Santander’s Ana Botín, Reality of Quantum Computing, Netherlands Pension Reform, Data Center Win-Win

0:00Goldman Sachs' 2026 outlooks examine the trend shaping the global economy. From global growth and regional perspectives to deep dives into asset classes and portfolio allocation. Listen to Exchanges Outlook 2026 from Goldman Sachs. Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bluebird Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going.

0:36From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts

1:27This is Wall Street Week. I'm David Weston bringing you stories of capitalism, playing dice with the universe, the strange new world of quantum computing, and how it may change our lives even more than AI. Plus, coming to terms with growing older and lower interest rates. As Western nations face growing problems providing for the elderly, we take a look at the largest set of pension assets in Europe and why the Dutch are changing the way they invest those assets. And turning concerns about data center energy consumption into a way to heat our houses. That's what they're doing in Finland. But we start with banking and how regulators in Europe and the United States are taking increasingly different approaches, creating both opportunities and challenges for Anna Boutin, executive chairman of Spain's leading bank, Santander.

2:21Banco Santander has had a big year. Give us a sense of how big a year it's been. It's been a great year. Our numbers will be totally on track to deliver all the numbers in our three-year plan. And again in 2025, we're going to reach our profitability 16.5%. And for shareholders, great value creation, increasing dividend per share. Our share price is up 100%, but there's still a lot of inherent value in our stock. Our multiples are still very attractive compared to US banks, for example. We're trading at a bit under 10 times price earnings. And we deserve a premium to Europe and I would say even to the U.S.

3:01banks because our profitability is getting better and we have growth. What were the main drivers of the success you've had this year? So I say it's an overnight success, 10 years in the making. So since I took over, I inherited a group of banks. It was a big bank, but many different geographies, different business models, very disconnected. And the whole vision is to bring them all together under a single open financial services platform. And that's what we have been working on. So this year, every single one of our five businesses is growing. We have simplified the organization. We sold Poland.

3:39We bought in the UK. So our UK business now is at scale. And this is really the opportunity at Santander. We have profitable growth for many years organically. Santander succeeded in selling half of its Polish unit this year, while other European banks, including Unicredit and BBVA, had a tough time getting deals done. As you say, you sold Poland, you bought in the UK. There were other banks in Europe that tried to do transactions this year that didn't go so well. How come you got it done? Well, you know, the sale of Poland was the largest cross-border M &A in Europe in a decade. And in today's world, where governments defend their countries and regulation is what it is, friendly deals are the way to go.

4:31And so I believe that's a secret. As you say, Banco Santander, as you inherited it, is pretty far flung. I mean, you've got, obviously, Spain, you've got Europe, you've got UK, you've got US, Mexico, Brazil. How much is that helping Banco Santander, that diversification? So in today's economy, either you're large and you have global scale or you're very specialized. And we have the scale. We're one of the largest banks in the world by number of customers, 180 million. That's more than the number one and number two bank in the United States together. We have added 60 million customers in the last 10 years.

5:09And so that scale, to benefit from that scale, to have the operating leverage, you need to work across the company. You cannot just work separately by business or by geographies. One of your goals has been efficiency, increasing the efficiency of the bank. How much success have you had? How much further can you take it? We're only just scratching the surface of our potential as a group. We have Gravity, our co-operating system. We have our payments core system, which is allowing us to reduce cost per transaction in the last few years by a third. What is now coming is what you as a customer are going to see, which is the open bank, the front end.

5:47This year we'll have flat to down cost and growing top line. And this should continue into the next few years. And again, organically. You know, we're in markets with 1.2, 1.3 billion people, where we are at scale in each one of them. And building our own platforms is something that very few banks, very few companies have in the world today. One of Santander's strongest verticals is its auto lending business, working with dealerships at 14 ,000 points of sale, as well as through its digital platform, OpenBank. The last two years, delinquencies were very low during COVID, half normalized, so they have been going up.

6:30But our final loss rate is actually stable over the last 12 months. And consumers are actually, you know, getting up to date on their loans, even though they get a bit behind, so the loss rates are stable. And we're not seeing anything right now that tells us the U.S. consumer, on average at least, is having any issues. It's very solid. We see interest rates coming down in Europe now. What does that do to your bank and to banks generally? So the way the terminal rate, and we can have a debate about what that is in Europe or in the U.S., given the size and level of government debt, given demographics, defense spending, decarbonization, we don't see that rate being below 2 % in Europe, probably below 3 % in the United States, something like that.

