Santander's powerful patriarch Botin dies, daughter named successor

MADRID (Reuters) - Banco SANTANDER (SAN.MC) quickly appointed Ana Botin as its new head on Wednesday after her father Emilio's sudden death, continuing the Botin family's century-old management of the lender which now ranks as the euro zone's largest bank.

The board named Botin, 53, as the new group chairwoman just hours after it announced her father had died at the age of 79 from a heart attack. During his 28 years at the helm of Santander, Emilio Botin had transformed the bank from a small domestic lender into a global financial institution.

Ana Botin, who has been groomed for years to take over from her father, had recently run the bank's UK business.

"The appointments and remuneration committee considered Ana Botin is the most appropriate person, given her personal and professional qualities, experience, track record in the group and her unanimous recognition both in Spain and internationally," the bank said following a board meeting.

The move could prove controversial as banking dynasties have come under renewed criticism recently following the scandal at Portugal's Banco Espirito Santo , where the founding family's holdings are being investigated over financial irregularities.

"Succession shouldn't just be saying 'my daughter's going to take over'," said a corporate governance expert at a global asset manager which owns Santander shares, speaking on condition of anonymity before Ana Botin's appointment.

But others said Botin, who has spent most of the last 25 years at Santander, would provide welcome continuity.

"The key issue is whether or not family control is a good or a bad thing. Ultimately this depends on individuals and his (Botin's) daughter is a chip off the old block," said Philip Saunders, co-head of multi-asset at Investec Asset Management.

"More often than not, family control or strong influence tends to bolster long termism which is particularly important in a banking context given that banks typically behave in an overly pro cyclical manner and destroy shareholder value as a consequence," he said.

With Ana Botin now chairing the group a gap is left at Santander's UK arm just as it prepares for a separate share market listing. UK Finance Director Nathan Bostock has been lined up as her replacement, but he only joined a month ago. The UK arm is also looking for a new chairman.

DEALMAKER

Emilio Botin, "El Presidente" to co-workers and the third generation of Botins to run Santander, was at the forefront of a drive to create global banks, offering a one-stop shop to multinational companies and a range of services to consumers.

He used a keen eye for deals to spread Santander's red-liveried brand with its stylized 'S' logo around the world, amassing 1.4 trillion euros ($1.8 trillion) of funds and nearly 200,000 employees.

"He was a man who has been able to make Banco Santander the most important bank of our country," Spanish Prime Minister Mariano Rajoy told journalists in Parliament.

"I had a meeting with him last week and he was well and in good form. It has been a surprise and a blow."

Botin shook up Spanish banking with a campaign to attract depositors in 1989, forcing rivals to compete on price, and bought troubled Banesto in 1994 to create Spain's biggest bank.

He took advantage of cultural and language ties to expand rapidly into Latin America, and in 2004 snapped up Britain's Abbey National for more than 9 billion pounds ($14.5 billion).

More canny dealmaking followed. In 2007, Santander made 2.4 billion euros in three weeks through deals to buy and then sell Italian bank Antonveneta. And while partners RBS and Fortis were driven to seek state bailouts after a carve up of ABN Amro on the eve of the financial crisis, Santander emerged comparatively unscathed with the Dutch group's healthier Brazilian arm.

The expansion helped to shield Santander from the euro zone debt crisis and Spain's long-running recession, with the bank now making only about 14 percent of its profit at home.

"UNOFFICIAL KING OF SPAIN"

But it has not been all success. Santander has trailed the total returns to shareholders delivered in the past 10 years by rivals JPMorgan and HSBC - two firms Botin liked to measures himself against, according to colleagues.

There has been controversy too. Botin's family, which owns barely 2 percent of Santander, paid 200 million euros in penalties in 2011 to avoid charges of tax evasion related to a secret Swiss bank account.

Few doubt Ana Botin had a strong claim to succeed her father. But her high profile in the bank had drawn some criticism.

Earlier this year two shareholder advisory firms, ISS and Glass Lewis & Co, recommended shareholders vote against her re-election as a director - one because it thought Botins were over-represented on the board, the other because it considered there were not enough independent members.

In the event, she got the backing of 81.3 percent of the votes, almost unchanged from three years earlier.

"Botin was the unofficial king of Spain. His death creates uncertainty and a power vacuum at the top," said a London-based hedge fund manager, who declined to be named.

"The obvious successor is his daughter Ana, which was always the plan, but he hasn?t had a proper chance to groom her and install her as chairwoman before he died."

(1 US dollar = 0.6198 British pounds)

(1 US dollar = 0.7731 euros)

(Additional reporting by Elisabeth O'Leary and Paul Day in Madrid; Lionel Laurent, Simon Jessop and Steve Slater in London; Editing by Mark Potter and Greg Mahlich)

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