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Santander escalates war of words with Orcel in court battle

By Jesús Aguado and Pamela Barbaglia
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Santander escalates war of words with Orcel in court battle

FILE PHOTO: A woman and child walk past a Banco Santander branch in Rio de Janeiro

By Jesús Aguado and Pamela Barbaglia

MADRID/LONDON (Reuters) - Santander <SAN.MC> has accused Andrea Orcel, who is suing the Spanish bank for 100 million euros (£89.5 million) after it withdrew an offer to make him its chief executive, of "dubious ethical and moral behaviour".

Orcel, one of Europe's most high-profile bankers, filed a lawsuit in Madrid this month claiming breach of contract. He was offered the CEO job at Santander last year but the bank changed its mind in January, saying it could not meet his pay demands.

Orcel has alleged that a four-page letter written in September in which Santander offered him the job, along with a stock and bonus package to compensate for deferred pay he risked losing by quitting UBS <UBSG.S>, is legally binding.

But Santander said in a statement on Friday that the letter to Orcel was not a contract as required by Spanish law.

"A contract was never completed or fulfilled," it said.

Santander said it had learned through Orcel's lawsuit that in January he started to record private conversations, without other parties' knowledge or consent.

"This is a practice of dubious ethical and moral behaviour for someone who was potentially to become Santander's CEO and has ultimately confirmed that the board of directors' decision not to proceed with his appointment was right".

Orcel said in a statement that he was confident about the merits of his case, adding that all facts regarding his "effective appointment and subsequent illegitimate dismissal" by Santander would be "adequately subject to evidence in court, including all relevant witnesses' evidence."

The statement said Orcel regretted Santander's decision to make a public statement.

It stressed "the material personal and professional damage" that followed previous public announcements on his hiring, dismissal and remuneration details.

Orcel's claim was filed on May 27 and was subsequently notified to Santander on June 27, the statement said, following months of trying to "find a constructive arrangement and after being persuaded on the lack of Santander's willingness to redirect the matter to amicable terms."

Orcel did not comment further saying "this is a legal matter that shall be dealt with on strict legal terms and based on existing evidence by the competent court."

The lawsuit is expected to be handled by Madrid's court Juzgado de Primera Instancia in October.

But the case could take more than 18 months to reach a verdict, several lawyers have told Reuters.


Santander's decision to withdraw its job offer marked a rare U-turn on such a high-profile appointment at a major bank. Orcel had resigned as head of UBS's investment banking business to take up the Santander offer.

Sources familiar with the matter said Orcel and Santander's executive chairman Ana Botin argued over the scope of his new chief executive role as he wanted more power and autonomy in taking decisions.

While Santander's balance sheet and share price are unlikely to be affected by a lengthy and draining lawsuit, the bank might feel uncomfortable at the level of public attention, in particular at home in Spain, a country still recovering from one of Europe's biggest recent banking crises.

In its statement, Santander, which had for months largely dodged questions on the dispute with Orcel, goes into a lot of detail into how its job offer fell apart.

"From the beginning, Mr. Orcel conveyed expectations regarding UBS' position with regard to the payment of his deferred compensation that were never met," the statement said.

"In the course of negotiations, not only did Mr. Orcel not make his best efforts to get UBS to pay a significant portion of his deferrals, he also refused to attribute the 13.7 million euros that UBS agreed to pay him (as non-deferred 2018 bonus and deferrals that were due in February) to reducing the cost to Santander."

A source familiar with the matter said Orcel was informed of his dismissal during a meeting with Botin on Jan. 7.

He subsequently received legal advice to record all the conversations with Santander executives.

The source said Botin offered Orcel a senior position in one of the real estate companies invested by Santander but the Italian banker turned it down as he felt he had enough evidence to sue the bank.

($1 = 0.8976 euros)

(Additional reporting by Andres Gonzalez and Jose Elias Rodriguez; Writing by Andrei Khalip and Rachel Armstrong; Editing by Ingrid Melander and Susan Fenton)