Banker lined up to lead Santander sues for €100m

The investment banker who was lined up to lead Santander, before it suddenly withdrew the offer over his pay demands, is suing the Spanish lender for €100m (£90m).

Andrea Orcel submitted a lawsuit accusing Santander of a breach of contract, according to a report in the Spanish newspaper El Confidencial, demanding the bank either hand him the sum in damages or reinstate its offer of the chief executive’s post.

Santander offered Orcel the job last year but changed its mind in January, four months later, saying it could not justify paying him a €50m signing-on fee. The award was intended to compensate him for bonuses he would forfeit by leaving his job as president of the investment bank at Switzerland’s UBS.

At the time, the bank said it had been caught off guard by his compensation demands, which were for “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 said.

As well as concerns over pay, Orcel also reportedly clashed several times with Santander’s executive chair, Ana Botín, who built the bank into the eurozone’s largest by stock market value, along with her father.

The bank’s change of heart meant José Antonio Álvarez remained in the role of chief executive, abandoning plans to transition to the chairman of Santander Spain in March.

Orcel, who built a reputation as a star investment banker at UBS, was due to receive an annual pay package in line with Alvarez, who was paid €8.9m in 2017.

In an interview with the FT earlier this year, Orcel said: “I’m not known to be a person that lets go, especially when I think the right thing to do is to not let go.”

Orcel’s claim is believed to be based on a calculation of his lost earnings, as well as legal fees and other costs.

Santander declined to comment and Mr Orcel could not be reached for comment.

The circumstances of Orcel’s claim against his once prospective employer are rare, in that the dispute came about before he had even taken up the position.

But multimillion-pound legal tussles between companies and the people chosen to lead them are less rare.

The former AA chairman Bob Mackenzie launched a £225m claim against the roadside assistance firm after he was sacked in the wake of a “sustained and violent assault” on a colleague at a five-star hotel.

This year Michael Woodford, former boss of Japanese camera firm Olympus, won a claim brought against him by one of its subsidiaries, which sought to revoke his £64m pension pot.

Woodford had earlier blown the whistle on a $1.7bn accounting scandal at the company.

The logistics firm Stobart and its former boss Andrew Tinkler sued one another after he left following a dispute with the board over strategy. Tinkler lost an appeal this month after claiming for alleged breach of contract.

In 2017, engineering group Dyson said it planned to sue the former chief executive Max Conze, alleging that he had misused company resources and leaked secrets. Conze responded with a countersuit of his own but the two sides eventually settled their dispute.