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NBK fully reimburses those it led into Madoff scheme
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Added by
apesphere on 30 Jan 2009
From: www.ft.com
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| Image courtesy BallGame68 via Flickr |
While some bankers continue to demand their bonuses, a Kuwaiti institution offers to pay for its mistakes.
Some 20 wealth management clients of the National Bank of Kuwait are being completely reimbursed by the bank for all money lost as a result of their investment in the alleged Ponzi scheme run by Bernard Madoff, the New York broker.
NBK is paying out around US$50 million to cover both the original principal and the gains that they were led to believe they had made on them but which authorities say were fictitious.
By contrast, while Spanish bank Santander has also taken responsibility for putting clients into Madoff's scheme, its offer to clients that have lost money as a result has been described by the leader of one group of disgruntled clients as being more in the nature of a threat than an offer.
The offer comprises Santander preferred stock equal to the principal invested by the client, in return for foregoing legal action and retaining Santander as their "preferred" bank as long as the shares remain in circulation. The preference shares could stay in circulation indefinitely.
Santander group has a market capitalization of $119 billion and NKB has a market capitalization of $18.5 billion, while losses on the Madoff scheme amount to $3.2 billion for Santander clients versus the $50 million that NKB has had to find.
The argument goes that Santander could not afford to do what NKB has done, and other banks have yet to stump up at all yet.
So who would you put your money with?
Some 20 wealth management clients of the National Bank of Kuwait are being completely reimbursed by the bank for all money lost as a result of their investment in the alleged Ponzi scheme run by Bernard Madoff, the New York broker.
NBK is paying out around US$50 million to cover both the original principal and the gains that they were led to believe they had made on them but which authorities say were fictitious.
By contrast, while Spanish bank Santander has also taken responsibility for putting clients into Madoff's scheme, its offer to clients that have lost money as a result has been described by the leader of one group of disgruntled clients as being more in the nature of a threat than an offer.
The offer comprises Santander preferred stock equal to the principal invested by the client, in return for foregoing legal action and retaining Santander as their "preferred" bank as long as the shares remain in circulation. The preference shares could stay in circulation indefinitely.
Santander group has a market capitalization of $119 billion and NKB has a market capitalization of $18.5 billion, while losses on the Madoff scheme amount to $3.2 billion for Santander clients versus the $50 million that NKB has had to find.
The argument goes that Santander could not afford to do what NKB has done, and other banks have yet to stump up at all yet.
So who would you put your money with?
Andrew Newton is the author of The Handbook of Compliance: Making Ethics Work in Financial Services
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