Andrea Orcel
Andrea Orcel is an Italian investment banker who most recently served as the president of UBS Investment Bank from November 2014 to September 2018. He was slated to succeed José Antonio Alvarez as chief executive of Spanish bank Banco Santander from September 2018 to January 2019. Since early 2020, Orcel has been linked to taking over as CEO at a variety of financial institutions including starting his own boutique investment bank.
Born in Rome, Italy, Orcel attended the University of Rome, Sapienza, graduating with degrees in economics and commerce. He attended the INSEAD business school in Paris before working at Goldman Sachs and Boston Consulting Group during the late 1980s. In 1992, he was hired by Merrill Lynch & Co. where he spent the succeeding twenty years in their mergers and acquisitions department in London. He left Merrill Lynch in 2012 to join Swiss investment bank UBS at the behest of its CEO, Sergio Ermotti. From 2012 to 2018, Orcel endured the 2013 Libor trading scandal, led a corporate restructuring, downsized the bank, and increased up M&A activity.
Orcel is a controversial figure in European business and international banking. He has been called one of the most successful investment bankers of his generation. Orcel has also been routinely criticized for his abrasive management style, overworking subordinates, and being hyper-competitive. He is an outspoken supporter of increased banking regulation, corporate social responsibility, and enhanced market supervision.
Early life and education
Andrea Orcel was born on May 14, 1963 in Rome, Italy. His father ran a small leasing company and his mother worked for the United Nations. Orcel attended the Lycée français Chateaubriand in Rome for secondary school, at his mother's request, so he could learn French in addition to his native Italian. Orcel attended the University of Rome, Sapienza, majoring in economics and commerce. While a university student Orcel reportedly skipped class, as attendance was optional, and went backpacking in South America before returning to take his final exams. He has stated that a vacation to the United States when he was 18 moved him to go into banking. He graduated summa cum laude with an undergraduate thesis was on hostile takeovers. He went on to attend the INSEAD business school in Fontainebleau, France.Career
Merrill Lynch
Upon his graduation, Orcel was hired by American investment bank Goldman Sachs in 1988, aged 25, to work in their fixed income business in London. A year later he left the firm to work as a senior consultant at Boston Consulting Group from 1989 to 1992 in their corporate restructuring and strategy departments in Paris, France. In 1992, he was asked to join Merrill Lynch & Co. in their Financial Institutions Group back in London. Orcel orchestrated the $25 billion merger of Italian banking groups, Credito Italiano and UniCredito to form banking conglomerate UniCredit in 1998. UniCredito had originally wanted to go public but the valuation that investment bankers at a rival bank gave it made them "unhappy". Orcel called the bank and offered to explore the possibility of a merger with a comparable company as the initial deal was going through; he brought them to Merrill Lynch a week later. The merger made UniCredit the largest bank in Italy. The following year he personally closed the $13 billion merger of Banco Bilbao Vizcaya and Argentaria to create BBVA. BBVA became the second largest bank in Spain after the merger. Orcel served as the head of the Global FIG from 2003 to 2007, succeeding Joseph Willit. In 2004, Orcel initiated Spanish bank Santander's acquisition of British subsidiary Abbey National, expanding the banks operations into the United Kingdom in a deal worth $15.56 billion. He was tapped by the Royal Bank of Scotland in 2007 to advise on a $55 billion acquisition of ABN Amro. The deal was orchestrated by Orcel after he brought in Fortis and Santander to execute a three-way consortium bid for ABN Amro. At the time, the bid set a record for the largest merger or acquisition in financial services history. For the acquisition, Orcel collected $12 million in advisory fees. Months later, the oncoming financial crisis surfaced, quickly absorbing the capital buffers of banks all over the world, causing major damage to RBS and forcing the UK to seize control of it. The deal was dubbed "disastrous" by The Telegraph while Institutional Investor labeled Orcel "one of the most controversial bankers of the financial crisis". For his role increasing advisory service business throughout 2007, Orcel was paid $38 million.In November 2008, Orcel's team at Merrill valued the Italian bank Banca Antonveneta at $10 billion, advising Monte dei Paschi to acquire it from Santander for the same amount. Internal valuations of the bank at Santander had Banca Antonveneta valued at $7.4 billion. The deal was described as ill-advised and "flawed" as MPS overpaid $2.85 billion for its new acquisition, leaving it with capital deficiencies in 2016. In 2008, in the middle of the financial crisis, it was reported that Orcel brought in $550 million in advisory fees for the bank, earning him an annual bonus of $33 to $34 million. His bonus sparked an investigation into executive compensation by the New York Attorney General; no charges were brought forward against Orcel or Merrill Lynch. In July 2008, Orcel rejoined Santander