*

Broedel faces legal proceedings from former employee Itau

*

Manuel Preto to replace Jose Doncel as new accounting head

(Adds appointment of new accounting chief, changes sourcing in

first paragraph to a bank internal memo)

By Jesús Aguado and Andres Gonzalez

MADRID, June 4 (Reuters) - Santander rescinded

the appointment of Alexsandro Broedel Lopes as its new chief

accounting officer and has instead chosen Manuel Preto for the

role, according to an internal memo by the Spanish lender on

Wednesday seen by Reuters.

Broedel, who had been set to start in the role at Santander

as soon as this month, faces litigation proceedings from his

former employer Brazilian lender Itau Unibanco ( ITUB ), which

has accused Broedel of diverting funds while at the bank.

Broedel declined to comment. His representatives had

previously said their client denied any misconduct.

A person familiar with the matter told Reuters earlier that

Santander had decided not to proceed with Broedel. Santander

declined to comment on Broedel and did not mention him in the

internal memo.

The executive, who Santander had hired last year, was

expected to replace current head accounting officer, Jose

Doncel.

The bank said in the memo that Preto will replace Doncel,

with his appointment becoming effective July 31.

Preto joined Santander in 1996 and has held various

leadership roles in Santander Portugal and at a group level.

Since 2019, he has been deputy CEO, chief financial officer and

head of strategy of Santander Portugal, the bank said in the

memo.

Santander's decision comes after Itau, Latin America's

largest private lender, dropped a lawsuit against a past

consultant but said earlier this week it would continue with

litigation against Broedel.

Itau alleges that the consultant, in collaboration with

Broedel, breached the bank's policies by engaging in irregular

payments for consultancy reports.

It is not the first time that Santander has to row back on

the appointment of a senior executive.

In one of the banking industry's biggest disputes over pay,

Italian banker Andrea Orcel and Santander ended up in court

after Spain's biggest bank dropped plans to make the former UBS

investment banker its chief executive in January 2019.

On Monday, Itau confirmed it had reached a settlement with

Eliseu Martins, under which the consultant agreed to pay an

additional 2.5 million reais ($440,000) to the bank, bringing

the total amount returned to 4 million reais.

Under the settlement, seen by Reuters, Martins said Broedel

was his de facto business partner, collaborating on certain

consulting work and accounting reports, receiving 40% of revenue

generated by those services.