SMALL Spanish bank Banco Madrid yesterday filed for bankruptcy after the United States accused its Andorran parent of laundering money for organised crime groups.
Customers of Banco Madrid, which caters for affluent people, rushed to empty their accounts after parent group, Andorran lender Banca Privada d’Andorra (BPA), was described by the US Department of the Treasury as an “easy vehicle” for criminal gangs in Russia and China to funnel their profits.
The cash withdrawals prompted Banco Madrid to halt business and seek protection from its creditors, the Bank of Spain said yesterday.
Banco Madrid had 15,000 clients with assets under management of about €6bn (£4.3bn) before the US allegations and BPA’s subsequent seizure by authorities in Andorra, a tiny principality in the Pyrenees mountains between Spain and France.
The Bank of Spain will guarantee deposits of up to €100,000 per client. It said fewer than 500 clients had more than €100,000 deposited at the bank.
US officials said BPA’s alleged money laundering occurred largely through its Andorran headquarters, but Spain’s anti-corruption prosecutor is looking into whether similar activity occurred at its unit there, a judicial source told Reuters.
The chief executive of BPA, who was suspended along with the rest of the board last week, was arrested at the weekend on suspicion of money laundering.