Santander, the Spanish owner of Abbey and Alliance & Leicester, looks likely to miss its ambitious €10 billion (£9 billion) profit target for 2008

Santander, the Spanish owner of Abbey and Alliance & Leicester, looks likely to miss its ambitious €10 billion (£9 billion) profit target for 2008 after suffering hits from the Bernard Madoff scandal and the collapse of Lehman Brothers.Speculation about Spain’s biggest bank came as more details emerged about Mr Madoff’s frantic attempts to prevent the collapse of his scheme and as American prosecutors boosted their efforts to jail the fund manager.Santander, which had emerged relatively unscathed from the credit crunch, said in June that it was aiming for a net profit of €10 billion for 2008. Banking sources in Spain said, however, that Santander’s private bank faced compensating wealthy clients who lost millions of euros on Lehman bonds after the investment bank collapsed last September.It is also possible that Santander will have to compensate customers who lost money in the Madoff scandal after investing in the bank’s Optimal strategic US equity fund. The Switzerland-based fund lost about €2.33 billion of clients’ cash put in Mr Madoff’s fund. Santander itself lost €17 million that it invested with Mr Madoff.The fund manager was arrested on December 11 after confessing that he had been running a fraudulent scheme in which he used funds invested by new clients to pay fake returns to existing investors. The scam unravelled after clients became nervous because of the financial downturn and asked for $7 billion of their cash back.Yesterday, it emerged that Mr Madoff had tried to prop up the scheme by taking $250 million (£165 million) from Carl Shapiro, one of his long-time supporters, in the weeks before his arrest. Mr Shapiro, 95, an entrepreneur and philanthropist who is one of Mr Madoff's oldest friends, lost an estimated $400 million in the fraud and his charitable foundation lost a further $100 million.

Mr Madoff, 70, is on bail, staying at his penthouse in Manhattan, but yesterday prosecutors stepped up their efforts to have him jailed after he allegedly broke the terms of his bail. Marc Litt, Assistant US Attorney, told a court in Manhattan on Monday that Mr Madoff had posted valuables over Christmas and new year to his sons, his brother, Peter, and to an unnamed couple. The fund manager had been ordered not to move any assets while investors who lost money try to recover their cash.

Ira Sorkin, Mr Madoff’s lawyer, told the court on Monday that the items were family heirlooms sent in innocence. Mr Litt said yesterday that one parcel contained 13 watches, a diamond necklace, an emerald ring and two sets of cufflinks. The prosecutor said that the collective value of this parcel could exceed $1 million.
“Two other packages containing a diamond bracelet, a gold watch, a diamond Cartier watch, a diamond Tiffany watch, four diamond brooches, a jade necklace and other assorted jewellery, also were sent to relatives,” Mr Litt wrote in his evidence.
Judge Ronald Ellis must decide whether Mr Madoff's activities warrant revocation of his $10 million bail.Irving Picard, the trustee appointed to unwind Mr Madoff’s affairs, has uncovered about $830 million in cash in the company and about $850 million in liquid assets.