January 30, 2019 / 7:01 AM / a year ago

UPDATE 3-Santander still talking to Orcel, profit lifted by Brazil

* Botin declines comment on possible compensation for Orcel

* Santander prepared for all Brexit eventualities - Botin

* Q4 net profit up 34 percent year-on-year (Recasts with Orcel, details)

By Axel Bugge and Carlos Ruano

MADRID, Jan 30 (Reuters) - Spain’s Santander said on Wednesday it is still in contact with Andrea Orcel, the Italian banker seeking compensation after the bank withdrew an offer to make him its chief executive, but would stick with its existing CEO.

Santander has come under scrutiny after saying this month that Orcel would not take over as CEO as it would not meet his pay expectations, raising questions about the hiring process.

Ana Botin, chairman of the euro zone’s biggest bank by market value, said Santander’s board had reached a decision not to proceed with hiring Orcel after a “very rigorous internal corporate governance process”.

Speaking to reporters after Santander reported a rise in fourth quarter net profit, Botin declined to comment on any possible compensation deal, adding “we had reasons to make the offer, to announce it early because of regulatory reasons”.

Orcel, who had left Swiss bank UBS to take the job, had been appointed in September last year. He is now awaiting a compensation offer from Santander to cover lost future earnings, a source familiar with the matter has told Reuters.

Ana Botin, who took over as head of the bank after the death of her father Emilio Botin in 2014, said that Jose Antonio Alvarez will remain Santander chief executive “indefinitely”.

Earlier, Santander reported that fourth quarter net profit rose 34 percent to 2.07 billion euros ($2.37 billion) from the same period a year earlier, boosted by Brazil and higher net interest income. That compared with a 4 percent rise in net profit from the previous quarter.

“Latin America has remained an important engine for growth within the group, with especially strong progress in Brazil and Mexico,” Botin said in a statement.

Santander shares turned negative in midday trading after outperforming the overall market earlier, falling 2.02 percent at 1323 GMT and leading losses on a weaker Ibex.

“Core revenue trends look positive but partially offset by higher costs and while capital rose it was a touch below our estimate,” Jefferies said in a research note, adding that quarterly net profit was 8 percent above consensus.


Santander said its net interest income, a measure of earnings on loans minus deposit costs, rose 8.5 percent from the previous quarter to 9.06 billion euros. NII for the full year was 34.34 billion euros, virtually unchanged from 2017.

Net profit in the fourth quarter rose by 1.4 percent from the previous three-month period to 663 million euros in Brazil, which is Santander’s largest market, while net profit for the whole of 2018 jumped 22.3 percent.

In Mexico, net profit rose 8 percent in the fourth quarter to 206 million euros.

Net profit in Spain reached 432 million euros in the fourth quarter, down 18 percent from the third quarter on the back of regular contributions to the country’s deposit guarantee fund.

Compared with a year earlier, fourth quarter net profit in Spain rose 30.9 percent.

In Britain, fourth quarter net profit rose 3.8 percent to 286 million euros from the year before. Botin said the bank was prepared for all possible outcomes of Britain’s departure from the European Union and held one more year of currency hedges.

Overall Santander posted an 18 percent jump in its full-year profit which rose to 7.81 billion euros, from 6.62 billion euros a year earlier. Analysts had expected a net profit of 7.83 billion euros for the full-year. ($1 = 0.8750 euros) (Editing by Sherry Jacob-Phillips and Alexander Smith)

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