Santander Cancels Andrea Orcel's Appointment as CEO Over Compensation

By Margot Patrick 

Banco Santander SA says it has withdrawn a job offer to UBS AG executive Andrea Orcel to be its next chief executive after concluding that the high-profile investment banker was too expensive.

The Spanish bank, which announced Mr. Orcel's appointment last September, said the sum needed to compensate Mr. Orcel for deferred pay he lost by leaving UBS was significantly more than it had expected when it appointed him and would be an "unacceptable" amount or money for it to pay a single individual.

Instead, current CEO Jose Antonio Alvarez will remain in the role instead of becoming chairman of Santander Spain, as previously announced. Mr. Alvarez has been in the job since 2015. The outgoing Santander Spain chairman, Rodrigo Echenique, will stay until a successor is named, Santander said.

Santander Chairman Ana Botin, who handpicked Mr. Orcel for the job, on Tuesday said the decision not to hire Mr. Orcel was made to "balance the respect we have for all or our stakeholders" against the cost of hiring a single individual, "even one as talented as Andrea."

Mr. Orcel left UBS in September when his new job was announced. At the end of 2017, he had at least 1.3 million in unvested shares, according to UBS's annual report. At UBS' current share price, those would be worth around 17.2 million Swiss francs. A person familiar with the matter said the overall bill to hire Mr. Orcel could have been more than EUR50 million ($57.4 million).

UBS declined to comment.

Banking executives typically expect a new employer to compensate them for shares and pay they will lose by leaving their firm.

For example, when UBS hired Mr. Orcel from Bank of America Merrill Lynch in 2012, it paid him $6.3 million in deferred cash and around 18.5 million Swiss francs worth of UBS shares to compensate him for forfeited awards. UBS at the time said that was "in line with market practice."

Mr. Orcel was, for years, the go-to investment banker for former Santander Chairman Emilio Botín, working on deals such as the Spanish bank's 2004 purchase of Britain's Abbey National PLC and acquisition of ABN Amro NV with two other banks just before the 2008 financial crisis.

Santander is one of the world's largest retail banks, focusing on selling mortgages, consumer loans and bank accounts to hundreds of thousands of customers around the world. Mr. Orcel, by contrast, is a longtime investment banker and his appointment had caught many observers by surprise.

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Patricia Kowsmann

in Frankfurt and Donato Paolo Mancini in Barcelona contributed to this article.

Write to Margot Patrick at [e-mail]

(END) Dow Jones Newswires

January 15, 2019 14:14 ET (19:14 GMT)

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