Expecting a Huge Payout, Investment Banker Loses His New Job Instead

Expecting a Huge Payout, Investment Banker Loses His New Job Instead

Andrea Orcel is Europe’s most well-known funding banker, a suave, brash and fabulously rich dealmaker who counts lots of the Continent’s chief executives as his longtime purchasers.

Final fall, he agreed to develop into a kind of C.E.O.s. He accepted a job operating the day-to-day operations of Banco Santander, a sprawling European and American lender whose ruling Botín household is certainly one of Mr. Orcel’s oldest patrons.

On Tuesday, that deal unraveled — doomed by a rare public spat over who would pay Mr. Orcel the greater than $50 million in deferred compensation he was owed by his earlier employer, the Swiss financial institution UBS. It leaves Mr. Orcel with no job and leaves his once-high-flying profession in limbo.

Mr. Orcel, who didn’t reply to requests for remark, was scheduled to develop into Santander’s chief government early this 12 months, working hand in hand with the financial institution’s government chairwoman, Ana Patricia Botín. Mr. Orcel had spent the previous seven years at UBS, heading funding banking, however resigned after Santander mentioned it was hiring him.

Ms. Botín mentioned in a statement on Tuesday that the financial institution had underestimated how a lot it will price to rent him. She mentioned Santander needed to “steadiness the respect now we have for all of our stakeholders — the hundreds of thousands of individuals, prospects and shareholders we serve — with the very important price of hiring one particular person, even one as gifted as Andrea.”

At a time when government compensation is underneath rising scrutiny everywhere in the world, Santander’s determination represents maybe the highest-profile occasion of an organization rescinding a job supply as a result of it was frightened concerning the blowback from a wealthy payday.

If it had gone forward, Santander would have needed to search shareholder approval for Mr. Orcel’s compensation package deal. Senior executives feared that its eight-figure dimension would spark an investor uproar, particularly among the many financial institution’s massive contingent of particular person stockholders, in line with an individual aware of executives’ pondering.

A local of Rome, Mr. Orcel spent a long time constructing an extended record of boardroom contacts, particularly in Southern Europe. He orchestrated among the world’s largest company transactions. He even appears like an funding banker out of central casting: He wears tailored shirts, fits and silk ties; his salt-and-pepper hair is impeccably groomed; and he sprinkles his speech with references to luxurious manufacturers.

One in every of his closest relationships was with Emilio Botín, the Santander patriarch and Ms. Botín’s father. Mr. Orcel spent greater than 20 years as certainly one of Mr. Botín’s most trusted advisers as he constructed Santander into a world financial institution with acquisitions in Spain, elsewhere in Europe and in the US. When Mr. Botín died in 2014, Mr. Orcel hailed him as “one of the crucial vital international banking leaders in a era.”

Mr. Orcel’s most well-known — or notorious — deal was the 2007 sale of the Dutch financial institution ABN Amro to Royal Financial institution of Scotland and different banks. Mr. Orcel on the time was a senior funding banker at Merrill Lynch, and he helped form the roughly $100 billion transaction on the eve of the monetary disaster. It ended up saddling a few of its acquirers with crippling losses that necessitated authorities bailouts. Among the many solely winners in that transaction was Santander, which purchased ABN’s Italian operation for lower than $10 billion after which, months later, bought it to a different financial institution for greater than $13 billion.

In 2012, UBS employed Mr. Orcel to assist overhaul its beleaguered funding financial institution. It was an costly rent; the Swiss bank paid $26 million to make up for deferred compensation Mr. Orcel forfeited by leaving Merrill.

At UBS, Mr. Orcel was greeted warily. Inside months, he elbowed out his associate and have become the only head of funding banking. His colleagues at UBS have been awe-struck by Mr. Orcel’s rainmaking however have been much less impressed together with his sometimes-brusque administration fashion.

When Santander introduced it was hiring Mr. Orcel final September, analysts mentioned the transfer may augur one other spherical of acquisitions by the Spanish financial institution.

UBS, nonetheless, was not thrilled to lose a high government. The Swiss financial institution enforced a provision in Mr. Orcel’s contract that required him to take a six-month break, generally known as gardening go away, earlier than defecting to a rival enterprise. The transfer angered Santander executives, who considered the maneuver as a pointless jab at a longtime consumer of UBS.

However cash turned out to be the larger drawback.

Throughout his seven years at UBS, Mr. Orcel racked up nicely over $50 million in deferred compensation, which the financial institution promised to pay him within the coming years.

When Santander employed Mr. Orcel, it agreed to pay him no matter quantity UBS didn’t. Santander executives and board members figured that UBS would pay a lot of the deferred compensation and that Santander’s share could be comparatively small, in line with folks aware of Santander’s deliberations.

UBS, nonetheless, balked. After months of negotiations, executives on the Swiss financial institution knowledgeable Santander final week that they might not pay something.

“This can be a matter between Andrea Orcel and Santander,” mentioned Dominik von Arx, a UBS spokesman. “UBS utilized the compensation plan guidelines related in such circumstances and made them clear to all events earlier than any selections have been made.”

That left Santander and Mr. Orcel with a alternative. Both he may waive a few of his deferred pay, or Santander may make him entire.

Mr. Orcel wouldn’t quit the cash.

Santander wouldn’t pay.

“What UBS did is sort of predictable,” mentioned C. Evan Stewart, a associate on the legislation agency Cohen & Gresser who focuses on monetary providers, “and it’s stunning that Mr. Orcel thought that they might simply sit again and provides him his deferred compensation.”

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