Santander shares close down on Madoff probe report

MADRID (Reuters) - Shares in Spain's biggest bank Santander closed down on Tuesday after the Wall Street Journal reported Spain was probing the bank over the exposure of more than 2.3 billion euros ($3.06 billion) in client funds to alleged swindler Bernard Madoff.

The Journal said Spain's anti-corruption prosecutor would examine the relationship between Santander, investment fund Fairfield Greenwich Group and Madoff.

Investors are suing Fairfield Greenwich Group, whose clients stand to lose $7.5 billion in the alleged $50 billion Ponzi scheme, in which early investors are paid with the money of new clients.

Investors claim Fairfield Greenwich and its executives "failed to manage properly their investments and to carry out necessary due diligence that would have uncovered the massive Ponzi scheme."

A spokesman for Santander declined to comment on the WSJ report, as did Spain's public prosecutors office.

A Bank of Spain spokesman also declined to comment.

Santander shares closed down 3.36 percent at 6.61 euros, compared with a 1.55 percent drop to 9,057.3 on the IBEX-35.

According to the Journal, investigators are probing why Santander chairman Emilio Botin sent his head of risk management operations to visit Madoff weeks before the former Nasdaq chairman's arrest and whether Santander officials were aware of the problem.

(Reporting by Judy MacInnes; editing by David Cowell)