[QODLink]
Europe
Santander offer to Madoff 'victims'
Spain's largest bank offers to reimburse customers $1.82bn lost in alleged fraud.
Last Modified: 28 Jan 2009 19:39 GMT

Bernard Madoff is accused of running a fraudulent $50bn scheme that hit investors around the world

Spain's largest bank has offered to reimburse its private clients the $1.82bn lost in the alleged fraud by Bernard Madoff, a US broker.

Santander said on Wednesday it was offering its clients the "chance to recover 100 per cent of the money which they invested", but said the offer would not apply to institutional investors.

The move means clients of the bank will only lose the interest they should have accrued through Madoff funds.

Madoff, a former chairman of the Nasdaq stock market who was arrested last month, is accused of running a fraudulent $50bn scheme that hit investors and banks around the world.

'Red flags'

Santander was one of the companies most exposed to the scheme Madoff allegedly ran.

It revealed in December its investment fund Optimal had a $3bn exposure to the Madoff scheme.

A Spanish law firm said a day earlier the bank was being sued in the US by investors who say they lost money in a Madoff-linked fund.

The lawsuit claims Santander was negligent, saying there was a "plethora of red flags" that should have alerted the bank that Madoff was running an alleged pyramid scheme.

In a statement Santander said it would repay the money of its private bank clients.

'Exceptional circumstances'

Santander in a statement: "The group has taken this decision given the exceptional circumstances surrounding this case and based exclusively on commercial reasons, given the interest it has in maintaining its business relationship with these clients."

Santander added that its offer will cost $660m which will be absorbed in the bank's results for last year.

The bank has forecast a net profit of $13bn for 2008.

Meanwhile, Spain's economy is officially in recession after figures showed it had contracted sharply in the last two quarters of 2008.

Spanish economic output fell 1.1 per cent in the last three months of 2008 compared with the previous quarter, the Bank of Spain said.

Source:
Agencies
Topics in this article
People
Country
Featured on Al Jazeera
Italy struggles to deal with growing flood of migrants willing to risk their lives to reach the nearest European shores.
Israel's Operation Protective Edge is the third major offensive on the Gaza Strip in six years.
Muslims and Arabs in the US say they face discrimination in many areas of life, 13 years after the 9/11 attacks.
At one UN site alone, approximately four children below the age of five are dying each day.
Featured
The conservative UMP party suffers from crippling internal divisions and extreme debt from mismanagement.
More than fifty years of an armed struggle for independence from Spain might be coming to an end in the Basque Country.
After the shooting-down of flight MH17, relatives ask what the carrier has learned from still-missing MH370.
Human rights and corporate responsibility prompt a US church to divest from companies doing business with Israel.
Afghan militias have accumulated a lengthy record of human-rights abuses, including murders and rapes.
join our mailing list