Andrea Orcel renegotiated his departure agreement from Swiss bank UBS after he missed out on the top job at Santander in 2018 in order to unlock deferred payments, a court in Madrid heard on Wednesday.
Orcel, who was UBS’s top investment banker at the time and who is now running Italy’s UniCredit, is suing Santander for tens of millions of euros in compensation after the Spanish bank withdrew an offer to give him the top job more than two years ago.
In a hearing on Wednesday, Mark Shelton, UBS’s head of performance and reward, testified that Orcel changed his departure from a voluntarily resignation to a retirement, unlocking deferred payments that he would otherwise have lost.
“Awards deferred to 2020 and 2021 ultimately were delivered,” Shelton said, noting that Orcel had asked to change his departure status after his offer from Santander was cancelled. Orcel lost his retired status when he took over at UniCredit in April, missing out on further payments.
In one of the highest-profile disputes in European banking in recent years, the case pits Ana Botín, Santander’s executive chair, against the charismatic Italian investment banker, a former friend who had been a longtime adviser to Santander under Botín and her father Emilio, who ran the bank before her.
In an earlier hearing in May, Botín argued that the offer letter issued to Orcel in September 2018 did not clearly define the buyout terms for a payout he was forgoing from UBS and therefore was not a contract. She added that, in any case, shareholders would need to approve a contract under Spanish law.
Orcel, for his part, argues that the offer constituted a contract and claims that the bank owes him €76.1m for lost pay and damages, down from an original claim of €112m.
Wearing bright red reading classes and a matching watch, Orcel watched from the front row of the court as Axel Weber, UBS chair, testified by video link from Switzerland that he had told Botín twice in September 2018 that the bank would not offer Orcel a payout if he resigned to join the Spanish bank.
“In the first conversation [with Botín] I indicated my strong conviction that in a voluntary resignation by an employee like Mr Orcel, we would apply our rules strictly as it would be a very public event and scrutinised by regulators,” Weber said. “That was communicated to both parties.”
Orcel resigned from UBS shortly afterward and was announced as Santander’s new chief executive on September 25 2018. He tried to continue negotiating a payout from UBS, Weber said: “I cannot rule out that Orcel brought up the issue repeatedly because he was not happy about the situation. But I can say that I was not disposed to speak of the issue.”
Weber’s refusal to offer Orcel a payout or to excuse him from six-month gardening leave made Orcel’s appointment much more expensive and fraught for Santander, which had proposed giving him up to a maximum of €35m in shares if he forfeited deferred pay from the Swiss bank by joining a rival.
It became clear that Orcel’s next tranche of bonus and deferred pay, some €13.7m, would vest in early 2019 while he was on gardening leave. Orcel, however, declined to subtract it from the €35m maximum payout. Santander argues that this demonstrates that Orcel failed to meet the terms of the offer letter, which committed him to making his “best efforts” to reduce this cost.
Santander said in a statement in July that it had suffered a “gradual loss of confidence” in Orcel, over his unfulfilled claims that UBS would cover up to 50 per cent of his forfeited payout and over this refusal to subtract the bonus and deferred pay from his payout. On January 7 2019, Botín told Orcel that the bank was withdrawing the offer.
Orcel did not speak in court and Botín was not in attendance. Santander said it “remains confident that the decision not to proceed with Andrea Orcel’s appointment was both correct and handled appropriately”. UBS did not respond to requests for comment.
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