Banco Santander SA (SAN), Spain’s biggest bank, named Javier Marin as chief executive officer, turning to a leader from a younger generation after Alfredo Saenz resigned.
Marin, 46, is senior executive vice president of the bank and head of the global insurance, asset management and private banking unit, the Santander, Spain-based bank said in a filing to regulators today. Saenz will also quit the 16-member board.
Chairman Emilio Botin, 78, is turning to a former personal aide to lead the day-to-day operations at the bank, which quadrupled its assets by acquiring lenders from the U.K. to Brazil (SANB11) during Saenz’s 11-year tenure. Saenz, 70, who Botin called the “best CEO in banking,” stepped down before the Bank of Spain decided whether he could continue in his post after a legal case dating back almost 20 years.
“It will be good to have someone younger but who clearly has the backing and trust of Botin and can keep moving the bank forward,” said Mauro Guillen, a professor of international management at the Wharton School at the University of Pennsylvania in Philadelphia and co-author of a 2008 history of Santander. “This is an interesting moment.”
Santander shares closed up 2.6 percent to 5.56 euros in Madrid today, paring declines this year to 8.9 percent and valuing the lender at 60.3 billion euros ($79 billion). Saenz had no personal comment to make on his decision to resign, a spokesman for the bank said in a phone interview.
A graduate of Spain’s Papal University of Comillas, where he studied law and business studies, Marin joined Santander in 1991 and became Botin’s “technical secretary” or personal aide four years later, a bank spokeswoman said.
He became CEO of Santander’s private banking unit Banif in 2001 and added oversight of the lender’s asset management business in 2009 and insurance in 2010. In his role as head of private banking, Marin had the task of dealing with the aftermath of the 2008 Bernard Madoff scandal, which left 2.3 billion euros of Santander client balances at risk. Santander offered customers preferred shares with an annual payout of 2 percent as compensation for their Madoff-related losses.
“It is a bit surprising that they’ve chosen someone apparently without experience running one of the big retail divisions and so Marin is a bit of an unknown quantity,” Benjie Creelan-Sandford, an analyst at Macquarie Bank Ltd. in London, said in a phone interview. “Many investors, though, will take the view that Emilio Botin is the one who takes the big decisions and makes strategy and he is still there.”
Marin’s experience in the bank and the fact that he has Botin’s confidence makes him a “clear candidate” for the CEO job, said Guillen.
Board member Juan Rodriguez Inciarte, 60, a board member whom some people might have identified as a possible CEO candidate, is more suited to his current role planning strategy, said Guillen. Antonio Horta-Osorio, 49, a former rising star at Santander and once considered a potential successor to Saenz, quit the bank in 2010 to become CEO of London-based Lloyds Banking Group Plc. (LLOY)
Ana Patricia Botin, 52, Botin’s eldest daughter, took over from Horta-Osorio running Santander’s U.K. and may still eventually take over from her father as chairman of the bank, said Guillen. “She is perfect where she is,” he said.
While the Bank of Spain holds Saenz in the highest esteem, his resignation is positive and it will help strengthen the financial system, a spokesman for the regulator, who asked not be identified in line with its policy, said in a phone interview today. Santander, in a statement, praised the “extraordinary achievements” of Saenz, who earned 8.2 million euros last year and has an 88 million-euro pension.
The Supreme Court in Madrid ruled in February that a government pardon granted to Saenz in 2011 went too far by saying that a criminal record didn’t affect his ability to work in banking.
The legal proceedings involving Saenz cast a shadow over the executive and the bank since 2009 when he was convicted in a case dating back to 1994. The case relates to a lawsuit stemming from his tenure as chairman of Banco Espanol de Credito SA, now a retail banking unit of Santander.
Banesto, as the lender is known, sued a group of businessmen to recover loans in 1994. The defendants filed counter-complaints of false accusation, which a judge decided to investigate, and Saenz was held responsible because he approved the filing of the initial lawsuit.
According to Spanish banking regulations, “professional virtue” is a prerequisite for those working in the banking industry and can be lost by anyone with a criminal record. The Economy Ministry said earlier this month it would widen the criteria for evaluating the “honor” of bankers, a step that some commentators said might give the Bank of Spain more room to maneuver as it considered cases such as that of Saenz.
“The board of directors expressed its recognition of and gratitude for Alfredo Saenz’s extraordinary achievements since joining the group and, in particular, as chief executive,” the bank said in a statement. Saenz joined the bank in 1994 when Santander acquired Banesto.
“Saenz has had these legal issues but I think he has been a great banking professional,” said Alvaro Cuervo, director of the University College of Financial Studies in Madrid. “When a company skips a generation in management, as Santander is doing, it does give the opportunity for dynamism and modernity and that can be positive.”
Among other changes announced today, the bank named Matias Rodriguez Inciarte, who heads Santander’s risk committee, as second vice chairman of the board, replacing Saenz.
Guillermo de la Dehesa, an independent director, becomes third vice chairman and takes over from Manuel Soto as head of the audit and compliance committee. Soto leaves the board and will be replaced by Juan-Miguel Villar Mir while Isabel Tocino joins the board’s executive committee, Santander said.
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