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Customers of Banco Madrid, which caters for
wealthy people, rushed to empty their accounts after parent
group, Andorran lender Banca Privada d'Andorra (BPA), was
described by the U.S. Department of the Treasury as an "easy
vehicle" for criminal gangs in Russia and China to funnel their
profits.
The cash withdrawals prompted Banco Madrid to halt business and
seek protection from its creditors, the Bank of Spain said on
Monday.
Banco Madrid had 15,000 clients with assets under management of
about 6 billion euros ($6.3 billion) before the U.S. allegations
and BPA's subsequent seizure by authorities in Andorra, a tiny
principality in the Pyrenees mountains between Spain and France.
The Bank of Spain will guarantee deposits of up to 100,000 euros
per client. It said fewer than 500 clients had more than 100,000
euros deposited at the bank.
U.S. officials said BPA's alleged money laundering occurred
largely through its Andorran headquarters but Spain's
anti-corruption prosecutor is looking into whether similar
activity occurred at its unit there, a judicial source told
Reuters.
The chief executive of BPA, who was suspended along with the
rest of the board last week, was arrested at the weekend on
suspicion of money laundering.
($1 = 0.9492 euros)
(Writing by Paul Day and Carmel Crimmins; Editing by Keith Weir)
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