She runs mega-bank Santander; he’s a top deal-maker. She offered to make him the best-paid CEO of any bank in euroland. It didn’t happen, and the $123 million lawsuit that followed shows even banking royalty can’t always get their way.
The saga of Santander
In September 2018, Santander, one of Europe's biggest banks, tweeted a video of its incoming new chief executive, an Italian investment banker named Andrea Orcel. Depicting a meeting with the bank’s boss, Ana Botin, the clip showed the silver-haired Italian cutting the air with a decisive gesture.
A few months later, the bank shot a new video, intended for investors and the media, at its Madrid headquarters. It shows Botin, who heads a 150-year-old banking dynasty, saying she has withdrawn the offer because the new man’s pay would be too high for the bank, according to two people with direct knowledge of the sequence. In the video, Orcel is shown appearing to agree with the outcome.
That clip was never released; in fact, the Italian now says he was misled. The rupture that followed the meeting has turned into one of the bitterest and highest-profile employment disputes in recent European history, yielding a lawsuit that is due later this year in a Spanish civil court. This account of the Botin-Orcel clash, the most comprehensive yet assembled, offers a rare glimpse inside the top level of one of the world’s largest banks, a family-led giant with a culture all its own. It is also a story of how, a decade after bankers were blamed for a crippling global financial crisis, the reality of austerity has been slow to fully sink in.
In May, Orcel sued Santander, demanding that the bank honour its offer or pay him 112 million euros ($123 million) in damages - equivalent to about 1% of the bank’s profits in 2018.
In his suit, Orcel says a letter laying out his pay was a binding contract and that the video showing him accepting its withdrawal was shot on a false pretext, according to documents he submitted in court. In response, Santander said that under Spanish law, an offer letter is not a contract and that Orcel’s behaviour during negotiations led the bank to lose confidence in him.
Whatever the court decides, a rich body of evidence - texts and online messages between the pair and their family members, extracts from court documents, and interviews with eight people involved - shows a cosy relationship corroding. The messages - some reported here for the first time - suggest the hiring process for one of Europe's most important financial jobs went awry partly because old ties between powerful people led to hasty assurances and false assumptions.
Ana Botin, now 59, was a senior banker who had been named executive chairman of the group to succeed her late father, Emilio, a legendary patriarch who had built Santander into a global business through savvy acquisitions. Orcel, 56, a widely respected banker who according to some media looks like ‘the George Clooney of investment banking,’ had been Botin’s go-to investment banker for advice on deal-making and strategy.
When the wooing began in mid-2018, Botin and Orcel’s Portuguese wife, Clara Batalim-Orcel, chatted about the Orcel family’s plans to swap its mansion in Holland Park, London, for a nice place in Madrid, sources with knowledge of the matter said.
But for all its promise, terms of the September, 2018 offer to hire Orcel, reviewed by Reuters, were not clear. Crucially, Santander promised to pay “up to” 35 million euros of a 55 million euro package that Orcel was due to receive in future years from his employer at the time, Swiss bank UBS. The letter said Orcel would make his “best efforts” to cap that cost for Santander by getting the Swiss bank to contribute some of it.
UBS refused, and Orcel would not accept less than 35 million euros. By the end, the bankers and their spouses would have a frosty encounter in a coffee shop near London’s Mayfair. And Santander's board had issued a statement questioning what it called Orcel’s “dubious ethical and moral behaviour,” alleging he was secretly taping private conversations - which a source close to Orcel told Reuters he had done on legal advice.
The fallout has gripped Europe’s investment banking industry, where Orcel is one of the best-known dealmakers. It also raised questions about how one of Europe’s most important banks - Santander has 144 million customers worldwide - could name a new CEO without first finalising his pay.
Santander, founded by Royal Decree in 1857, has been run by the Botins for four generations. Its style has long been to move swiftly when needed, said Mauro Guillen, a management professor at Wharton School in Pennsylvania, who has written a book on Santander’s development into a global bank.
"The bank is always very nimble when it comes to making bold decisions,” he said, adding that in a rapidly changing environment, this made it popular with investors. But the way Orcel's appointment was handled shows Santander’s speediness does not always pay off. "If the bank wants to hire, not just a CEO but top executives, a lot of people may think twice” in the wake of the Orcel debacle.
Invited to comment on the details of its rupture with Orcel, the bank referred to a statement it made last year in response to Orcel’s suit and media reports, saying it had followed a robust appointment process that met the highest standards of corporate governance and giving its reasons not to proceed with his appointment. Orcel declined to comment ahead of the court hearing, and UBS declined to comment.
