MADRID (Reuters) - Deep in the pages of Santander’s latest annual report is a list of 11 names who might replace Emilio Botin in case the chairman were to die or retires from the Spanish bank.
A legal formality, published every year, few have ever paid the list much heed. But now, following the sudden departure on Monday of chief executive Alfredo Saenz, the long taboo subject of who may one day replace the 78-year-old chairman is being discussed by investors, even if Botin shows no sign of quitting.
Listed in order of length of service on the board, the names published in the last report include former CEO Rodrigo Gordillo and Botin confidant Juan Inciarte. The board is not bound by the list in choosing a long-term chairman but one name on it, second one down, does easily top most analysts’ rankings of the likely successors - the patriarch’s own eldest daughter, Ana Botin.
The exit of Saenz, 70, was prompted by a possible regulatory ban and was not an outcome the chairman wanted; it ended one of retail banking’s most successful partnerships, lasting nearly 20 years, during which Saenz and Don Emilio, as he is widely known, built the family concern into the biggest bank in the euro zone.
Botin has given no indication of when he might himself consider giving up a post held by his father and grandfather. When asked by reporters some weeks ago about his plans, he simply smiled and said he was working at full capacity.
The bank declined comment on the succession and investors and sources close to Santander told Reuters that Botin was unlikely to come under any pressure to retire. He was, they said, still held in high regard by executives and shareholders.
But that has not prevented examination of the possibility of a handover within the family, which now ranks only fourth among the group’s big shareholders, and of how a new leadership team will operate now the Botin-Saenz duo has passed into history.
Some saw the appointment as CEO of 46-year-old Javier Marin, head of private banking and also a confidant of the chairman, as clearing the way for Ana Botin, 52, to succeed her father.
An executive vice-president at Santander since 1992 and chairman of its Spanish retail bank Banesto for eight years, the younger Botin is now running Santander UK and is widely thought to want to see through a delayed market listing for the British unit before returning to Spain to take over.
“Ana is in the right place,” said Mauro Guillen, professor at the Lauder Institute business school in Pennsylvania and author of a book on Santander, adding that it was not a problem for her that Marin, not she, was promoted to chief executive: “It would have been a mistake to appoint her the CEO,” he said.
Nonetheless, she may face resistance from the international investors who now own what is a very different institution from the provincial, family-run lender whose chair her father took on in 1986 from his father, also called Emilio. Family succession can raise questions on firms’ ability to retain senior talent.
“Some promising executives may be dissuaded from remaining at Santander because they don’t feel they have a realistic shot at becoming its leader,” said Simon Wong, partner at London-based investment managers Governance for Owners.
Emilio Botin became chairman of the bank aged 51 in the year Spain joined the European Union; replacing his 83-year-old father, he quickly set about disproving any suggestion that “Emilio Junior” was no match for the original, grabbing clients with high-interest accounts and, in 1994, taking over state-owned Banesto, acquiring the talents of Saenz along with it.
Saenz focused on Spanish retail banking through Banesto while the parent group expanded aggressively into Latin America, which now accounts for around half its profit. In 2004, the purchase of Britain’s Abbey National cemented its prominence.
Throughout that expansion, Botin and Saenz complemented one another, the chairman the decisive dealmaker, the CEO bringing his retail banking expertise. With Saenz gone, investors are now assessing how his successor Marin will work, not so much with Emilio Botin but with his daughter. Ana Botin is said by those who know them to have a good relationship with Marin.
The chemistry will be different, but then the challengers the bank faces are also much changed. Santander is no longer in the heady expansionist phase of the last 20 years; maturity has brought problems of falling profitability per share, while the crisis in Spain and beyond has put its capital in focus.
Its shares have lost 7 percent this year, underperforming the European banking sector .SX7P by 10 percent. Last week, it reported first-quarter profit down 26 percent.
With the end of the Botin-Saenz era, the bank may become less dominated by the personalities at its centre, leaving a future chairman and chief executive more concerned with a coordinating role among department chiefs like Javier San Felix, head of the Americas division, and Jesus Zabalza in Brazil.
“Before it was all about Botin and Saenz,” said Jose Lizan at Auriga fund managers in Madrid, a Santander shareholder.
“Now a less paternalistic model is appropriate, in line with other international banks, with strong professionals heading up each division.”
Additional reporting by Sinead Cruise; Editing by Alastair Macdonald