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Spanish bank seeks creditor protection amid crime claim

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Banco de Madrid stopped operations and is seeking protection from creditors after the US accused its parent, Banca Privada d'Andorra, of money laundering.

Customers of the Spanish bank withdrew significant amounts of funds, leading to a "strong deterioration" of its financial situation, according a statement yesterday by Banco de Espana, Spain's central bank. Client deposits of up to €100,000 are guaranteed by Spain's deposit-guarantee fund, the central bank said.

A US Treasury report published last week which said that parent bank BPA, based in Andorra, is a "primary money-laundering concern" sparked withdrawals, triggering Spain's first banking collapse since 2003. Andorra, an independent nation of 470 square kilometres between France and Spain that counts private banking as one its main industries, pledged last June to end bank secrecy by adopting the OECD standard for the automatic exchange of client information.

Banco de Madrid, a lender with 21 branches, was bought by BPA in 2011. Specialised in private banking and asset management, Banco de Madrid had €1.8bn in assets and €1.6bn of deposits, according to financial statements dated September 2014, posted on its website. Assets under management totalled €3.9bn in mutual funds and so-called sicavs at the end of 2014, according to data from Spanish fund association Inverco.

BPA processed hundreds of millions of dollars through four US correspondent banks in transactions that bore signs of being done for illicit purposes, the Treasury said. The bank engaged in activities involving proceeds from criminal groups in Russia and China, and with Venezuelan money launderers, the report said. (Bloomberg)

Irish Independent