7:21And that is a very good level for banks because it is high enough for us to have a margin, but not that high that the credit gets bad. Rates are at a level that I think will allow growth to remain around 3 % globally right now. By the way, that's not fast enough, but at least we're growing. Regulation may be one thing holding down growth in Europe. In the last six years, the EU has added 13 ,000 new banking rules, while the U.S. came up with only 3 ,500. Give us your sense of regulation of banks in Europe versus the United States. Well, I think regulation like life is all about balance, right?

8:03And so we do believe in smart regulation, but we've gone way too far on certain items like capital. You know, soundness of banks doesn't just depend on capital, as we've seen. You know, if you look at the capital ratios of some of the banks that had problems, they're pretty high. And so we think, again, Santander, look at our CDS. It's one of the best in the world, including the best banks in the United States. Why? Because it's about a strong balance sheet, liquidity, scale, business model, etc. So we have gone as far as I think we need to go on capital, and now we need to be supporting growth.

8:40Mario Draghi came out with a famous report. What's been done with that report? So if the ambition is very high, even if you don't get to that, you're going to do pretty big things. And so this is the thing in Europe. What is our ambition for growth? Mario Draghi gave us a diagnosis. How much have we executed? Not more than 10 percent in one year. So we have to have a much greater ambition on delivering on those recommendations. I've said it publicly, you know, if taxes, every euro we make in Europe, 58 cents go to the government. Every dollar we make in the United States, 42. That's not a small number, but it's, you know, significantly lower.

9:22So excess regulation, excess taxation actually is a tax on the economy and growth. At some point, people don't invest. And so this is the balance we need to find. And Europe is getting further apart from the United States, not coming closer. We also have regulation of banks at both the European level and member state level. To what extent do member states hold things back? Well, and there's one thing you didn't mention. So there's the regulation and then that's the level two and three. Here in the United States, there's a lot of talk about the agencies. Clearly there's work to do in the United States.

10:00In Europe, there's even much more work to do, right? And I showed at a conference on regulation, only financial services regulation without the rest of the interpretation of the rules, which is thousands more, 97 ,000 lines, which is 100 Don Quixotes. You know, I showed it there. And so that is a second level. And then the third is what you say, which is the national rules and regulations. How do you decide how to allocate your capital for growth? And to what extent is it affected by things like the relative difference in regulatory levels? Well, that, of course, matters a lot, right? If other things equal, every dollar I put in Europe, you know, 58 of the profit goes to the state and 42 in the United States.

10:48Well, you know, Europe is going to have to give me higher growth or higher profitability or both for us. Other things equal to go there. So, yes, it matters. It matters a lot. There's innovation and creativity in Europe, entrepreneurship in Europe. Do the capital markets support it? We have been pushing for a long time for capital markets union. We now have the savings union, which is not exactly the same, but it's going to be helpful. The reality is that most of SME commercial lending comes from banks. And that is why it's so existential and urgent that we increase the ambition for change. because we will only be more competitive if there's more investment.

11:32This is coming from smaller and medium-sized companies, and a lot of that lending comes from the banks. And that's why capacity to lend has to expand. And that is what, again, regulation, smart regulation, would be very helpful. Is there any prospect of a unified banking regulatory system in Europe? Well, you know, how many years did it take to build the United States? 200? Europe, we've been going at this for 50 or 60 years. So it will happen. I'm not sure I will see it. Coming up, we try to make sense of something that Einstein threw up his hands trying to understand. Quantum mechanics and the revolution it may bring to computing by doing some things better than AI.

12:28Goldman Sachs 2026 Outlooks. From global growth and regional perspectives to deep dives into asset classes and portfolio allocation, Goldman Sachs research examines the trends shaping the global economy. For insights to help you stay a step ahead, listen to Exchanges. Outlook 2026 from Goldman Sachs.

12:55This is Caroline Hyde. And I'm Ed Ludlow, inviting you to join us for Bloomberg Tech, a daily podcast focusing exclusively on technology, innovation and the future of business. Every weekday, we bring you the top headlines from the world's biggest tech companies. From finance to defence, AI to entertainment and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. We do this all every weekday, then bring you the most important conversations and analysis in our podcast.

13:29Search for Bloomberg Tech on YouTube, Apple, Spotify or anywhere else you listen. Join us every afternoon on your commute home and stay ahead of the tech news cycle. That's the Bloomberg Tech Podcast. I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. Subscribe today, wherever you get your podcasts.

13:52This is a story about God playing dice with the universe, something Albert Einstein told us he didn't do back in 1926. Einstein was criticizing physicists' theory of quantum mechanics. Yet a century after Einstein's denial, billions of dollars are being invested today in taking that theory and turning it into reality, with the prospect of a revolution in computing potentially larger even than generative AI. Quantum computing is very high potential. Investors are increasingly asking us about the implications of quantum computing. Quantum computing. Quantum computing. Political and state-level economic supports to develop quantum, and we want to be part of that.

