Banco Santander has ditched its incoming chief executive after the former UBS investment banker proved too expensive for the Spanish lender to hire.
The bank originally announced Andrea Orcel’s appointment in September and had settled the terms of his annual pay by that time. However, it was still unclear how costly it would be to cover deferred awards which Orcel had racked up at UBS over seven years.
The Guardian understands that it would have meant paying upwards of €50m (£44.8m). Santander declined to comment on the figure. Negotiations eventually broke down and the lender said Orcel’s signing-on fee ultimately proved “unacceptable”.
Santander said: “In recent months, discussions have been taking place over the terms of Orcel’s departure from his previous employer.
“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.
“The board considers that for Santander to pay this amount to facilitating 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.”
It means Santander’s current chief executive, José Antonio Alvarez, would continue in the role, abandoning plans to transition to the chairman of Santander Spain in March.
Orcel, known as a star investment banker at UBS, was set to pocket an annual pay package “in line” with Alvarez, who earned €8.9m (£8m) in 2017.
Santander’s executive chair Ana Botín, commenting on the group’s decision, said: “In making this decision we have had to balance the respect we have for all of our stakeholders ‐ the millions of people, customers and shareholders we serve ‐ with the very significant cost of hiring one individual, even one as talented as Andrea, by compensating for the loss of a significant proportion of seven years of his past remuneration.
“The board and I are certain that this decision, although difficult to take, is the right one.”