Orcel vs Botin: Santander CEO Job Feud Heads for Madrid Showdown
Orcel vs Botin: Santander CEO Job Feud Heads for Madrid Showdown
(Bloomberg) -- Andrea Orcel’s legal feud with Ana Botin shifts this week to a Madrid courtroom where he’ll seek redress from Banco Santander SA for withdrawing an offer to help run one of Europe’s biggest banks.
Orcel, 57, is seeking as much as 112 million euros ($133.2 million) in compensation from Spain’s No. 1 lender for breach of contract after it reversed course in January 2019 on installing him as chief executive officer.
Failure to resolve the dispute before the case opens on Wednesday means a tribunal in a nondescript modern block close to a bus terminal will become the stage for a legal battle involving some of the top names in European banking.
Orcel’s rise to become Santander’s CEO was derailed by a conflict over the issue of his deferred compensation from UBS Group AG, his former employer. The Spanish bank says Orcel wouldn’t allow that bonus payments agreed to by UBS should go toward making it cheaper to hire him.
Orcel, who is set to start as CEO of UniCredit SpA, Italy’s No. 2 bank, in April, had claimed that Santander’s U-turn had upended his career. As the dispute escalated, Santander went on to accuse Orcel of “dubious ethical and moral behavior” by recording private conversations.
A spokesperson for Santander referred to comments made by the lender in September when it said the board “remains confident that the decision not to proceed with Mr. Orcel’s appointment was both correct and handled appropriately, and looks forward to resolving the matter in court.”
Spanish law firm De Carlos Remon, which represents Orcel, didn’t immediately respond to a request for comment.
Here’s a summary of the case:
Why Are Orcel and Botin Fighting?
Botin electrified the financial world in September 2018 by naming Orcel, then head of investment banking at UBS, as CEO. But the plan to appoint the specialist dealmaker fell apart over the issue of the UBS bonuses that he risked forgoing by joining a competitor.
In the Spanish bank’s version, its letter offering Orcel a job required him to make his “best efforts” to reduce the cost to Santander of his deferred compensation from UBS. The Swiss lender did agree to pay him an amount of 13.7 million euros but Orcel refused to have that factored in to cutting the cost of his appointment, Santander said in a statement in July 2019.
Santander had to balance the interests of shareholders against the high cost of hiring an individual, “even one as talented as Andrea,” as Botin said when the bank announced in January that year that the deal to appoint him had fallen through.
What Are The Legal Arguments?
Santander says there was never a contract in place as a final agreement over pay was never sealed. Orcel says there was a breach of contract and is demanding compensation.
Why Did the Dispute Get Personal?
Being CEO of a behemoth like Santander with its 1.5 trillion-euro asset base would have given Orcel one of the top jobs in European banking. Having that opportunity wrestled away from him clearly rankled -- Orcel told the Financial Times he had been days away from buying a house in Madrid and his daughter had already been accepted into her new Spanish school.
Orcel, a veteran of Bank of America Corp. and Merrill Lynch & Co. who joined UBS in 2012, was a long-standing collaborator with Santander, advising Botin’s late father Emilio on deals. In a 2018 interview with Bloomberg TV, Botin praised Orcel’s proven track record and ability at “managing across cultures,” attributes that equipped him to be part of the bank’s “best possible team.”
What Else Is at Stake?
An expensive victory for Orcel would leave Botin facing more questions about the failed appointment process. Meanwhile, Jose Antonio Alvarez, 61, the veteran CEO whom Orcel was to have replaced, remains in his job -- leaving questions about Santander’s longer-term management direction.
How Will The Case Proceed?
Proceedings at Madrid’s Court of First Instance No. 46 are expected to only last Wednesday morning. It is a one-judge court, applying commercial, rather than labor, law, as happens with CEO contracts in Spain.
Do Orcel and Botin Have to Attend?
Orcel doesn’t have to be present. Botin will attend to give evidence on behalf of Santander.
Who Else Will be Speaking?
Apart from Botin, four people have been called as witnesses, including UBS Chairman Axel Weber, Orcel’s former boss, who, in principle, has to attend.
When Is a Decision Expected?
A decision could take weeks or even months. The court’s verdict can be appealed.
Can a Last-Minute Settlement Be Reached?
A settlement can be reached at any time, even when proceedings start and until the judge gives the verdict.
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