Changes in the leadership of the largest Spanish financial institution. Banco Santander has communicated this Friday to the National Securities Market Commission (CNMV) that it has proposed Héctor Grisi Checa to replace José Antonio Álvarez as CEO of the group from January 1, 2023. The entity thus closes a a process that has been delayed over time after the frustrated signing of Italian Andrea Orcel in 2018. Grisi, born in Mexico City 55 years ago, has been with the bank for a little over six and a half years, is currently CEO of Santander Mexico and responsible for the North American region, and before that he worked for 18 years for Credit Suisse. The appointment is subject to the corresponding approvals, including the green light from the ECB. Álvarez will continue to be linked to Santander as non-executive vice president. Investors have welcomed the announcement and the bank’s shares have risen by more than 2%.
The new number two arrives at the post after a “rigorous succession process” carried out by the board’s appointments committee, according to Santander in the statement. Once he assumes his functions, he will report directly to the board, as established in the new management structure that the bank announced on February 24 of this year, and will have all the regions, countries and global businesses under his responsibility. . The Anglo-Saxon governance model that was adopted in the entity is in line with what the European Central Bank (ECB) demands. Internally, it meant the transfer of power from the president Ana Botín to the CEO, who gained executive functions, so there is more balance between the two positions.
At that time, the transfer of powers was not made due to a requirement of the ECB. However, financial sources already pointed out then that Santander was anticipating that obligation. That is to say, he made the change before the change of the CEO that was expected for the coming months, as it has ended up happening. In this way, he avoided that at that time it was the European banking supervisor that required the transition as a condition for his approval of the new executive, approval that has not yet been given to Grisi, although financial sources assure that there have already been conversations informal. “After the previous experience of [Andrea] Orcel, the bank has been very careful and has asked the Eurobank beforehand, although in the case of Grisi there would be no problems because he was already a senior executive of the bank and meets all the requirements,” these sources add.
The search for candidates had accelerated in recent months and sources in the sector pointed out that this time Santander would not look outside to find the ideal person: all the pools pointed to the heads of regions of the bank itself as the main candidates to occupy the position of CEO. Internally, this generates more confidence and certainty as it is a person from the house who knows the ins and outs of the entity, quite the opposite of the doubts that overwhelmed the group in 2018. Then the replacement of Álvarez by Orcel was planned, but that signing failed and ended in a legal fight between the entity and the Italian.
Grisi’s landing should serve to heal those wounds. The Orcel failed hire fiasco was expensive. In economic terms, the justice condemned Banco Santander to pay him 51.4 million euros, an amount that, although not significant for his accounts, is high in the case of a labor dispute. And in terms of reputation, the announcement of his signing, the subsequent retreat and the legal battle also had a cost for the entity.
The president of the bank, Ana Botín, thanked José Antonio Álvarez for his work: “His leadership and dedication have been fundamental to Santander’s success and he has been a very important support for me over the years. I am delighted that he will remain on the board as non-executive vice chairman and I am sure he will continue to be key.” And she has also praised the profile of the new CEO: “he accumulates decades of experience and in-depth knowledge of our markets and our lines of business. Furthermore, in these years he has demonstrated his leadership, teamwork and ability to create value for our clients and shareholders”.
He knows in depth all the sides of the coin.
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The appointment of the Mexican banker comes at a time when the entity plans to grow in Mexico, the market it knows best. Santander is among the entities that have shown interest in buying Banamex, Citigroup’s subsidiary in that country. In fact, Grisi has been in charge of leading the previous surveys and reporting internally on the benefits that the operation would have for the group and whether it was a good opportunity or not. In other words, he knows in detail a possible operation that could be of great importance for Santander and would considerably increase the bank’s turnover in the country. In the first quarter, the Mexican subsidiary contributed 249 million in profits, an increase of 32%, spurred on by the rise in income (+7%) and the 25% reduction in the bank’s provisions. And in 2021 it was the fifth largest market by profit after the US, Brazil, the UK and Spain.
The announcement of Grisi’s landing also comes four months after the controversy unleashed by the Mexican president, Andrés Manuel López Obrador, for his criticism of Spanish companies based in the country, words that caused concern about the high presence of Spanish companies in Mexico. Grisi and Botín met with López Obrador in April with the aim of reducing tension. “We have a very good relationship,” said the Mexican president at the end of the meeting. Despite this, the fact that it is the only foreign group that has so far shown a firm interest in the purchase of Banamex may play against it in order to carry out the operation.
Grisi, married with three children, is practically unknown in Spain, given that he has carried out his work on the other side of the Atlantic. He defines himself on his LinkedIn profile as “a father, a husband, and a book lover.” And he says he is “passionate about the financial market”. His training was forged between his country and Canada. He has a degree in Finance from the Universidad Iberoamericana in Mexico City, where he graduated with honors. He has graduate studies in markets and finance from various schools, including the New York Institute of Finance. And currently he is a member of the board of the Mexican Stock Exchange and patron of the Universidad Iberoamericana. On her trips to Mexico, Ana Botín has shown signs of maintaining a good personal harmony with hers. number two.
While visiting Mexico and in front of the impressive murals by Diego Rivera in the National Palace, I have recalled with Héctor Grisi how we have seen the country progress in the 25 years that @SantanderMx takes in Mexico. pic.twitter.com/EjnPuLZRze
– Ana Botín (@AnaBotin) March 12, 2019
His career in the group began in 2015, directly in the position of CEO of Santander Mexico. Since then, “it has driven a major transformation of the business, which has placed the return on adjusted ordinary tangible capital at 31% at the end of March 2022”, highlights the bank. In addition, the number of active customers has grown by almost 50% in that period to almost 10 million. And Santander has positioned itself as one of the first in the country in SMEs, companies, mortgages and project financing.
Until now, Grisi’s most important promotion in the bank’s organization chart occurred before the pandemic, in 2019, when he was appointed regional head of North America, whose main markets are Mexico and the United States. Last year, the group achieved the best results in its history in the US, with a profit of 2,750 million dollars, compared to 648 million in 2018, and became the country that contributed the most to the group’s profit, surpassing by little to Brazil. In addition, in the US market, it led the acquisition of the broker Amherst Pierpont for about 600 million dollars (at current exchange rates, about 570 million euros). On the other hand, Grisi’s departure from the Mexican subsidiary opens a succession process in the position of CEO of Santander Mexico.
Step aside Alvarez
Álvarez joined the group in 2002. Two years later he was appointed CFO and in 2015 he became CEO. Now, once the relief takes effect at the beginning of next year, he will become non-executive vice president and will continue on the bank’s board of directors. “It has been a privilege to be part of the Santander team over the last 20 years. I am very proud of what we have achieved together and I have every confidence that under Ana’s leadership [Botín] and Hector [Grisi] the bank will continue to grow and be successful”, he stated.
Santander highlights in its statement that since Álvarez took over as CEO, the group has increased its return on tangible capital (ROTE): from 11% in 2014 to more than 14% in the first quarter of this year. In addition, the CET1 capital ratio has gone from 8% to over 12% in the same period. “Revenues have grown by 35% in constant euros and the bank has added almost 40 million customers, which brings the total number of people and companies it serves to 155 million at the end of March 2022”, highlights the bank. An evolution that has made it possible to distribute 15,000 million euros in cash dividends to shareholders in those years.
The group has also announced that Ramón Martín Chávez, currently an external director of the bank, will leave the board on July 1. “Chávez will continue to attend the meetings of Santander’s International Advisory Council and will continue as a director of PagoNxt, the group’s payment business,” explains Santander in the note.
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