Spanish Court Rejects Part of Pardon for Santander Chief

MADRID — The Spanish Supreme Court ruled unexpectedly Tuesday that the previous government had gone too far in its pardon of Alfredo Sáenz, the chief executive of Banco Santander, reinstating his criminal record and throwing into question his continued tenure at the bank.

The decision put a cloud over the future leadership of Santander. As chief executive, Mr. Sáenz, 70, has long been second in command to Emilio Botín, the bank’s chairman. Mr. Botín, 78, has been Spain’s most influential banker for almost three decades, transforming what had been a midsize Spanish bank into one of the largest financial institutions in the euro zone.

It now falls to the Bank of Spain to decide whether Mr. Sáenz must step down.

Santander declined to comment immediately on the ruling.

Luis de Guindos, the economy minister, would not comment on Mr. Sáenz’s case but he insisted that “both the Bank of Spain and the government will apply the law and respect court rulings.”

Mr. Sáenz received a pardon in November 2011 after fighting an unsuccessful court battle over charges that he had made false accusations against alleged debtors to Banesto, a troubled bank that was eventually taken over by Santander, in a case that began in 1994.

In March of 2011, the Supreme Court upheld the rulings against Mr. Sáenz.

The pardon came weeks before José Luis Rodríguez Zapatero, the outgoing Socialist prime minister, was scheduled to hand over power to a conservative government under Mariano Rajoy.

The government offered no justification for the pardon, which commuted a three-month prison sentence and a temporary ban from working as a banker into a fine.

The Supreme Court on Tuesday unanimously rejected the government’s contention that having a criminal record did not affect one’s ability to conduct banking activities. The high court maintained the other terms of the pardon.

Despite his legal problems, Mr. Sáenz remained as chief executive, helping steer Santander through a Spanish banking crisis that started in 2008 and eventually required the government to seek a bailout from Europe for the country’s most troubled banks. It secured that bailout last June.

While Santander suffered from its exposure to a collapsed property market, its assets outside Spain, particularly in Brazil, have allowed it to weather the crisis better than many of its counterparts.

Mr. de Guindos underlined on Tuesday the importance of Santander. “I am convinced that its management capacity will lead it to keep being one of the principal banks in Europe and the world,” he said.

Article source: http://www.nytimes.com/2013/02/13/business/global/spanish-court-rejects-part-of-pardon-for-santander-chief.html?partner=rss&emc=rss