Orcel VS Santander

Spanish bank Santander must pay Andrea Orcel €68m in compensation after losing a legal battle over its rancorous 2018 U-turn on hiring the Italian banker as chief executive.

The ruling was a significant blow for Ana Botín, executive chair of the Spanish lender, whose tenure since succeeding her father Emilio Botín has been marked by the decision to hire Orcel, a family confidant, and then to drop him, with the resulting legal fight.

The payment the court-ordered from Santander included €10m “for moral and reputational damages” to Orcel, as well as contractual items including €5.8m for two years of salary, a €17m sign-on bonus and €35m compensation for loss of long-term incentives at UBS.

The court ruled that both sides had signed a “valid” contract, which had been broken in a “unilateral and unjustified” manner by the bank and that, therefore, it had to pay compensation.

“I think it’s unfortunate that we are where we are, but if people look only at the facts and what has emerged in court, the conclusions are clear,” Orcel said in an interview with the Financial Times before he knew that the court’s decision was coming yesterday. The court quoted what it described as “particularly eloquent” tweets by Botín, in which she gushed about Orcel’s appointment “effective from the beginning of 2019”, as well as a promotional video and interviews in which she gave the same message.

The Madrid court ruling capped a long-running dispute between Orcel, one of Europe’s best-known investment bankers and now head of UniCredit, and Spanish lender Santander, his former client when he worked at UBS and Merrill Lynch.

The case centred on Santander’s decision to withdraw an offer it made to him in 2018 when Orcel was running UBS’s investment bank.

Santander said: “We disagree strongly with the ruling.

The bank claimed Orcel’s offer letter did not amount to a contract under Spanish law.

Summarised www.sba.tax

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