Orcel knows Santander better than any other investment banker. Over nearly three decades as a dealmaker at Bank of America Merrill Lynch and UBS, he worked on dozens of transactions that helped Emilio Botin transform the bank. The biggest of these was when Santander joined a consortium and bought parts of ABN Amro, a major Dutch bank, in 2007.
Orcel is a driven and talented banker, interviews with former colleagues show. Having run investment banking at UBS since 2012, he had also made clear his desire for a CEO post, telling the Financial Times in 2015 that “of course” he wanted to run a bank some day, and if he could choose, UBS would be a good place to start.
When Emilio Botin died suddenly in September 2014, Ana, the eldest of his six children, was swiftly named to follow him. She would continue the family line in a bank whose shares are now mostly owned by institutional investors and funds. By appointing her, Santander followed a Spanish tradition of banks controlled by a single head, rather than a separate chairman and CEO, as the European Central Bank has said should be the norm.
The Botin family is part of Spain’s aristocracy - the King of Spain made Botin’s mother a marchioness in 2008. Ana, whose full name is Ana Patricia Botin-Sanz de Sautuola O'Shea, was made an honorary Dame Commander of the Order of the British Empire by Britain’s queen for services to the British financial sector in 2015.
A keen golfer who describes herself as highly competitive, Botin was ranked by Forbes as one of the world’s most powerful women; she told Spanish TV in January the special thing about her job is the power it gives to change lives for many people. She started her career at JPMorgan, successfully turned around Santander’s Spanish subsidiary Banesto, and ran its business in the UK, one of the bank’s largest.
In Santander’s top slot, she faced a challenge to sustain the growth rate her father had achieved.
Emilio’s strategy of swallowing businesses in emerging markets had won plaudits for shielding Santander from the worst of the 2008 financial crisis, even as its home market was in deep recession. But when Emilio died, growth in Latin America was slowing and Santander’s business in Britain and the United States faced strong headwinds. Like other banks, it was under pressure to bolster its capital. In September 2015, a year after Emilio’s death, Santander’s share price was down around 30% from when Ana had started.
Orcel the adviser was on hand. Four months after Ana Botin’s elevation, he helped arrange a massive 7.5 billion euro capital increase, which took place overnight and was called “ballsy” by trade magazine Euromoney. Again, in 2017, Orcel advised when Santander picked up an ailing domestic rival, Banco Popular, for one euro. He arranged a 7 billion euro capital boost for Santander to cover Popular’s bad debts.
In early 2018, with Santander’s stock still lagging, Botin asked Orcel to outline a strategic plan to help lift the bank’s share price, a source familiar with the matter told Reuters. That July, when the two met for dinner at the Loews Regency hotel on Park Avenue in New York, she had a proposal: Join the bank as CEO and implement the plan.
One idea they discussed was that Santander could sell its underperforming U.S. and British units - a task Orcel would execute. People familiar with the discussions said Orcel pledged loyalty to Botin. He compared his new role to that of the fighter Maximus, played by Russell Crowe in the 2000 movie “Gladiator,” leading the troops into battle for his emperor.
For Orcel, Santander would be a radical switch. Investment bankers deal with big corporations and investment funds, while commercial ones serve small companies and individuals. He would be leaving the relationship-driven world of investment banking - which he has likened to selling designer handbags such as Louis Vuitton - to a hands-on role in a major commercial bank, which he has said is more “potatoes and tomatoes,” comparable to Wal-Mart.
“Working on details €”
With the offer in place, the next topic was pay. Orcel was used to big money. While working at Merrill Lynch, he had made headlines after receiving a $33.8 million bonus from the Wall Street investment bank for 2008, a year when Merrill’s net loss swelled to $27.6 billion.
UBS had granted him a compensation package due to be paid out over several years, including roughly 55 million euros worth of stock to be paid in future, four sources familiar with the matter said.
Such deferred pay is one of the ways investment bankers in the European Union, where bonuses have been capped since 2014, have found to keep up their incomes, said Anna Marietta, co-founder and managing partner of London-based headhunting firm Vici Advisory, which specialises in investment banking.
It is meant as an incentive to lock executives into a bank: If they leave, executives in theory forfeit pay they’ve accumulated.
In practice, it doesn’t work like that. When investment bankers move jobs, the new employer usually ‘makes them whole’ by paying their deferred compensation. In the investment banking world, this is seldom a point of contention. UBS had done it for Orcel when he joined from Bank of America in 2012. The Swiss bank topped up his $7 million in base salary with $26 million in deferred compensation carried over from his former employer, its annual report showed.
