It seems scarcely believable that a world-leading bank should be able to botch an appointment of such importance as its own chief executive.
However, that is exactly what Santander has done with its announcement on Tuesday night that it had failed to agree the terms on which Andrea Orcel would make that move from UBS, where he ran the investment bank.
Santander was transparent, after a fashion, on the reasons.
“This decision is due to the change … of the basis upon which the board initially decided to appoint Mr Orcel and the fact that the costs of compensating him for past remuneration cannot exceed those corresponding to the original understanding,” said the bank’s statement.
Translation: UBS is clawing back more than – for whatever reason – the Santander board originally envisaged, and Orcel wants to be compensated for that.
Of the three parties involved – Santander, Orcel and UBS – it is the Spanish bank that comes out of this mess looking worst.
Not only has it failed to secure the deal it had trumpeted to the world, but the apparent failure of its board to support chairman Ana Botín in her quest to sign up the UBS rainmaker has dealt her authority a heavy blow.
The possible explanations don’t look good. Perhaps there was a catastrophic misreading of Orcel’s likely priorities – who knew he might hold out for money instead of the top job?
However, it is more likely that there has been a monumental failure of due diligence.
It is now obvious that there was a lack of clarity around just what the Spanish bank might have to pay up, but UBS had already played hardball on timing, insisting that Orcel serve his full six months of gardening leave.
Its apparent attitude to the compensation issue is in keeping with that. Santander – both Botín and the board – should surely have ensured that they knew every possible outcome before pressing ahead.
There may be some temptation to see in this development a reassuring indication that bank boards are not prepared to simply rubber-stamp vast compensation at the top of their firms.
Not so fast. That may have ended up being the outcome here, but the route to that point matters.
Santander has got there not by coordination but by cock-up.
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