Spain's Santander will compensate all individual clients who suffered losses in the alleged Bernard Madoff fraud, the bank said last night.
The bank plans to issue €1.38 billion ($1.82 billion) in preferential shares with an annual 2 per cent coupon to compensate its clients, it said.
The compensation plan will cost the bank €500 million, which will be provisioned against its 2008 earnings, the bank said.
Earlier yesterday, Spanish law firm Cremades & Calvo Sotelo said in a statement that Santander and its private banking business Optimal were being sued in Florida by clients who lost money.
Santander, the largest bank in the eurozone, has said its customers have exposure of €2.3 billion to Mr Madoff through Optimal, with the lion's share in Latin America.
The lawsuit in the United States did not affect any potential legal action or out-of-court settlement in Spain, said the lawyers.
Investment adviser Bernard Madoff has been accused of operating a $50 billion Ponzi scheme.