People: Luzón next in line at Santander

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By:
Clive Horwood
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Sáenz continues to fight court conviction; Luzón looks best placed to succeed him

Alfredo Sáenz (l) intends to appeal his conviction; Francisco Luzón (r) is his heir apparent

Alfredo Sáenz intends to appeal his conviction; Francisco Luzón (inset) is his heir apparent


In March, Spain’s Supreme Court upheld a conviction against Santander chief executive Alfredo Sáenz that suspended him from banking for three months.

Sáenz and Santander say they will continue to fight the conviction, including an appeal to Spain’s constitutional court, and Sáenz remains very much in place as CEO.

A Santander insider says: "The Bank of Spain has not asked for his resignation and we do not expect it to do so." He also said that "it is very unlikely that Sáenz would want to leave Santander under a cloud".

However, in recent months speculation has begun to grow about how long Sáenz will stay in his role, and who is likely to succeed him. Sáenz is 68 years old and has been CEO of Santander since 2002.

That speculation began at the end of last year when António Horta-Osório, formerly head of Santander’s fast-growing UK operations, left the bank to become chief executive of Lloyds Banking Group.

Horta-Osório’s success in the UK, as well as his experience running Santander’s businesses in Brazil and Portugal, had made him the strong favourite to replace Sáenz when the time came. Internally, it had been expected that Horta-Osório might succeed Sáenz within the next two years.

Horta-Osório has been replaced at Santander UK by Ana Patricia Botín, who was previously in charge of the Banesto retail and commercial unit in Spain. Ana Botín is considered by many as a future leader of Santander group. Having only just taken the reins of the London-based operations, and with a flotation of Santander UK expected during the course of 2012, it is unlikely that she would take the group CEO role in the near future. Net profit in the UK operations reached £1.7 billion, a 10% increase on the previous year.

Sources close to Santander suggest this leaves Francisco Luzón as the heir apparent to Sáenz. Luzón has overseen the rapid expansion of Santander’s Latin American businesses over the past decade, making it the most profitable region in the group. Santander posted net profits of €8.18 billion in 2010, of which 43% came from Latin American operations compared with 35% in continental Europe.

That shift in earnings base makes Luzón arguably the most powerful board member at Santander after Sáenz and the group chairman, Emilio Botín.

Luzón also has considerable experience of the Spanish banking market, having previously been chairman of Argentaria, which is now part of arch-rival BBVA. Luzón has been a board member of Santander since 1997.

It is inconceivable that Santander would look outside its own team for a new chief executive. Two other internal candidates would be the highly regarded Rodríguez Inciarte brothers, Matías and Juan. The former is vice-chairman of the group and chairman of Santander’s key risk committee and has been a director of the bank since 1988. Juan is also a board director and is chairman Botín’s key dealmaker, having been closely involved in all of Santander’s main acquisitions, notably Banco Real in Brazil and Abbey in the UK.

Last month Santander completed its latest emerging market acquisition. It paid €4 billion for Poland’s Bank Zachodni WBK, 70% of which it bought from Allied Irish Banks. The purchase gives Santander a foothold in the largest economy among the new EU entrants. Botín said: "I am confident that Poland will soon become a growth engine for Santander."

While the chief executive at Santander has key day-to-day operational responsibilities at the bank, the most powerful position remains that of the executive chairman. There is little indication that the energetic Emilio Botín has any intention of giving up that role in the near future, even as he approaches his mid-70s.

The case against Sáenz relates to efforts made by Banesto, now a unit of Santander, to recover loans in 1994.