After investors filed a class action suit in a US court against Spanish bank Santander, hit hard by the Madoff fraud scandal, the bank has announced it will reimburse its private clients' original investment lost through the fraud.
AFP - Spanish bank Santander will reimburse 1.38 billion euros (1.82 billion dollars) to investors affected by a massive fraud scheme allegedly run by US financier Bernard Madoff, the bank said on Tuesday.
"This solution applies to its private banking clients and for the principle invested in Optimal Strategic, excluding returns, which results in a total amount of 1.38 billion euros," it said in a statement, referring to the bank's fund which was wholly invested with Madoff.
A class action suit was filed on Monday in a US court against Santander, the eurozone's largest bank, in the name of investors who say they lost money by investing in the fund, lawyers said earlier Tuesday.
"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 client," the bank said.
The offer does not apply to institutional investors who lost money by investing in the fund.
Private bank clients will be repayed the money they invested in the Madoff-linked fund in the form of Santander preference shares, which pay an annual two percent return and which could be bought back by the bank after 10 years.
The offer will cost Santander 500 million euros, a figure which will be absorbed in the bank's results for last year which will be presented on February 5, the statement said.
Santander, which has forecast a record net profit of 10 billion euros for 2008, has said its clients lost 2.3 billion euros in total due to investments in the fund.
Madoff, a former chairman of the Nasdaq stock market, was arrested last month after allegedly confessing to a 50-billion-dollar pyramid fraud.
Date created : 2009-01-27