Santander to pay out over Madoff claim

SPANISH banking giant Santander has agreed to pay $235m (&pound;148m) to a trustee representing victims of Bernard Madoff&rsquo;s $65bn alleged fraud, to avoid a claim against two hedge funds managed by its Optimal investment unit.<br /><br />The settlement represents the first big victory for the trustee, Irving Picard, who has filed suits against a bevy of investors and funds that profited from Madoff&rsquo;s dealings. He aims to recover some $14bn for victims of the alleged fraud.<br /><br />Santander is thought to have agreed on the settlement to avoid a full-blown high-profile lawsuit.<br /><br />Speaking after the settlement, Picard said the payout was 85 per cent of what he had been seeking from Optimal, but added that the agreement could set a precedent for further payouts.<br /><br />&ldquo;We hope that other entities against which we have claims will likewise come forward to settle those claims for the benefit of all of Madoff's victims,&rdquo; he said.<br /><br />The latest settlement will bring the total amount that Picard has collected on behalf of Madoff investors to more than $1.2bn.<br /><br />Under US law, investment institutions that withdrew funds in the 90 days leading up to Madoff&rsquo;s arrest are subject to demands to pay back their investors.<br /><br />Santander would not confirm whether or not Optimal had withdrawn funds during that period but said it would issue a more detailed statement at a later date.<br /><br />The bank sent director Rodrigo Echenique to meet Madoff in New York on 27 November last year, less than a month before his arrest, but it would not say whether the purpose of the trip had been to extract funds.<br /><br />Santander, the largest bank in Europe, has said that it lost up to &euro;2.33bn through its Optimal funds as part of the alleged fraud.<br /><br />The bank has already offered compensation to private banking clients who lost a combined &euro;1.38bn, with 93 per cent accepting the offer.<br /><br />Madoff pleaded guilty in March to operating a $65bn &ldquo;Ponzi&rdquo; scheme in which investors were given false returns taken from the funds of other investors.