Jefferies Cuts Santander to Hold as Borrowing Costs Double

Jefferies downgraded SAN to Hold from Buy today, the first rating cut from any major firm in over four years. The timing is notable: cost to borrow has doubled in 30 days, the stock has shed 9% over the past month, and earnings land in eight days.

The Downgrade and What Preceded It

Jefferies made the cut this morning with the stock at $13.02, down 2.1% on the day and 9% over the past month. The firm had held a Buy rating since March 2022. Before today, the most recent rating changes from major banks were Citigroup reinstating a Buy in June 2025 and Barclays upgrading to Overweight in March 2024. Both of those constructive calls are now sitting on top of a stock that has moved in the wrong direction through October.

Santander reports on 28 October, eight days from now. The last quarterly print sent the stock down 3.2% on the day and a further 1.8% over the following week.

Borrow Costs Rise, Shares Short Climb

Cost to borrow stood at 1.21% on 19 October, up 59% over the week and 103% over 30 days. A month ago it was sitting below 0.60%.

Short shares outstanding have climbed to 45.9 million, up roughly 3.6% on the week. The short position peaked above 54 million in early September before unwinding through mid-October, so the current reading represents a rebuilding from that trough rather than an all-time extreme.

Availability remains wide at 757% of estimated short interest, meaning roughly seven and a half shares are available to borrow for every one already lent out. The lending market is tightening fast from very loose conditions: a week ago availability stood at 1,026%. The direction matters more than the level here. At the 52-week tightest point, availability fell to 27.5%, so there is room for further compression before borrowing becomes genuinely constrained.

Options and Institutional Picture

The put/call ratio sits at 0.47, above its 20-day average of 0.42 and at a z-score of 1.12. That puts options positioning modestly skewed toward hedging but not at an extreme by the past year's standards, the 52-week high on the PCR was 0.81.

On the institutional side, BlackRock holds 7.1% of shares and added 6.1 million shares as of 30 September. Norges Bank Investment Management added 32 million shares as of 30 June. Neither of those moves counteracts what the borrow market and the Jefferies desk are signalling about near-term risk.

What to Watch

The 28 October earnings print is the near-term pin. Cost to borrow above 1.21%, combined with the Jefferies downgrade and a stock already down 9% this month, sets up a crowded pre-earnings dynamic. Watch whether availability drops below 500% in the days ahead: that would indicate genuine acceleration in short demand from funds building positions before the print.

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Data summary

• Price: $13.02, down 2.1% on day, down 9% over 30 days
• Jefferies: downgraded to Hold from Buy, 20 October 2026
• Cost to borrow: 1.21%, up 59% week-on-week, up 103% month-on-month
• Shares short: 45.9 million, up 3.6% on week
• Availability: 757% of estimated shorts, down from 1,026% one week ago; 52-week low 27.5%
• Next earnings: 28 October 2026