Alfredo Saenz, Chief Executive of the euro zone’s biggest banks, Banco Santander, S.A. (ADR) (NYSE:SAN) (MCE:SAN) resigned.
Banco Santander, S.A. (ADR) (NYSE:SAN) (MCE:SAN) said Monday that its Chief Executive is stepping down, a move that may bring an end to a two-decade long legal battle. Last week, the Spanish bank reported that its first-quarter net profit fell 26 percent.
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The largest euro zone bank by market value said in a press release that Mr. Saenz will be replaced as CEO by Managing Director Javier Martin. The bank did not give any reason for Mr. Saenz’s decision.
Mr. Saenz joined Santander in 1994 after the bank acquired a local rival, BANESTO SA SPONS ADR (OTCMKTS:BNSTY). He helped Chairman Emilio Botin transform Santander from a regional player to an international giant with operations spanning from the Unites States to Poland. During his tenure as Chief Executive, the bank grew its assets to 1.25 trillion euros from 358 billion euros.
Mr. Saenz had to confront a series of legal problems, including his conviction in 2009 for making a false accusation in the early 1990s in a case involving Banesto. He was subsequently pardoned by Spain’s departing Socialist government in 2011.
However the Supreme Court ruled in February that the pardon didn’t exempt him from sanction by the industry, but Spain’s new conservative government, in power since late 2011, issued an executive order that will relax its standard of conduct for bankers. This was widely seen as seeking a reprieve for Mr. Saenz, despite the government’s denials.
The Spanish government’s executive order was approved earlier this month, after the country’s central bank, began debating whether to enforce its standard and expel Mr. Saenz from the industry.
On the business front, Santander has been hurt by persistent problems in Europe, besides increasing headwinds in emerging markets like Brazil. Last year, the bank set aside over $25 billion in provisions to offset a rise in delinquent mortgages in Spain’s strained economy and an increase in other troubled loans across its businesses.
Latin America, where the bank earns over 50 percent of its net income, faced a double whammy with slowing economic growth coupled with an increase in troubled loans. Banco Santander, S.A. (ADR) (NYSE:SAN) (MCE:SAN)’s decade-long international expansion has shielded the bank from the economic and financial crisis in Spain.
The country’s Central Bank, Bank of Spain source said Mr. Saenz’s stepping down is a very positive decision for banking stability and for Banco Santander, S.A. (ADR) (NYSE:SAN) (MCE:SAN).
Banco Santander, S.A. (ADR) (NYSE:SAN) (MCE:SAN) shares rose 1.9 percent in morning trading in Madrid on Monday.