According to the court, the Spanish Goßbank has “unilaterally and unjustifiably” violated contractual principles from the Spanish Civil Code (Código Civil).
(Photo: Reuters)
Madrid In the million dollar brawl between the heads of two of the largest banks in Europe, a Spanish court sentenced the major bank Santander to pay Andrea Orcel 68 million euros. The current Unicredit boss had sued the Spaniards for 76 million euros after his planned commitment as CEO was reversed.
The dispute has been simmering for three years. On September 25, 2018, Spain’s largest bank publicly named Orcel as its new CEO. The Italian had known the bank for decades and had advised them on all major deals. The relationship between Orcel and Ana Botín was close and friendly. On January 15, 2019, however, Santander announced that Orcel would not be hired after all.
The main question in the process was whether a contract had already been concluded between Santander and Orcel or not. The court of first instance number 46 in Madrid ruled on Friday that this was the case and that Santander had “unilaterally and unjustifiably” violated contractual principles from the Spanish Civil Code (Código Civil).
Santander had argued that a contract had not yet been concluded because, among other things, the payment had not yet been agreed. Orcel did not want to forego millions of euros in unpaid bonuses that he was entitled to from his time at UBS, but which would lapse as soon as he switched to a competitor. He asked for € 52 million from Santander.
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The Spaniards offered him a maximum of 35 million for the outstanding bonuses, but asked Orcel to do everything possible to get UBS to take part of that amount. When Orcel received € 13.7 million in outstanding payments from UBS and refused to reduce its claim on Santander by that amount, it broke, according to Santander.
Santander appeals
The trial in Madrid, during which in addition to Botín and Orcel, the then UBS Board of Directors chairman Axel Weber appeared in person, also gave insights into Orcel’s business conduct. According to the Spaniards, he secretly recorded phone calls with Santander managers when both parties were already fighting over his obligation.
Santander announced that it would appeal. “We do not agree with the verdict at all,” said a spokesman for the bank. “The Santander Board of Directors is confident that we will succeed in the calling.”
Orcel had initially sued Santander for 112 million euros – in addition to the UBS bonuses and a sign-up fee, there were 50 million euros for five years of lost salary with the Spaniards and ten million euros for reputational damage. Since Orcel has been CEO of Unicredit since April of this year and UBS has paid him outstanding bonuses in the past two years when Orcel did not have a job, he reduced his claim to 76 million euros shortly before the start of the litigation in the spring of this year.
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