Gilets and Court Cases: Orcel’s botched hiring by Luke Rochussen

If offending the sartorially educated didn’t draw enough attention to the ex-head of the UBS investment bank, the gilet-wearing Andrea Orcel is reportedly preparing to mount legal action against Santander following a row over a €50 million compensation package.

Educated at the University of Rome and then at the INSEAD in Paris, Mr Orcel has spent most of his career at Merrill Lynch and UBS, where he ultimately served as executive chairman and president of the investment bank respectively. In September last year, Ana Botín, the executive chairman of Banco Santander, announced the appointment of Orcel as the CEO of the Spanish bank. The proposed move from investment banking to retail lending shocked many, not least his former UBS colleagues, who had considered him as a potential candidate for the top role at the Swiss bank, currently held by Sergio Ermotti, one of Europe’s longest serving banking chiefs. During his time at UBS, Orcel had earned €50 million in invested stock – a figure presumed to be covered by his future employer as UBS was entitled to withhold these shares on the grounds of the Italian-born banker joining a rival. However, in a statement on Tuesday 15th January, Santander claimed the cost of reimbursing Mr Orcel would be “significantly above the board’s original expectations”, thereby terminating his move. The share price was ostensibly unaffected by this announcement, climbing 1.11% that day.


His hurried departure from UBS mean that the finer details of the move were not confirmed, with Botín stating when presenting the annual results, that “because of the level of the hire, there was a need to announce it early and at the time we didn’t have all the details ironed out”. Sources close to Ms Botín claimed she had hoped to use the fact that Santander was a client of the Swiss bank to strengthen her negotiating position, hoping UBS would agree to a deal where it paid out at least part of Mr Orcel’s stock in the bank. UBS’ chairman rejected this deal meaning Botín, under pressure from shareholders, had little option but to call the deal off.


Santander’s share price fell 28% last year and Borcel’s proposed move was hoped to turn the bank’s fortune around. Despite a poor year, the bank did report a 34% rise in fourth quarter net earnings with total net profits at €2.1bn for the three months to December, up from €1.5bn in 2017. Botín added that “Latin America has remained an important engine for growth within the group, with especially strong progress in Brazil and Mexico.”


Despite positive results, the Orcel saga is far from over – sources familiar with the matter believe that Mr Orcel is preparing to mount legal action against Santander, having already approached a number of lawyers in Spain. Mr Orcel’s claims he received a contractual letter from the Spanish bank in which they committed to covering his deferred stock of around €50 million. This news comes at a difficult time for Ms Botín, who is due to announce the bank’s full year results next Wednesday (6Th February). Whilst the exact nature of Orcel’s court case is unknown, a settlement out of court may be preferable lest he wishes to put off any future employers.

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