Banco de Madrid Files for Bankruptcy After Parent Accused of Money Laundering
Spanish unit of Banca Privada d’Andorra hit by client withdrawals
Banco de Madrid SA, the Spanish unit of an Andorran lender accused of money laundering for organized-crime groups, has filed for protection from its creditors, Spain’s central bank said Monday.
Banco de Madrid has been hit by substantial client withdrawals, Spain’s central bank said, which has impacted the ability of the lender to “meet its obligations in a timely matter.”
Filing for creditor protection will allow depositors and other creditors “equal treatment.” The filing must still be approved by a judge, the Bank of Spain said in a statement published Monday morning.
Deposits of up to €100,000 ($104,970) a client are protected by Spain’s deposit-guarantee fund, the central bank said.
Banco de Madrid confirmed it was filing for bankruptcy in a separate statement. The Spanish lender said it had undergone a “sharp deterioration in its economic and financial situation” in recent days after its parent company was named a “primary laundering concern” by the U.S. government.
The Treasury Department’s Financial Crimes Enforcement Network last week named parent company Banca Privada d’Andorra, or BPA, a “primary money-laundering concern.”
The U.S. alleged that its managers for years knowingly facilitated transactions by money launderers working for organized crime groups. BPA is a private bank based in Andorra, a tiny principality perched between Spain and France that has a thriving banking industry catering to wealthy individuals.
BPA said last week that it “has worked and is working with the Andorran financial regulator to uncover any wrongdoing,” adding that any doubts about the bank’s behavior “will quickly disappear.”
Banco de Madrid is a small bank in Spain’s banking sector. The lender had 15,000 clients and 21 offices in major cities such as Madrid and Barcelona as of March 11, a spokeswoman said Monday. The bank targeted high-net worth clients with deposits above €500,000, she added.
*Corrections & Amplifications:
Deposits of up to €100,000, or $104,970, a client are protected by Spain’s deposit-guarantee fund. An earlier version of this article incorrectly stated the currency conversion as $95,265. March 16.
Source: WSJ – Banco de Madrid Files for Bankruptcy After Parent Accused of Money Laundering
