Santander and UBS chairs should testify in €112m Orcel suit, court rules

Ana Botín and Axel Weber called to give evidence over lender’s decision to cancel hiring of UBS banker

Santander chair Ana Botín and UBS chairman Axel Weber will be called to testify over the Spanish lender’s U-turn in hiring Andrea Orcel as chief executive, a Madrid court decided on Monday.

Mr Orcel, UBS’s former head of investment banking, is suing Santander for €112m, alleging that the bank’s reversal of its September 2018 decision to appoint him constitutes breach of contract.

Santander says that, although a letter offering the chief executive post to Mr Orcel was signed by both sides, it was not a contract under Spanish law.

At Monday’s preliminary hearing, which lasted about an hour and a half, the court fixed March 10 as the start of the civil case, and the two sides confirmed that they were unable to reach a settlement. 

Neither Mr Orcel nor Ms Botín were present at the hearing, which had previously been scheduled for April but was disrupted by the coronavirus pandemic.

But Mr Orcel’s side have called Ms Botín as a witness in March, as well as Mr Weber. 

UBS’s role may be significant, because its decision not to pay Mr Orcel deferred pay worth millions of euros made his hiring much more expensive for Santander.

The Spanish bank had proposed giving Mr Orcel up to a maximum of €35m in shares if he forfeited his deferred pay from UBS by joining a rival.

Ms Botín subsequently told Mr Orcel in a December 2018 exchange on Signal, the encrypted messaging app, that “on the subject of compensation Axel [Weber] is not moving at all. Basically 0 [zero].” Days later Santander decided not to proceed with Mr Orcel’s appointment.

The prolonged legal battle over Santander’s volte face and whether Mr Orcel is due compensation have also put the spotlight on corporate governance at the bank. 

The lender argues that his proposed hire was a mistake that it remedied in time amid concerns about the final cost of his appointment. 

Mr Orcel, who had already quit his UBS post by the time of the volte face and who had asked Ms Botín to “empower” him as CEO, has said he was surprised and massively disappointed by the bank’s U-turn.

The fact that the court case is set to begin in March may pave the way for a ruling next year — although it could subsequently be appealed.

Mr Orcel also has recourse to appeal in a separate criminal case he is pursuing against Santander over alleged manipulation of evidence. Santander denies the claims, which have also been rejected by a criminal court. 

In a statement on Monday, Santander said it remained “confident that the decision not to proceed with Mr Orcel’s appointment was both correct and handled appropriately”, adding that it “looks forward to resolving the matter in court”.

Mr Orcel’s lawyers did not immediately respond to a request for comment.
UBS, which has been reluctant to take sides in the dispute, declined to comment.