The painter’s work, titled ‘Head of a Young Woman’, was seized from his yacht in Corsica, France, in 2015.
Botin was sentenced to 18 months in prison after being found guilty of “smuggling cultural goods” and was forced to forfeit the work.
Spain’s strict heritage laws state that any work of art over 100 years old and considered culturally significant can be deemed a national treasure.
This status forces owners to obtain a permit before they are allowed to take the work out of the country.
Botin was denied a permit for the Picasso in 2012, after he authorised British auction house Christie’s to seek an export permit from Madrid to London.
In 2015, Botin reportedly instructed his chauffeur to drive the painting from Madrid to Valencia, where his yacht was moored and bound for Corsica.
But French police inspected the yacht after receiving a notification the banker had requested a permit to transport the painting and found it wrapped up in the captain’s cabin.
According to local news site El Confidencial, the banker argued the art had only been in Spain on a few occasions, including his daughter’s wedding and for re-framing.
He added that he intended to bring it to Geneva for safekeeping and not auction it off in London.
But the judge ruled against him, saying: “Despite being fully aware of the administrative ban, the defendant transferred the painting to [his yacht], docked in Valencia, with the purpose of removing [the painting] from Spain.”
‘Head of a Young Woman’ was painted by Picasso in the early 1900s at the age of 24 during his Gosol period, before Cubism.
It is worth an estimated £22 million and Botin acquired it in 1977 in London. The piece has been handed over to the Reina Sofia art museum in Madrid, where it will reside until authorities decide where to assign it.
It is unlikely he will have to serve any jail time as first-time offenders in Spain are often spared prison for non-violent crimes with sentences of less than two years.