Santander Offers $1.8 Billion to End Madoff Claims [View All]

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Source: Bloomberg

Banco Santander SA will offer 1.38 billion euros ($1.82 billion) to clients who lost money with Bernard Madoff, a settlement that may pressure banks worldwide to reimburse customers blindsided by the alleged Ponzi scheme.

Spain’s largest bank said yesterday it also will close seven hedge funds run by its Optimal Investment Services unit after the Madoff scandal triggered a surge in withdrawal requests. It didn’t disclose the size of the funds or amounts clients had sought to get back.

Santander, which said Dec. 14 it had 2.33 billion euros in client funds with Madoff, was sued in U.S. federal court in Miami by investors who accused the bank of failing to adequately vet Madoff. Its settlement offer may elicit similar proposals from firms such as Bank Medici AG, the Vienna-based firm that funneled $3.2 billion to Madoff, the most among European banks, and Geneva-based Union Bancaire Privee, with $700 million.

“Other banks are going to see this and customers are going to say, ‘What about us? Are you going to make a similar offer to us?’” said Marvin Pickholz, a litigation attorney at Duane Morris in New York and former U.S. Securities and Exchange Commission enforcement official.

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