Santander chief Ana Botin overhauled the management of the euro zone's biggest bank on Tuesday, turning the page after her father's 28-year leadership and giving the lender a younger, more international profile.
Continue Reading Below
The decision to oust CEO Javier Marin and replace him with Chief Financial Officer Jose Antonio Alvarez was welcomed by investors as a sign Botin, 54, was putting her stamp on a business that has recently been hit by a crippling five-year economic downturn in its home market.
The new management team, which starts January 1, now needs to show that their bank can cut costs and build up capital, while holding its top position in Europe and expanding in new markets like the United States and Eastern Europe.
A key part of the overhaul aims to answer big international investors' concerns that Santander's board was not independent enough. The bank also announced on Tuesday that two long-standing independent directors would resign and be replaced by two new directors, and a new position of lead independent director was created for Bruce Carnegie-Brown, 54.
Carnegie-Brown had been seen as a front-runner for the position of chairman of the UK business. His new role sees him effectively independent chief of board members, a position some banks have started to created in the aftermath of the financial crisis and which is meant to foster accountability.
"The changes at Santander are a clear message from Ana Patricia to say 'I'm in charge' and to show who is holding the reins. She is implementing change at all levels of the bank," said Enrique Quemada, CEO of investment bank ONEtoONE.
Continue Reading Below
"The appointments make the board more international and involve promoting people who have worked with her in the UK, like Bruce Carnegie-Brown."
Santander shares had risen 1.83 percent to 7.22 euros by 1330 GMT.
A CHANGE OF STYLE
Santander was transformed by Emilio Botin, who took over the bank in 1986 from his father and made a local lender into a global systemic bank that now has big operations in 10 countries including Britain, Brazil, the United States, Mexico, Argentina and Poland.
International diversification has helped Santander weather Spain's deep economic downturn. Still, investors were recently disappointed by the pace of the recovery in its core lending business revenue. Analysts have said the bank needs to increase its cost-cutting efforts and bolster it capital base.
When Ana Botin came on board in September from her former post running Santander's UK business, she said she would defend her father's legacy, such as the bank's global footprint, its generous dividend policy and focus on customers.
But Tuesday's announcement demonstrated - again - that her management style is a clear departure from her father, many of whose allies she has broken with.
Earlier this month, Botin disbanded the bank's 12-strong advisory board, in the process cutting Santander's ties with Rodrigo Rato, the former International Monetary Fund chief who has been caught up in a court investigation over his time at Bankia.
Other members of the disbanded advisory board included George Mathewson, the former chairman of Royal Bank of Scotland, and Francisco Pinto, ex-prime minister of Portugal.
Tuesday's shake-up also addresses corporate governance concerns that have often been raised about the bank, which until recently had three Botin family members on the board of directors. Some investors had criticized what they perceived as a lack of independent directors.
Javier Marin, a former personal aide of Botin's, had been a surprise choice as the bank's previous CEO because he was little known outside the bank. Marin launched a cost-cutting drive and a review of how divisions use up capital, and had demoted some veteran executives, but was still seen as old guard.
Some analysts welcomed the new appointment of Alvarez, who had been CFO for the past 10 years.
"Mr Alvarez is an experienced and well-regarded executive whose leadership should be positive for Santander and the shares," said Citi bank analysts in a research note.
"We expect continuity, predictability and potentially more transparency on issues such as capital and strategic priorities."
Jose Garcia Cantera will replace Jose Antonio Alvarez as CFO. The bank also appointed a new head of global banking and markets, Jacques Ripoll, who formerly occupied that role in the UK division. (1 US dollar = 0.8041 euro) (Additional reporting by Steve Slater in London; Writing by Sarah White and Julien Toyer; Editing by Alessandra Gallonia and Sophie Walker)