to advise it in its $1.6 billion acquisition of Alliance & Leicester, a British bank and former building society. On January 30, 2009, Santander hired Orcel once more to complete their acquisition of Sovereign Bank, in a deal valued roughly at $1.9 billion. His relationship with Santander's executive chairman, Emilio Botín, was reported as being particularly close during this time; Botín sent handwritten thank you notes to Orcel after each deal. Orcel, in turn, felt "emotionally attached" to the bank and the Botín family. In 2009, Orcel was asked to serve as the executive chairman of the investment bank eventually being appointed chief executive of European Card Services. In February 2011, Orcel brokered the $3.3 billion initial public offering of a 10% stake of VTB Bank from the Russian government with his brother Riccardo. Orcel led a team to execute a $8.5 billion rights offering for UniCredit, at the height of the Eurozone crisis in January 2012. Recalled as the "scariest of his career", he broke through Merrill Lynch's risk limits to secure the deal, drawing wide-spread industry attention. In April 2012, Orcel was tapped by Swiss investment bank UBS CEO Sergio Ermotti to lead their sell side and UK operations. Within days of the announcement, Orcel reportedly began a "smash and grab" of Merrill executives, recruiting them for UBS. During this time, Merrill Lynch was being merged with Bank of America to create Bank of America Merrill Lynch ; the deal was completed in 2013, months after Orcel left with like-minded executives. Two of Merrill Lynch's largest corporate clients, UniCredit and Santander, reportedly transferred their business to UBS, following Orcel.
UBS
Following the 2011 UBS rogue trader scandal and a corporate restructuring, Orcel was invited to the group executive board and appointed the co-CEO of the investment banking unit of UBS. In November 2012, he was asked to serve as the CEO of UBS AG–the main private banking unit of UBS Group AG before taking sole control of the investment bank. Upon his acceptance of the position, UBS paid Orcel Sfr6.3 million in cash and awarded him Sfr18.5 million in stock options, for a total sign-on bonus of Sfr25 million. In January 2013, following the Libor scandal, Orcel was called before the British Parliament's banking standards commission to explain the company's role in the scandal. Present for nearly three hours of testimony, he expressed regret for the firm's role and stated to commissioner Andrew Tyrie: "we all got probably too arrogant, too self-convinced that things were correct the way they were. I think the industry needs to change." Later that year he was compensated $26 million, in line with a 7% clawback of the company's bonus pool. Although he was hired in a primarily managerial role, he continued to advise some of the firm's higher profile clients and institutional partners. In March 2013, Orcel rejoined his brother Riccardo to negotiate an investment into VTB from a Qatari sovereign wealth fund. From early 2013 to late 2014 Orcel initiated a corporate restructuring of the investment bank, to " trying to be the biggest investment bank and on being the best". With a focus on return-on-investment, deleveraging, and cost reduction, Orcel increased majority capital positions while diminishing the size of the bank. In May 2015, he was the highest earning executive at UBS Group AG, grossing $8 million in base salary. In June 2016, Orcel offered MPS–a client of his at Merrill Lynch during the financial crisis–$5.6 billon in debt and equity when it was facing liquidity issues and was reaching out to a handful of banks. Orcel made this offer to counter a bailout by the Italian government but was jointly rejected by the Italian prime minister Matteo Renzi and MPS. In February 2016, he orchestrated the merger of Vodafone's and Liberty Global's operations in the Netherlands to create a joint venture in a deal worth $1.1 billion.From 2012 to 2017 Orcel fired thousands of employees in order to boost profitability, reducing the company's wage requirements by $3 billion. He reportedly handed lists of people to fire to managing directors while many UBS employees learned of their firing as they came to work and "found their access cards no longer worked." In May 2017, he approved a $2.8 billion financing package to Chinese conglomerate HNA Group so they could buy a 10% stake in Deutsche Bank. In August 2018, a UBS Investment Bank trainee accused one of Orcel's managing directors of drugging and sexually assaulting her at a social gathering in September. Orcel personally invited her to his London office to clarify that the director had been suspended and subsequently resigned. Orcel appeared on Bloomberg Markets later that day explaining a revamped infrastructure and process of handling sexual misconduct at the company, noting it must be "completely eradicated". All throughout the late 2010s, it was speculated that Orcel was to either succeed Ermotti as the chief executive of UBS, or go on to lead either MPS, Cassa Depositi e Prestiti, or UniCredit. Orcel was considered to be the "hit-by-the-bus" candidate to lead UBS, an executive who would assume the role of CEO should Ermotti suffer some serious injury. In the months preceding October 2018, Orcel reportedly "lobbied intensely" to be the next CEO of UBS. After giving in to Orcel, UBS put him directly in line to succeed Ermotti.
