Banco de Madrid files for bankruptcy

Spain's Banco de Madrid announced insolvency proceedings on Monday as a large amount of clients withdraw money due to the money-laundering scandal affecting its Andorran mother company.

Clients rushed to withdraw their money from Banco de Madrid, which was intervened by the Bank of Spain last week as it was 100 percent owned by the Andorran bank Banca Privada d'Andorra (BPA) accused by the United States of laundering money for organized crimes.

As a result of the cash withdrawals, Banco de Madrid sought protection from its creditors and ceased all operations until a judge rules on its insolvency proceedings.

"The decision is caused by Banco de Madrid's significant financial deterioration as a result of important fund withdrawals by clients and by recent events that have affected its ability to meet its obligations in a timely manner," the Bank of Spain pointed out.

Andorran authorities took control of the BPA on March 10, while the Bank of Spain intervened Banco de Madrid the following day "in order to ensure the continuity of this company, taking into account the decision adopted by the U.S. Treasury Department."

The U.S. Financial Crimes Enforcement Network said the BPA was an "easy vehicle to funnel proceeds of organized crime, corruption and human trafficking through the U.S. financial system."

Former Managing Director of BPA Joan Pau Miquel was arrested and sent to prison, while other two more managers could be also arrested, local media reported. Endit