Finance

Santander chair Ana Botín cedes power following ECB pressure

Santander chair Ana Botín has given up some of her responsibilities at Spain’s largest lender, delegating operational authority to chief executive José Antonio Álvarez in response to pressure from European regulators to improve corporate governance.

Álvarez will now report directly to the board, rather than the chair, the bank announced on Thursday. Botín will retain the power to set strategy and oversee two technology units, called PagoNxt and Digital Consumer Bank, while the CEO will run the group’s regions, countries and global business divisions.

Botín said “the changes ensure we continue to meet the highest standards of governance with a clear differentiation between the executive chair and CEO roles” and are “consistent with supervisory expectations and build on a series of governance enhancements”.

For years, the European Central Bank has taken a dim view of corporate governance at Spanish lenders, where authority has traditionally been concentrated in the chair with CEOs fulfilling ancillary, operational roles. The regulator has pushed the country’s systemically important banks to separate the positions to improve risk management and accountability.

Santander took longer to make the changes than domestic rival BBVA, which separated the roles of chair and chief executive in 2018.

One of the most influential women in global finance, Botín became chair of Santander in 2014 and is the fourth generation of the family to hold the position.

Since she became chair, Santander’s share price has dropped by more than 50 per cent.

Having joined Santander from JPMorgan in 1989, Botín has held a range of positions within the group, including leading its expansion into Latin America in the 1990s and as CEO of the UK business.

Botín also sits on the board of Coca-Cola and last year was appointed president of the European Banking Federation.

Santander lost a long-running legal dispute with Andrea Orcel last year over the Spanish lender’s abortive attempt to hire the Italian banker as chief executive in 2018. Santander is contesting the decision.

The appointment of Orcel was seen as a response to pressure from regulators to introduce a strong CEO to counterbalance Botín’s authority within the group.

However, before he took up the role the pair clashed over the scope of his executive authority and who would be the public face of the lender, causing Botín to change her mind. She reinstated Alvarez as CEO and Orcel sued Santander for loss of earnings, in one of the most high-profile personal feuds in European banking.

The case pitted Botín against Orcel, who had been a trusted adviser to Botín’s father, Emilio, during his time as an investment banker at UBS and Merrill Lynch.

Orcel won the case, but a Madrid judge has reduced the remuneration Santander owed him to €51.4mn from the initial €68mn awarded for lost earnings and “moral and reputational damages”.

Alongside the announcement Santander also said it will ​pay a final cash dividend of 5.15 euro cents per share for 2021 and buy back €865mn in stock. The bank said this means €3.4bn will have been paid out to shareholders in relation to 2021.

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