“It is very rare that compensation over deferred pay becomes a problem,” said Marietta. “In fact, none of my clients has ever experienced issues with it.”
It’s also very rare for a top investment banker to go directly into a top position in commercial banking. Usually they take a break between posts.
In September 2018, Ana Botin messaged Orcel to say colleagues at Santander were on board with his appointment and a staffing committee was working on financial details.
Orcel had told his boss at UBS about Botin’s approach on the sidelines of an internal meeting in Zurich. There is no record of exactly how the CEO, Sergio Ermotti, responded, and UBS declined to comment. Orcel later messaged Botin saying his boss had said that if the Italian was moving on, it would be good to announce this before a planned investor day in October.
But there was a problem. As Spain's biggest lender, Santander needed to be mindful of the public mood – as well as the reaction of its 200,000 staff around the world. This was particularly true in the summer of 2018. The country was still recovering from a devastating recession. A Socialist government had just taken power, and some people thought it would impose a new bank tax. Santander was negotiating a large round of job cuts - trade unions said it cut 1,100 staff in Spain in 2018, a figure Santander did not dispute.
Botin saw room to manoeuvre, thanks to Santander’s relationship with UBS.
Her father’s dealings with Orcel had turned Santander into a big client for the Swiss bank: In each year the Spanish bank did a major deal, it brought UBS more than 50 million euros in fees, according to people familiar with their relationship. The banks declined to comment.
Botin saw a chance that UBS Chairman Axel Weber would want to keep that business going, the messages show. UBS itself might stump up some of the deferred compensation that Orcel stood to lose. If Weber decided not to, Botin told Orcel in a message, Santander would threaten to pull their business.
A few days later, Botin approached UBS to pave the way for discussions with its chairman, Axel Weber.
The Swiss bank’s executives were all meeting in Singapore, where Orcel spoke to its CEO, Sergio Ermotti, and another UBS board member. “They are helping us,” he messaged to Botin.
But when Santander’s boss got to speak to UBS chairman Weber, she found out he was not on board. He wanted Orcel to stay.
Weber wrote an email to Orcel’s wife, Clara - whom Orcel consults closely on major career moves - saying the Swiss bank wanted to offer her husband a more senior role at UBS, that could pave the way to him succeeding Ermotti.
“Dear Clara, we have tried to offer him a way to stay at UBS with the same job perspective as outside UBS. The board is unanimous on this and committed to facilitating an orderly transition. It is now his choice and his decision. I appreciate it is a difficult choice. I have also talked to Ana and I was clear to her so that she does not base her actions and her offers on assumptions. I am aware that this will have consequences down the road but everything we do or don’t do has. But as long as what we do is the right thing in our mind we will have to be happy to live with these consequences.”
Weber said in the message that he had spoken to Botin, “and I was clear to her so that she does not base her actions and her offers on assumptions.”
Orcel messaged Botin later about UBS’s offer.
On Sunday, Sept. 23, Orcel decided not to take up the counter-offer, and to quit UBS. Meanwhile, Botin was still trying to persuade UBS’s Weber to stump up some of Orcel’s deferred pay. Without success.
“The numbers have gone up”
Despite this lack of movement from UBS, on Sept. 24 Santander’s board went ahead with an offer letter for Orcel.
Orcel’s wife, Clara, was keen. She messaged Botin the same day to express support for what she called an agreement - it was not clear exactly what she meant - saying Orcel had told her that Botin’s word was “worth more than a thousand contracts.”
Santander’s offer was signed by Santander’s General Secretary Jaime Renovales. It would make Orcel the highest-paid bank CEO in the euro-zone – and put his annual pay on par with Botin, who was paid almost 10.6 million euros in 2017. Her pension pot is worth about 46 million euros, according to Santander’s annual report.
Santander promised Orcel a sign-on bonus of 17 million euros, annual salary including bonus of 10 million euros, and deferred compensation in the form of shares. But the details on that were vague.
“Banco Santander expects that you will do your best efforts to ensure that your current employer will continue to pay the long-term incentive plans of which you are a beneficiary under the same conditions as if you were employed. Should your current employer pay only partially your long-term incentives or an amount lower than the one you would have received remaining in the company, we will pay a buyout of a maximum of 35 million gross euros.”
The next day, Orcel was appointed CEO, with the paperwork still to be finalised. He was invited to join discussions with Santander executives and a month later, made a member of an internal WhatsApp group called Promontorio, court documents show. Santander released the first video, where he was pictured gesticulating in a meeting with Botin and the man he was due to replace, Jose Antonio Alvarez.