Santander
In September 2018, Ana Botín announced that Orcel would lead Spanish commercial bank and financial services company Banco Santander as its chief executive officer, starting early 2019. Orcel formally left UBS on September 30, 2018. His appointment to the chief executive made him the first non-Spanish individual to be nominated for such a high-ranking position at the company. Despite being a traditional mergers and acquisitions banker, Orcel expressed interest in staving off banking digitization instead of acquiring more banks or merging with other large banks. As Orcel left UBS his employment contract included variable remuneration valued at $21.3 million. Santander bought out his contract, paying Orcel this remuneration as a part of his sign-on bonus on October 19, 2018.In January 2019 he and Botín were unable to convince European regulators, UBS’s Ermotti and Axel Weber, and Santander’s board of directors that Orcel was joining the company from a non-competing bank. As such he was classified as a “bad leaver” by UBS and executives at the Swiss bank refused to pay out his deferred stock options enforcing a “hard-lined” departure policy. This triggered his offer of employment at Santander to absorb the complete cost of those deferred stock options. The total amount Santander had to pay to hire Orcel increased from $21.3 million to more than $50.7 million . One estimate had the total cost of Orcel’s contract to be as high as $60 million. Santander could only cover a third of that amount. Botín called Orcel and told him that the position was still open for him if he was willing to forfeit “up to $60 million dollars ”. They offered him cash sign-on bonus of €17 million as well as up to €35 million of Santander shares to compensate him for deferred pay with a €10 million annual salary.
After Orcel offered two concession arrangements on his contract, the lowest amount he would go down to was deemed "too expensive" for Santander. Orcel was released from his contract and regained his UBS deferred stock options. Industry reaction to the news was mixed with Euromoney stating: “If Santander wanted him, it should have paid for him”; The Economist noted the political backlash Santander would face for hiring Orcel after Spain's 2008–2014 financial crisis. The Spanish bank offered Orcel capital to start his own investment bank after withdrawing their job offer but he declined. On July 3, 2019, Orcel launched a €100 million breach-of-contract lawsuit against Santander. Since February 2020, the lawsuit is ongoing in the local Madrid court system.
Post-Santander
As of 22 January 2019, he is on track to collect his deferred UBS compensation in full by 2026, aged 63. After completing his "gardening leave”, it has been speculated that he would either start his own boutique investment bank, return to UBS, wait until another CEO position opened up, or go into early retirement. With respect to starting his own investment bank, the Investor's Chronicle noted that there could be a potential conflict-of-interest as many of his former UBS colleagues "might decamp to him", competing directly with UBS for deal flow and clients. Orcel has, since early 2020, been linked with taking over as CEO at a variety of banks including Monte dei Paschi, Cassa Depositi e Prestiti, UniCredit, HSBC, Credit Suisse, and Barclays.Management style
Orcel's management style has widely been received as valuing hard work and presenteeism, and being performance-driven. He himself reportedly works 18-hour days, waking up around 5:00 AM and working until 11:30 PM to midnight. Orcel has stated in interviews that his favorite book is Angela Duckworth’s Grit: The Power of Passion and Perseverance, whose central thesis is that "the secret to success is not raw talent, but rather a blend of passion and persistence." Orcel's personality and management philosophy has been criticized for not facilitating team work, isolating those who do not perform, and being high maintenance. In response to this criticism, he has stated that he was "not easy" and "demanding" but not willing to "ask for something I’m not doing myself." Additionally, he has stated that people should not "generalize what a few people with an objective say about ." In May 2015, he also denied allegations that he asked junior bankers to skip vacations and come in on holidays. Orcel was quoted as respecting a banker's choice to "cancel their holidays themselves so they can stick around to help with a deal", but doesn't demand it of them. After a Bank of America intern died from working 72 hours straight in 2013, many banking executives, including Orcel, were pressured to reform their scheduling. He rebuffed the calls for change and declined to amend the working hours of UBS junior bankers. Multiple profiles of Orcel undertaken by the Financial Times describe him as 'voraciously competitive', capable of " his temper in a typical Italian way", " and at people sometimes". Orcel has repeatedly stated that, due to the competitive