Santander probed on £2bn Madoff losses

The bank, which owns Abbey, Alliance & Leicester and Bradford & Bingley on the High Street, lost more for clients than any other European financial institution. Meanwhile, it only lost 17 million of its own money in the alleged $50 billion swindle.

The investigation by the Spanish authorities and the potential damage to Santander's reputation could have a serious impact on its future profits and growth, particularly in South America where it does 30% of its business and many of the losses are thought to have come.

It could be embarrassing for Santander chairman Emilio Botin, who boasted that the bank had avoided much of the carnage in the financial markets by avoiding exotic financial instruments. This allowed it to take over A&L and B&B.