23 July 2019
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Spanish lender Santander has said it is ready to fight in court a lawsuit brought by Italian banker Andrea Orcel after the bank withdrew an offer to make him chief executive officer.
Orcel launched earlier this month a €100m lawsuit against Santander alleging that the Spanish lender had breached his contract, while demanding the company to hire him as CEO or paying damages totalling €100m.
According to Reuters, Santander was given then about 20 days to respond to the lawsuit filed by Orcel in a court in Madrid.
Orcel's claims are based on a four-page letter in which the bank formally offered him the job along with a stock and bonus package to compensate for deferred pay he risked losing by quitting UBS, Reuters reported.
Spanish bank Santander withdrew Orcel's September appointment in January this year, after finding out how much money it would cost them to name him chief executive officer.
The bank said it would be unacceptable to pay him the amount of money it would have cost to make him chief executive, which according to people familiar with the matter could be above €50m.
According to the bank, the appointment was announced last September given Orcel's seniority, along with regulatory considerations, including a six-month garden leave.
"When the Board agreed the terms of his annual remuneration in his future role at Santander, - which were in line with that of former CEO José Antonio Álvarez - it was not possible yet to determine the final cost of the Group's share of compensating him for the remuneration awards, made to him by his previous employer, that would have been foregone.
"The Board therefore proceeded with the appointment on the basis of a considered estimate of the likely cost to Santander, based on advice, precedent and expectations of mitigation, due to the nature of the relationship between the two organizations and the different activities carried out by each institution," Santander said.
Orcel was previously running UBS' investment bank since 2012, contributing to turn around a toxic division that nearly pulled the bank under during the financial crisis.
He has been advising Santander as a client for more than 20 years and has a close relationship with the Botín family, who founded and continue heading up Santander Bank through its chairman Ana Botín.
Ana Botín, Executive Chairman of the Board said in January this year: "Santander is a retail and commercial bank with significant responsibilities to the societies in which it operates. In making this decision we have had to balance the respect we have for all of our stakeholders - the millions of people, customers and shareholders we serve - with the very significant cost of hiring one individual, even one as talented as Andrea, by compensating for the loss of a significant proportion of seven years of his past remuneration.
"The Board and I are certain that this decision, although difficult to take, is the right one".
