(Updates with Santander appeal, recasts)
MADRID, Feb 26 (Reuters) - The Chief Executive of Spain's Santander, Alfredo Saenz, is planning to appeal a court ruling that reinstated his criminal record, according to a source at the bank with knowledge of his legal team's thinking.
Spain's Supreme Court this month partially annulled a 2011 pardon of a conviction held by Saenz, 70, reviving a long-running case.
The Supreme Court's ruling two weeks ago has created a headache for Saenz and authorities at the Bank of Spain, which has to decide Saenz's fate as CEO of the euro zone's biggest bank. The Bank of Spain declined to comment on Tuesday.
An appeal of the Supreme Court decision could extend the case for several more months, but the courts would first have to decide whether to accept the appeal request.
Saenz, who was convicted in 2009 for false accusation against debtors, would appeal to the Constitutional Court, the source said. That is the last recourse for cases that have already been through Spain's Supreme Court.
Santander declined to comment and said Saenz was not available for comment.
Spain's rules on banking ethics, which define the criteria by which bankers are deemed to be fit and proper, would in most cases bar a person with a criminal record.
Saenz must now bear the consequences of his criminal record, even though the cancellation of his three-month jail sentence still stands, the Supreme Court ruled. It blasted Spain's former government for overstepping its powers with the pardon.
"It was more than the simple pardon of the sentence ... there was an intention to eliminate whatever problem or obstacle there could be to the exercise of the banking profession derived from the existence of a criminal record," the Supreme Court said in its Feb. 12 ruling, which was published on Tuesday.
"Taking the pardon any further is not only against the law relating to pardons but is also against the constitution."
The former socialist government of Jose Luis Rodriguez Zapatero approved Saenz's pardon in its last cabinet meeting before leaving office at the end of 2011.
Saenz would appeal the Supreme Court ruling based on two alleged breaches, of proper legal procedures and of equal treatment under the law, the person familiar with his legal team's thinking said.
The source said pending an appeal, Saenz's legal team would ask for the Supreme Court's decision to be nullified.
The country's rules on banking ethics, which date back to 1995, are set to change in the coming months, and could end up having a bearing on the Saenz case.
Spain is in the process of adopting new rules that would give the Bank of Spain the final say when deciding whether someone can be a banker or not, effectively giving it more flexibility.
The Bank of Spain would, however, have to take a court opinion into account, according to a copy of the draft law seen by Reuters. (Reporting by Tomas Cobos; and Sarah White; Editing by Julien Toyer, Carlos Ruano and Jane Merriman)