14:38IBM is one of the companies leading the charge in quantum computing. At IBM, we developed some of the very foundations of quantum information science, starting as early as 1970. Jamie Garcia is the director of quantum partnerships at IBM. A Ph.D. chemist, she's working on quantum computers transforming health care at places like the Cleveland Clinic. Quantum computers are just a totally different paradigm to calculate solutions to problems. And so what most experts have done today that are studying quantum computing for different application spaces is to really sit down with the math and figure out, like, are the algorithms here that I can use and that I can exploit using a quantum computer going to bring me any sort of advantage over what can be done today in classical sort of state-of-the-art techniques?

15:31At the core of classical computing are bits, single pieces of information that can have the value of zero or one. But quantum technology relies on qubits, a unit that can have multiple values simultaneously. It's like holding a coin in your hand that is heads, tails, and everything in between until you open your hand to check. Physicist Jerry Chow is IBM's Director of Quantum Hardware System Development. Really fundamentally, there's a different math, right? It's the mathematics of quantum mechanics that is governing how you actually manipulate these quantum bits, which then gives rise to a whole host of different opportunities for algorithms and types of problems that you can actually solve using quantum computers.

16:21As we're studying things today, we're using a lot of something called error mitigation as our approach to dealing with errors and noise in the system. and in the quantum computer itself. This is going to continue to evolve. In fact, we think that next year, we're going to see examples of what we call quantum advantage, which is where you're able to come up with a solution to a problem that is cheaper, faster, or more accurate than with classical alone. A turning point in IBM's efforts to make quantum computing a reality came when it made it available to the world on the cloud. 2016, the IBM quantum experience was really a pivotal moment for us in terms of getting quantum computers for the first time out onto the cloud and into the hands of anybody, really people, right?

17:11What's interesting is that before that period, I'd say it was really much more in the realm of physics, right? That we were doing experiments on small devices, qubit devices that we were looking at, understanding how they worked, trying to make them better. but we didn't have any kind of real thought about how is this going to be used for computation. In the nine years since you put quantum experience up there, what have you learned at IBM? I think what I learned from that experience really was that there was a whole lot of people out there who wanted to touch and learn about quantum. I think we were sitting there that first night after we launched it watching these circuits coming in and people were actually running things and we were like, oh wow, this is picking up some steam here.

17:58And then to this point, we've had tremendous uptake in terms of using the platform to actually generate new papers and research. Thousands of papers have been generated, which would have been impossible for us to do just as individual scientists or researchers studying these devices in our own lab and working with other scientists in collaborations. And in success, that community could go places that classical computing, even using the large language models of AI could never take us. So it's not just speed, it's actual accuracy. When we're using classical, no matter how infinite we get, it's an approximation.

18:35Right, absolutely. It's absolutely not a question about speed. The whole point of the quantum computer and what it can do is that it can give us the ability to actually get potentially more accurate results, also get results that otherwise are unattainable using a classical computer alone. Companies like Google, Microsoft, and Intel are all exploring the potential of quantum computing. But there's also a new group of contenders, startups, that are betting it all on the hope that quantum tech will one day become profitable. One of those firms is Maryland-based IonQ. Its CEO is Niccolo DeMasi, who believes he has the best horse in the race.

19:15We supply quantum computers to our both federal, state and commercial customer partners. We also provide quantum key distribution, and we do that both on the ground and up in the heavens. Quantum key distribution is effectively quantum cyber security. And we're very focused on this not being just proof points in the lab, but doing useful quantum advantage examples for our customers and embedding ourselves into their workflows on an ongoing basis. So what will it look like as we go beyond showing so-called quantum advantage in the lab and embedding it into real world workflows? One place people look to first is in the life sciences.

19:59Work like Dr. Garcia is doing at the Cleveland Clinic. An example of something that we've done is we've taken some of the algorithms that we've worked on for chemistry. And alongside Cleveland Clinic, we've started looking at different chemical processes that they really care about. So you can think about this in the larger context of therapeutics, design, drug discovery, that kind of thing. And really what we're doing with Cleveland Clinic is pushing the boundaries of algorithm development, methodology of using quantum computers, again, in concert with classical computers to come up with solutions to problems that they care about.

20:41Protein folding is definitely one area. mRNA, secondary structure understanding, how things come together and how they look in sort of 3D is a very interesting area, as you can imagine, as you're trying to understand how these things fit together in a biological system. It isn't just life sciences that could be revolutionized by the addition of quantum computing. Financial markets are another target of opportunity. IBM scored an early advantage this year when HSBC said it used the tech company's Heron quantum processor to make a 34 % improvement in predicting how likely a bond will trade at a given price.

