- Santander said late on Tuesday that it will no longer be appointing UBS executive Andrea Orcel as its new CEO.
- The Spanish banking giant said that the level of compensation that was required to hire Orcel was “unacceptable.”
- The sticking point in bringing Orcel to Santander was years of compensation that had previously been deferred by UBS, which, owing to his departure, the Swiss bank was reluctant to pay.
- Santander would have needed to pay Orcel upwards of €50 million ($57.1 million; £44.8 million), according to the Guardian.
In a major U-turn that stunned the financial industry, Spanish banking giant Santander said it will no longer be appointing UBS executive Andrea Orcel as its new CEO.
Orcel, who was previously head of the Swiss lender’s investment bank, will no longer be taking up the position after the bank realized that the cost of bringing him to Spain would be much higher than originally expected.
“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,” Santander said in a statement on Tuesday evening.
While Orcel’s attempt to move was troubled from the start, the sticking point in bringing Orcel to Santander is years of compensation that had previously been deferred by UBS, which, owing to his departure, the Swiss bank was reluctant to pay, instead shifting the responsibility to Santander.
The Financial Times said UBS was under no obligation to give these awards to Orcel, owing to the fact he was moving to a competitor.
“The board considers that for Santander to pay this amount to facilitating the hiring of one individual, even one of the caliber and background of Mr Orcel, would be unacceptable for a retail and commercial bank such as Santander,” it continued.
UBS Chairman Axel Weber was worried about the “optics” of giving multi-million dollar compensation to a departing employee when it had no legal obligation to do so.
Santander would have needed to pay Orcel upwards of €50 million ($57.1 million; £44.8 million), said the Guardian.
After the announcement of Orcel’s departure in September, he was obligated to take a several-month break from UBS, in what’s typically referred to in Europe as “gardening leave.”
Gardening leave is, among other things, an attempt to prevent departing staff from influencing the company and accessing confidential information, especially crucial when they’re jumping to a rival.
“He is devastated, not only because of all that has happened, but also because his career is in a shambles,” one person who recently spoke to Orcel said, according to the FT’s account of events.
Within banking circles, Orcel is famed for his intense work rate, and is known to call staff at dawn.
“He rises at 5am and often works late into the night, but still resorts to running up Zurich’s hills instead of around its idyllic lake so he can pack a notional 60 minutes of exercise into 30 minutes of brutal intensity,” an earlier FT profile said.