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.

Topics in this article
Featured on Al Jazeera
Swathes of the British electorate continue to show discontent with all things European, including immigration.
Astronomers have captured images of primordial galaxies that helped light up the cosmos after the Big Bang.
Critics assail British photographer's portrayal of indigenous people, but he says he's highlighting their plight.
As Western stars re-release 1980s charity hit, many Africans say it's a demeaning relic that can do more harm than good.
No one convicted after 58 people gunned down in cold blood in 2009 in the country's worst political mass killing.
While hosting the World Internet Conference, China tries Tiananmen activist for leaking 'state secrets' to US website.
Once staunchly anti-immigrant, some observers say the conservative US state could lead the way in documenting migrants.
NGOs say women without formal documentation are being imprisoned after giving birth in Malaysia.
Public stripping and assault of woman and rival protests thereafter highlight Kenya's gender-relations divide.