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You are here: Home Finance & Business Banking Santander launches offensive to rebuild trust

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02/02/2009Santander launches offensive to rebuild trust

Swift actions taken by Spain’s biggest bank may just help restore investor confidence.

MADRID – Santander, Spain's biggest bank, has acted twice in less than 24 hours to restore investor confidence with the announcement of solid 2008 results and a plan to reimburse clients who lost money to the alleged fraud by US broker Bernard Madoff.

The bank offered late Tuesday to repay the EUR 1.38 billion which its private clients invested in a Madoff-linked fund in the form of Santander preference shares, in the first such move by a bank.

Diego Barron, an analyst at Fortis Bank in Madrid, said Santander made the offer to reimburse its clients who lost money to Madoff to neutralise "a risk to its reputation".
"They did not have to do it," he told AFP, adding the bank's 2008 results "were in line with our expectations and seeing that they did not have additional loses was good news".

Santander was making the offer "to preserve the value of the franchise," the bank's finance director Jose Antonio Alvarez told the Financial Times.

A bank spokesman said the offer would not be extended to institutional investors who put money into Santander's Optimal Strategic.

"Private clients have a long relationship with the bank which we want to preserve," he told AFP.

Earlier on Wednesday the bank announced it has its annual net profit for 2008 would be EUR 8.87 billion, a 2.0 percent decline from the record profit of EUR 9.03 billion it posted in 2007.

The bank, which will publish full 2008 earnings on 5 February, also said it would keep its 2008 dividend at the same level as that of 2007.

The market reacted positively to Santander's news on Thursday. Shares in the bank closed up 13.39 percent at 6.52 euros, outperforming the benchmark Ibex-35 most traded share index which closed with gains of 4.22 percent.
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