Santander Hires UBS’s Andrea Orcel as CEO; Swiss Lender Promotes Execs

(Bloomberg) -- Banco Santander SA, in a surprise move, appointed UBS Group AG investment bank head Andrea Orcel as its new chief executive officer, a decision that reshapes the leadership of two of Europe’s biggest lenders.

Switzerland’s largest bank is filling the vacuum by promoting ex-global mergers and acquisitions head Piero Novelli and equities chief Robert Karofsky to replace Orcel as co-heads of the investment bank. At Santander, Jose Antonio Alvarez will stay on as chairman of Santander Spain and becomes vice chairman of Banco Santander.

Orcel’s appointment as CEO renews a link between the veteran banker and Spanish lender that stretches back to when he was a confidante and dealmaker for late Chairman Emilio Botin, one of Europe’s most acquisitive bankers. The move to the CEO role also marks the Italian’s steady ascent through the continent’s investment banking ranks and comes as UBS shifts its focus away from investment banking in favor of more stable wealth management.

Under Ana Botin, who took over from her father as executive chairman, Santander has shied away from large-scale acquisitions in recent years to strengthen its balance sheet and recover from Spain’s financial crash. Tuesday’s announcement may fuel speculation that Orcel may seek to do deals again as economic expansion emboldens the nation’s banks.

U.S. Gains

Santander’s U.S. stock rose as much as 1 percent after the close of regular trading in Madrid, while UBS’s securities declined by a similar amount.

“There is a cultural fit between Santander and Andrea Orcel: boldness and relentless appetite for high-profile combinations in the banking sector,” said Gildas Surry at Axiom Alternative Investments in London. “We read about Deutsche Bank and Commerzbank or SocGen and UniCredit -- Santander could well be willing to play its part.”

Novelli and Karofsky inherit a unit seeking to boost its merger and IPO advisory business to offset industry-wide headwinds in trading. The bank has reduced the capital allocated to the investment bank, focusing on areas such as equities, foreign exchange and advisory services, and limiting growth. That’s prompted speculation on Orcel’s future even as he boosted profitability.

Executive Board

Novelli will focus primarily on corporate client solutions and Karofsky on investor client services, according to a statement from the bank. Both will be members of the Zurich-based bank’s group executive board. Novelli rejoined the firm in 2013 and is currently executive chairman of corporate client solutions, while Karofsky is global head of equities.

Orcel had been seeking to recruit dealmakers even as many left for rivals. About a half dozen long-time UBS bankers joined Rothschild in North America earlier this year to work for UBS veteran Jimmy Neissa, focused on industries including financial services and technology. JPMorgan added a top consumer banker, while Bank of America Corp. took the head of M&A for the Europe, Middle East and Africa region.

But he’s been able to keep headcount steady. Orcel and his team attracted at least 12 senior-level bankers from JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Inc, in the past six months -- including a new Americas co-head of M&A from Deutsche Bank AG. He’s also promoted dealmakers, helping revive morale at a time when Hong Kong banned his business from advising on initial public offerings.

“Life is a series of hellos and goodbyes but still this moment is bittersweet,” Orcel said in a memo to staff announcing his departure. “I wouldn’t have left for anything less than a client I have been advising and working with my whole career.”

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