in 1935. (Courant File Photo)
The transaction is expected to close in the second half of 2026. It wasn’t immediately clear to what extent there might be branch closures and what magnitude of layoffs of duplicated administrative staffs there might be — both sources of cost savings in bank mergers.
Banks are under increasing pressure to consider mergers to achieve the scale and resources to invest in emerging technology that is demanded by consumers and business customers. Technology is considered essential to remaining competitive in a marketplace where banks are going up against a growing number of rivals, many that are online and don’t have the costs associated with operating branches.
Webster Bank was founded in 1935 by Harold Webster Smith as First Federal Savings of Waterbury with $25,000 borrowed from friends and family.
Harold Smith had an office with one chair and a shelf. He carried deposits home at night in a leather bag.
His son, James C. Smith, succeeded his father as chief executive in 1986, and the bank changed its name to Webster in 1995, a nod to Smith’s father.
As president and chief executive, James Smith rose to prominence in the state’s banking community through a series of well-placed acquisitions that expanded the bank far beyond its Waterbury roots and beyond Connecticut. He retired as CEO in 2017.
Although Webster towers over Santander by deposit market share in Connecticut — 22.8% as compared with 1.1% — Santander’s overall presence in the U.S. dwarfs Webster. Santander has 400 branches and nearly $80 billion in deposits, compared with 196 branches and $66 billion in deposits for Webster.
Combined, the banks said they would rank among the 10 largest retail and commercial banks in the country, when ranked by deposits, and among the top five in the Northeast, by deposits.
In a release, Ana Botin, executive chair of Banco Santander, characterized the deal as creating a stronger bank for Santander customers.
Banco Santander has modest Connecticut branch presence but strong footprint nationally. (AP Photo/Mark Lennihan)
“Webster is one of the most efficient and profitable banks among its peers and bringing together two highly complementary franchises will expand the products, technology and capabilities we can deliver, with clear revenue opportunities from a stronger, more capable combined franchise,” Botin said.
Botin said the acquisition is “strategically significant” for Santander’s U.S. business, while remaining a “bolt-on” for the entire bank.
The acquisition has been approved unanimously by boards at Webster and Santander. Ciulla will remain with the merged bank heading up Santander Bank, which will absorb Webster, and he will remain based in Stamford.
Under the terms of the transaction, Webster shareholders will receive $48.75 in cash and 2.0548 shares in Santander for each Webster common share. The per-share price of $75.59 — based on closing prices as of Monday — represent a 16% premium to Webster’s all-time high closing stock price.
Shares in Webster Financial jumped $5.57, or 8.5%, to $71.58 in late-afternoon trading on the New York Stock Exchange.
Kenneth R. Gosselin can be reached at [email protected].