Santander Names Ana Botin Head of U.K., Replacing Horta-Osorio

Antonio Horta Osorio, CEO of Santander U.K.
Antonio Horta-Osorio ran 10 different banks for Chairman Emilio Botin during his 18 years at Banco Santander SA. Photographer: Chris Ratcliffe/Bloomberg

Ana Patricia Botin, daughter of Banco Santander SA’s chairman, will take over the bank’s U.K. unit, strengthening her position to succeed her father just as the U.K. division is planning an initial public offering.

Botin, 50, will take the job after Horta-Osorio was today named chief executive officer of Lloyds Banking Group Plc, the Spanish lender said today in a statement. She is chairman of Banco Espanol de Credito SA, Santander’s Spanish consumer-banking unit.

The eldest daughter of Santander Chairman Emilio Botin, Ana Patricia Botin has been mentioned by analysts as a possible successor to her 76 year-old father. She was already the highest-ranking woman in Spanish finance as head of the group’s Spanish retail unit Banesto. She takes over as Santander U.K. prepares for an initial public offering in London next year.

“The market will see this as another step to a final destination as the head of Santander,” said Juan Jose Figares, chief analyst at Link Securities in Madrid.

Botin, ranked 38th in Forbes’ list of the world’s most powerful women this year, has lead Banesto since 2002. She steered the retail lender through a real estate collapse in Spain that prompted a six-fold increase in the industry’s bad-loan ratio. Botin, after studying in the U.S. and working at J.P. Morgan & Co., has been at Santander since 1988. Santander U.K. accounts for a quarter of group profit.

‘Last Step’ in Succession

“Her path has been very carefully prepared, and it would be a logical move,” said Robert Tornabell, a professor of finance at the ESADE business school in Barcelona, who has met Santander officials including Emilio Botin. “This would be the last step” in the road to succession, he said.

The bank’s U.K. business expanded during the credit crisis as it bought Alliance & Leicester Plc as well as parts of Bradford & Bingley Plc and Royal Bank of Scotland Group Plc. Those acquisitions were made during the tenure of Horta-Osorio, who will now be Botin’s direct rival at Lloyds, Britain’s biggest mortgage lender.

Santander fell 3.5 percent to 8.69 euros in Madrid, while Lloyds rose 2.7 percent to 69.20 pence in London. Banesto shares slipped 0.2 percent to 7 euros.

“It’s not good news for Santander,” said Francisco Salvador, a Madrid-based strategist at Iberian Equities. “Horta-Osorio was clearly a heavyweight.”

Santander said board member Antonio Basagoiti will be named non-executive chairman of Banesto.

Initial Public Offering

Santander U.K. had a 19 percent share of mortgage lending in the third quarter and a 14 percent share of total mortgage stock. The group said on Oct. 28 it planned to sell a stake in the U.K. unit in an IPO and while it hadn’t decided on the date, it would probably take place in the first part of 2011.

“Ana Patricia is well known by investors and that could help move forward with the plan for an initial public offering,” Figares said.

Santander officials regularly decline to comment on the Botin succession plan and there’s no sign he will be stepping aside anytime soon. Emilio Botin I, Ana Patricia’s great-grandfather, was named chairman in 1909. His son, also named Emilio, became head of the bank in 1950. The current chairman, Ana Patricia’s father, took over in 1986, when his father retired at the age of 83.

After earning an economics degree at Pennsylvania’s Bryn Mawr College in 1981, she worked for J.P. Morgan & Co. in Madrid and New York, rising to vice president in the Latin American division. Botin moved to Santander in 1988 as head of international capital markets. She joined the board a year later at age 28. In 1991, she became director of investment banking, eventually spending more than $5 billion on acquisitions in Latin America.

European Crisis

Her time at Banesto also coincided with the sovereign debt crisis in Europe, which limited access to capital markets for Spanish banks. That stiffened competition for deposits as an alternative source of funding for lenders.

“She has distinguished herself in marketing campaigns to get deposits,” Tornabell said. “They pay more than others but they have lower bad-loan ratios so they can compete.”

Banesto’s bad loans rose to 3.8 percent of total lending in September, and third-quarter net profit fell 52 percent as the lender set aside more money. That compares with an industry-wide ratio of 5.62 percent in August, up from 0.84 percent three years earlier, according to Bank of Spain data.

Santander said on Oct. 28 that it will miss its 2010 earnings goal due to a change in banking provisioning rules.

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