- Santander plans to appeal the court decision that it must pay a court ruling to keep the money on its debt. However, the bank has a less expensive chance to claw back a lot in a fight that has ruined its reputation.
In one of the most controversial job disputes in the banking industry, a Madrid judge ruled that a four-page offer letter sent by the spanish lender to Orcel in September 2018 was a contract, which the bank breached four months later when it decided to resign.
Santander said he didn't have an unforeseen requirement to pay Orcel deferred pay he was losing to leaving UBS had made his appointment too expensive.
That ruling - while relatively quick - was a blow to Santander's president, Ana Botin, who personally favored the Italian executive and appeared in court to defend the bank's change of course.
Santander says now it's preparing to appeal an appeal, something that must happen within twenty working days of the release of the Dec. 10 ruling.
Legal experts, bankers and academics think that there's little room to overturn judge Javier Sanchez Beltran's main decision expressing that the offer letter was legally binding.
If a santander can appeal, then they have all the odds against them. In my opinion, the offer letter showed a deal and it would be a real endeavour," says Enrique Quemada, chairman of ONEtoone's Spanish capital.
The lawyer that wasn't related to the matter who wanted to be identified said that he believed that the offer letter was a valid pre-contract, and that there was a confirmation of the bank's nominations and remuneration committee with the chairman on board, and that the announcement was made public.
Botin told the court that that offer letter was not a contract because Santander's board did not approve its final pay package.
But the judge referenced its tweets and media interviews in which she said that Orcel's appointment would be "effective from the beginning of 2019."
I have no new evidence to prove that the appeal was finalized, so Santander will be the only one who would consider it that the letter was not a contract. The appeal could go to the court of Spain, the court sources said, meaning it may take many years until the case is resolved.
Both parties can get a settlement via private equity at any time during the process.
Orcel didn't reply to messages and demanded a comment.
In case of moral damage, a lawyer and a source close to the issue believe that Santander's best chance will be contesting the 10 million euros of compensation for moral damage. Orcel was awarded by a Madrid court, rather than his 17 million euros sign-on bonus, the 35 million buyout clause and 5,8 million for two years' salary.
The judge said it was difficult to prove how much "moral damage" Santander's volte-face caused Orcel, but he said that the bank's withdrawal generated "considerable frustration, unforgivability, uncertainty and a certain discrediting world."
The individual lawyers say those 10 million euros in moral damages are something that can be contested, as it's very high, but discretionary and up to the judge.
Although the court would take away the amount from Santander sources, it would be better if there was a time at the office to consider the decision.
Santander refused to comment.
Orcel originally sought $12 million for contract and damages to his career. In May, he dropped part of his claim after he was appointed executive by the UniCredit.
Analysts and academics said the court ruling highlighted possible flaws in Santander's management.
"It's not a good rule in terms of corporate governance; I think that this decision will affect the investor's perception of governance", said Jose Carlos Diez, an economist at the University of Alcala de Henares.
In April 2019, some investors criticised the bank's decision to refuse to hire Orcel at the first shareholder meeting after Santander's U-turn.
Santander maintains that appointments were made in good faith and after a proper governance process involved the entire board, and specifically its nominees and remuneration committees, which took place 13 times during that process.
An analysts, bankers and academics don't see a big financial impact for Santander and believe the bank will be careful of doing the same mistake twice.
That bank is looking for a new CEO or a new senior manager, Quemada said.
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