This evening, surprised the banking world by announcing the reversal of its decision to appoint Andrea Orcel as the new chief executive of the bank because of the cost of compensating him for leaving his previous position.
Last September, the bank had revealed the high profile appointment of Orcel, the former head of investment banking at UBS.
He was set to take over from Jose Antonio Alvarez, Santander’s current boss, early this year.
In a statement, Santander stated: “It has now become clear that the cost to Santander of compensating Mr Orcel for the deferred awards he has earned over the past seven years, and other benefits previously awarded to him, would be a sum significantly above the board’s original expectations at the time of the appointment.”
It added: “The board considers that for Santander to pay this amount to facilitate the hiring of one individual, even one of the calibre and background of Mr Orcel, would be unacceptable for a retail and commercial bank such as Santander.”
The Spanish bank said that Alvarez will continue to serve as its chief executive.
He had been set to switch positions and become vice-chairman of Banco Santander, and the executive chairman of the bank’s Spanish division.
Orcel is an Italian-born banker that joined UBS in July 2012 from Bank of America Merrill Lynch.
He is famously hardworking and was credited with reshaping the Swiss bank, slashing thousands of jobs and reducing its balance sheet by more than half.
Orcel served as an adviser to Santander on its purchase alongside Fortis of ABN Amro and RBS, a deal from which Santander emerged to be the major winner as it acquired the Italian business – which was later sold for a profit – and the lucrative Brazilian division.
Both Fortis and RBS were later nationalised by the Dutch and British governments, respectively, after their collapse in the wake of the financial crisis.
Upon the announcement of the U-turn, the executive chairman of Santander, Ana Botin, stated: “The board and I are certain that this decision, although difficult to take, is the right one.”
Previously, Orcel served as an adviser to the father of Ana, Emilio Botin, on a series of deals which helped to make Santander the biggest bank in Spain.