Behind the scenes, negotiations on Orcel's pay were intense. Rather than letting the Italian go quickly, his Swiss employer insisted Orcel take a full six-month “gardening leave,” the gap top financiers usually take between jobs with a competing institution. This meant he would not be able to join Santander until April 2019.
Financially for Santander this could be good news - it meant part of Orcel’s deferred pay would fall due while he was still on UBS’s payroll.
Santander figured, therefore, that its costs would be reduced. Its board calculated the reduction at around 13.7 million euros, it said in a later statement.
But Orcel saw it differently. He did not think Santander should deduct pay from his deferred package while he was still a UBS employee. Some of it was a straight bonus for the previous year. And in his view, taking into account that his deferred package at UBS was worth about 55 million euros, he had already agreed to an effective pay cut of roughly 20 million euros, said sources familiar with his thinking.
His last day at UBS was Sept. 30. But by October, things with Santander were going nowhere.
Orcel apologised to Botin, reminding her that UBS had stumped up people’s deferred pay in the past, and hinting at a possible legal response.
Botin asked a Santander board member to speak to a counterpart in UBS, who refused to discuss the matter, saying UBS’s board was united behind Weber’s position, she told Orcel.
The next month, Orcel’s figures changed. He told Santander that his original pay calculations had missed a few million euros that were due to him in dividends. This, according to a statement from the bank last July, would add more than 3 million euros to Santander’s bill.
“The necessary empowerment”
On Dec. 17, Santander’s remuneration committee met.
It noted “a degree of discomfort” at the revised claim from Orcel. It noted as well the fact that UBS was not paying up as much as it said Orcel had predicted, and the “reputational risk” of failing to cap his buyout.
Board Secretary Renovales called Orcel - who by then was on a family holiday in Machu Pichu, Peru.
But Orcel said he would only discuss the matter with Ana Botin. He typed her a long message on Dec. 20.
He said any buyout of less than 35 million euros would no longer make sense for him, insisting he had already suffered a significant pay cut from his UBS package. He also asserted his need to “subordinate” other executives in the bank, using the image of a cascade system, in which he would be their boss; as chairman, she would have the opportunity to redirect him, as well as the final word.
In the Spanish banking world to date, the executive chairman has been the one with all the power - all the other executives defer to them. Orcel’s call for “the necessary empowerment” received a curt response.
“We need to stop and see where we are at,” Botin said, suggesting a meeting in Madrid.
Santander’s board was uncomfortable with the money, and with UBS not budging, Ana Botin was no longer sure her new right-hand man was putting enough pressure on Weber.
The pair met a day earlier than she first suggested, on Jan. 7, in Santander's headquarters. Botin told Orcel she was withdrawing her offer: The Spanish political climate meant they couldn’t meet his pay demands.
He was shocked, believing everything was still under negotiation, documents he submitted in court show. But she said there was no scope for further negotiation, because all the relevant authorities had been informed.
At this point, a source close to him said, he started recording their conversations, a practice which is legal in Spain.
On Jan. 15, Santander issued a statement saying Orcel would not be joining the bank, and its CEO Alvarez would remain in post.
Orcel wrote to Renovales withdrawing his permission for Santander to use the second video, in which he had been filmed accepting Botin’s decision. He said he had agreed to film the video on the understanding that he and Santander could resolve the issue in a friendly way, but as this was not possible, he considered it to have been made on a false premise and so withdrew his permission for the bank to use it. “If you proceed, you do so without any agreement with all the possible consequences of the case,” he wrote.
Ana Botin tried to smooth things over. She made various suggestions to Orcel, including possible financial backing to set up his own advisory boutique firm or private equity fund, or a top job in a Santander subsidiary, according to court documents.
But no agreement could be found. The bankers’ last meeting was in early February, in a coffee shop in Belgravia, one of London’s most affluent areas, with Orcel’s wife Clara. They discussed other possible roles that Orcel could take, but he did not accept any, according to two people familiar with the events. Botin’s husband, Guillermo Morenés, dropped in on them while he was jogging past.
In May, Orcel sued Santander for the job. The case is due to start being heard in April and could run well beyond a year unless the parties settle.
For its most recent corporate deal, Santander turned to UBS’s arch-rival, Credit Suisse. Santander’s shares are around half the price when Botin started.
Orcel remains in London. He has yet to take another post.
Additional reporting by Jesus Aguado in Madrid and Christopher Thompson in London
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