nature of banking, one-in-four of mergers and acquisition bankers do not make it past entry-level positions. Throughout the mid-2010s, Orcel fired subordinates by simply disabling their access cards to company buildings. He regularly holds annual off-site meetings in international locations away from London. After hosting an off-site meeting in Lisbon in 2013, he held a corporate retreat in Arizona a year later proclaiming: "If you can survive 45 degrees Celsius, rattlesnakes and the desert, we will win".Orcel frequently uses the Italian auto-manufacturer Ferrari to describe his affection for "focused" and "lean" execution of strategies as opposed to bigger, less versatile banks, i.e. as opposed to a Fiat automobile. He similarly uses European football to describe such strategies, referring to UBS as the "Croatia of investment banking" following the 2018 FIFA World Cup final. In June 2016, Orcel led an initiative where UBS bankers were granted two hours of "personal time" every week in order to boost work-life balances. On March 31, 2017, Orcel expressed his affection for shared parental leave and voiced his support for the growing movement in Europe to let fathers and mothers take extended time off of work to be with newly born and young children. In April 2018 Orcel issued an internal memo to UBS managing directors requiring that they hold 250 to 300 client meetings a year. This memo reportedly initiated a mass exodus of senior investment bank leadership in late 2017, as the latest in a series of "frequently changing strategies". Shortly after announcing the new directive, Orcel initiated a client meeting monitoring system that culminated in further departures. Employees of the bank who missed meeting targets received e-mail rebukes from Orcel and other executives. An unnamed senior executive at the investment bank stated: " is the best banker I’ve ever worked with and the worst manager I’ve ever seen" after the directive hit international presses.On October 15, 2018, Orcel was at the center of a Financial News London editorial investigation into his management style. The editorial team interviewed a variety of UBS executives with whom he had worked with from November 2012 to September 2018. The report concluded that Orcel had a “pattern of aggressive behavior towards other executives”. Select accounts asserted that Orcel pursued personal vendettas against detractors, often wishing to "make examples of out ”. Unnamed UBS executives argued that the report sensationalized internal misunderstandings and communication failures. UBS and Santander both issued statements that disagreed with the characterization and findings of the report. Orcel is an outspoken supporter of increased banking regulation, corporate social responsibility, and enhanced market supervision.
Public image and legacy
Orcel has been called the "Ronaldo of investment banking" and a "deal junkie" by the international press and select British government officials. Spanish media has called him de las finanzas globales. In France and Italy, he is known as the alpha de la finance and the deal-maker, respectively. After moving from UBS to Santander in 2019, the New York Times estimated that Orcel was likely "Europe's most famous investment banker." He has been noted by Financial Times as one of "the most successful investment bankers of his generation". From 1988 to 2018, Orcel was widely seen as " some of the world’s biggest corporate transactions."Conversely, Orcel's public image is often contrasted with by his abrasive management style, a long track-record of overworking subordinates and being hyper-competitive. Journalist Andrew Ross Sorkin, writing for the New York Times, summarized Orcel's legacy with: " was brash... brusque management style." His unsuccessful move from UBS to Santander in 2019, was seen by Metro, as " rupture that... turned into one of the bitterest and highest-profile employment disputes in recent European history." Sophie Perryer, writing for World Finance, stated that, "Despite holding semi-reverential status among many of his peers," Orcel's legacy was marked by "consistent courting of controversy" and "exorbitant price tags."
Personal life
While at Merrill Lynch and UBS, Orcel worked in their London offices, living in the Kensington district. He is married to Portuguese interior designer Clara Batalim-Orcel with whom he has one daughter. He married Batalim-Orcel in 2009, aged 46, after 16 years of dating. He has a pet husky named Flash.A known polyglot, he speaks five European languages: Italian, French, English, German, and Spanish, fluently. He is also noted for his preference for silk Salvatore Ferragamo ties. Orcel's exercise regime includes high intensity running, weight training, and water skiing.
His younger brother, Riccardo, worked as an investment banker with Orcel at Merrill Lynch & Co. during the late 2000s. He was appointed deputy chief executive of VTB Bank in July 2013 and has occasionally worked with Andrea on mutual deals.