21:22I think there's a lot of excitement in the market space as well, right? Especially because optimization is certainly in another area which we know is a classically difficult problem. And from the point of view of actually using a quantum computer to address optimization, there are many threads there in terms of leveraging this kind of large exponentially computational space to handle problems such as portfolio optimization, right, or risk management. So there's a lot of interesting ideas there that are being looked at by various financial institutions. What I can say at this stage is portfolio theory, options pricing, these are very much now accessible from a quantum advantage perspective using our new Tempo system.

22:06Quantum key distribution and cybersecurity, that is, of course, front and center for financial services on a global basis. And so security and integrity of the data flow is, of course, vital. I always like to jokingly say that you can spot our quantum security customers because they are not in the news for data breaches. Even agriculture could benefit from quantum computing in ways we haven't yet imagined. Understanding processes such as nitrogen fixation to make things like better fertilizer, right, to help us grow better crops, right? Understanding things that are critical in impacting climate change, right, in terms of how carbon is handled, right?

22:51Other things including better batteries, right, in terms of materials discovery. The potential may be great, as are the investments being made, but when can we expect to see these potentially dramatic results? It turns out that that depends on whom you ask. IBM has made getting to quantum advantage in the real world a strategic priority and has a timeline of getting there in a big way by 2029. Our roadmap really shows the detail in terms of how we want to get from today to 2029. In between, we have this real important milestone also that we believe that with the community, we'll be hitting quantum advantage, right?

23:32Where there'll be some problems and claims of advantage where we'll see quantum really surpassing any classical methods of solving certain types of problems, right? And we are looking at various ways of showing that academically, scientifically, and also empirically from the ground up in terms of compared with various kinds of classical methods today. And then we're building a lot of the, you know, in the end, it's like architecting a large skyscraper. We're building a lot of the foundational elements so that when we hit Starling in 2029, all the applications that people have been developing, all the software stack, all the eventual software libraries, they're still going to work.

24:17that they're going to work on a machine that's even more capable, something that can run hundreds of millions of gate operations compared to several thousands of gate operations on the advantage-level machines that we're building today. IBM says it's on track to have quantum computing payoff in a big way by 2029. But IonQ's Demasi says they're already there. So our machines we announced on September 12th at our Analyst Day are 36 quadrillion times more powerful than anyone else's machine. And that gap is increasing. Not only do we believe we are five years ahead of anybody else in the quantum computing business, whether it's government programs, adversaries, or commercial companies, but we also have the lowest unit economics.

25:03So we're able to build a fully fault-tolerant 2 million qubit system and keep our cost of goods sold under$30 million. Taking that together, it means that we're a fully-fledged quantum internet solution. We can provide our customers a platform of computing, cybersecurity, networking, communications, and sensing. And there's no other company in the history of the world that's ever able to supply a complete quantum internet. Everyone in the quantum business seems to agree that Einstein was wrong, that it's either coming soon or is already here, and that it will be big. But figuring out who's ahead in this race sometimes feels like predicting those dice.

25:45IBM says it's ahead because it has more total qubits in its machines. IonQ says it's not the number of qubits, but the number of algorithmic qubits, putting it in front. And quantum company Quontinuum has yet a third measure of quantum volume. Maybe we shouldn't be surprised that there isn't a single measurement. It's like those qubits that are both ones and zeros at the same time, until they're observed. And it looks likely that we will all be able to observe what quantum computing can do for us in the very near future. Up next, an aging population meets lower interest rates. It's a problem countries throughout the West are facing.

26:28We tell the story of what the Netherlands is doing about it.

26:38This is Scarlett Fu. And I'm Paul Sweeney, inviting you to join us for the Bloomberg Intelligence Podcast. Every day, we harness the power of Bloomberg Intelligence to bring you deep dives into the companies that are moving markets from publicly traded companies like Apple to those that are privately owned but known by everyone on Earth, like OpenAI. Now, I helped to build Bloomberg Intelligence to what it is today, Scarlett. And now, our analysts are the best in the world, covering more than 2 ,000 global companies. That is your legacy, Paul. and we speak to those in-house experts every day. They are Bloomberg's go-to authorities on sectors, companies, and legal processes.

27:11And we do it all live each weekday then bring you the best conversations in our daily podcast. So be sure to search for Bloomberg Intelligence on YouTube, Apple, Spotify, or anywhere else you listen. Listen in the afternoons on your way home from work to catch up on the market news you miss during the business day. That is the Bloomberg Intelligence Podcast. I'm Scarlett Fu. And I'm Paul Sweeney. Subscribe today wherever you get your podcasts.