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The Santander moment might have you believe the banking world has changed, that outrageous pay for bankers with the mental makeup of a Las Vegas card shark is finally becoming a relic of the decadent past. Populism has hit the pay world – thank you Bernie Sanders, Alexandria Ocasio-Cortez, Jeremy Corbyn and the other headline-grabbing socialists who equate overpaid bankers with broken, late-stage capitalism and the greediest bankers with the end of civilization, Rome in the fourth century.

If only it were that simple and uplifting. Sadly, it’s not.

What seemed like the dawn of a new era in bankers’ pay came on Tuesday, when Ana Botin, executive chairman of Spain’s Banco Santander, one of the world’s biggest commercial and retail banks, cancelled the appointment of Andrea Orcel, whom she had agreed to hire in September to become Santander’s new CEO. Mr. Orcel, a Roman, is one of Europe’s best known and highest paid investment bankers.

Ms. Botin’s U-turn came after she learned that it would cost Santander some €50-million ($75-million) to compensate Mr. Orcel for shares he would leave behind at his former employer, the Swiss investment banking giant UBS. That was a price too high, even for a bank of Santander’s size. And given that the bank’s stock market value had dropped by 28 per cent in the past year, taking it to less than €70-billion, shareholders might have balked at the sheer audacity – perhaps recklessness – of paying the moon for any executive, all the more so since Mr. Orcel is a deal-maker, not a retail expert. He was never the obvious choice for Santander.

“In making this decision we have had to balance the respect we have for all of our stakeholders – the millions of people, customers and shareholders we serve – with the very significant cost of hiring one individual, even one as talented as Andrea,” she said.

After the announcement, Santander stock barely wobbled. Life would go on. Jose Antonio Alvarez would continue as the bank’s CEO. Mr. Orcel was out of a job, but given his fortunes, absolutely no one feels sorry for him – certainly no one in Spain, which was nearly destroyed by the 2008 banking crisis and the subsequent property collapse. The bill for the bank fix-it campaign, through bailouts, has reached more than €60-billion, according to the Spanish newspaper El Pais. Of that amount, two thirds was put up by taxpayers. While the worst is over, Spanish unemployment, at about 15 per cent, is almost double the EU’s average. In other words, bankers are not viewed as cuddly objects in Spain.

Ms. Botin’s decision to de-hire an outrageously paid banker played well in Spain. It would be nice to assume that returning Mr. Orcel to gardening leave while he looks for a new job marks the start of the end game for bankers’ pay packages the size of the gross domestic product of a small sub-Saharan country. But no. Mr. Orcel was probably sent packing not because of a sudden attack of morality in Santander’s boardroom, but because of recruitment deal that didn’t go to plan.

We don’t know the details, but it appears that Ms. Botin was hoping to split the difference in the €50-million cost of reimbursing Mr. Orcel for his UBS shares, held in a deferred share account. How about half each, meaning UBS and Santander would each pick up €25-million? Ms. Botin just might be able to justify a €25-million hiring bill; double that would be a different matter.

It didn’t work that way. In the end, UBS evidently decided that Santander would have to pick up the entire tab. After all, Mr. Orcel was moving to a competitor, so why make life easy for him or Santander?

The reality is that bankers’ pay has been barely dented since the financial crisis and while no one loves bankers, no one is burning down their houses. Both banks and bankers got off pretty much scot-free after the 2008 financial meltdown. The cost of the American bank rescue under the Troubled Assets Relief Program was US$700-billion. The real cost was many times higher if you include the Federal Reserve’s US$1-trillion-plus purchase of mortgage-backed securities and other bailout programs.

Bankers’ bonuses in 2009 and 2010 actually rose to record or near-record highs, incredibly. That little ruse was partly accomplished by writing down the value of financial assets in the thick of the 2008 crisis, then inflating their value as the bank rescues came in. No major-bank chief executive or finance boss landed behind bars, in spite of their bad behaviour (the exception was Iceland, where some 26 bankers went to prison). Today, banking remains a highly paid career in which, apparently, all sins are forgiven. JP Morgan Chase boss Jamie Dimon took home US$32-million last year, up 5 per cent over 2017, even though the shares lost 9 per cent in the last year.

Mr. Orcel will find another job and the pay package will no doubt be eye-popping. The era when bankers are cut down to size has yet to arrive.

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