Santander’s Tussle With Jilted CEO Hire Intensifies

A disagreement between Banco Santander SA Executive Chairman Ana Botín and high-profile investment banker Andrea Orcel over the bank’s U-turn on his appointment as its chief executive is escalating as it reaches court, with each side accusing the other of acting in bad faith.

Spain’s Santander has said it canceled Mr. Orcel’s appointment in January after finding out how much it would need to compensate him for shares he would leave behind at his former employer,

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Group AG, a figure that people familiar with the matter said was above €50 million ($55.7 million).

Mr. Orcel has filed a lawsuit in Spain asking for €100 million in damages, alleging the bank offered him a contract and broke it.

Under a job offer letter initially given to Mr. Orcel last year, the bank said it would pay, among other compensation, up to €35 million to cover for any loss in compensation at UBS.

In a rebuttal to the lawsuit Friday, Santander alleges the offer letter Mr. Orcel received isn’t a contract under Spanish law, and an actual contract was never completed. It also accuses Mr. Orcel of not fulfilling a commitment to make “best efforts” with UBS to reduce the cost of his transfer to Santander.

“Mr. Orcel conveyed his confidence several times during the process regarding UBS’ willingness to negotiate the final terms of his deferred payments that were never met,” Santander said in a statement.

A spokesman for Mr. Orcel said Friday the banker spent months trying to find “a constructive arrangement” after the job offer fell apart. “Mr. Orcel is confident that all facts regarding his effective appointment and subsequent illegitimate dismissal by [Santander] will be adequately subject to evidence in court, including all relevant witnesses’ evidence.”

Mr. Orcel regrets the bank made details of the lawsuit public, “after the very public announcement of his hiring, dismissal and remuneration details, with the material personal and professional damage that follow,” according to the spokesman.

Ana Botín, executive chairman of Banco Santander SA, during a Bloomberg Television interview at the bank’s investor day in London, on April 3.


Photo:

Simon Dawson/Bloomberg News

The bank has also accused Mr. Orcel of “dubious ethical and moral behavior” after it found out the banker recorded private conversations with Santander executives, including with Ms. Botín. A transcript of the recordings was included in Mr. Orcel’s legal complaint. Mr. Orcel’s spokesman on Friday said the banker wouldn’t comment further on Santander’s statement because it is a legal matter.

Spanish newspaper El Confidential published Friday parts of the recordings. It quoted Ms. Botín as telling Mr. Orcel in a Jan. 15 conversation that she could compensate him for the lost job by placing him as CEO or chairman at listed real-estate companies in Spain. “I know this is a horrible situation, I know, OK?” she was quoted as saying. The bank issued a statement on the job withdrawal that day.

A Santander spokesman declined to comment on the content of the recordings. In a statement Friday, Santander said “the bank held discussions to enable Mr. Orcel to resume his career, including proposals to continue collaborating with the group.”

The court fight, expected to last months, strains the two-decade professional friendship between Ms. Botín, 58, and Mr. Orcel, 56, who both owe much to Ms. Botín’s late father, former Santander Chairman Emilio Botín, who was a guide in their career development. Ms. Botín was groomed for her role at one of Europe’s biggest banks by assets. Mr. Orcel was a key adviser to the bank on acquisitions and efforts to boost capital. He has now been forced into early retirement, at least temporarily.

Mr. Orcel’s appointment was announced with fanfare in September, even though analysts expected the bank’s strategy, buoyed by a recent cycle of growth, to remain intact. Italian-born Mr. Orcel slimmed down UBS’s investment bank years before some competitors, and Ms. Botín hired him to help modernize Santander and its far-flung operations.

Santander is one of the world’s largest retail banks, with 144 million customers in Europe, the U.S. and Latin America. Under Ms. Botín’s leadership, it has outperformed European peers in earnings growth and market capitalization, taking in stride political uncertainty, the threat of Brexit and volatility in Brazil, its biggest market by profits.

Ms. Botín had offered Mr. Orcel the CEO job in New York a year ago after realizing he could fill a gap opening up in a management reshuffle. He said yes on the spot, people familiar with the matter said.

Write to Patricia Kowsmann at patricia.kowsmann@wsj.com and Margot Patrick at margot.patrick@wsj.com

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