Spanish lawyers hope for Madoff out-of-court deal

MADRID Jan 16 (Reuters) - A Spanish law firm said on Friday it will press banks including Santander (SAN.MC) and Banco de Madrid to refund investors who made losses in Spain from Madoff-related products.

"The priority goal is to reach an out-of-court deal between clients affected in Spain and institutions like Santander, the fund manager Optimal and Banco de Madrid, which have sold products here," said Jose Luis Gonzalez Montes, a partner at Cremades & Calvo-Sotelo.

"They presented the product, they sold the product and in many cases directly placed a product with investors which even had funds with the bank in another type of financial product such as variable interest rate products or pension plans," Gonzalez Montes said.

Santander and Optimal had no comment and no spokesperson was available at Banco de Madrid.

Accused swindler Bernard Madoff is under house arrest and 24-hour surveillance at his home in New York as authorities investigate a suspected $50 billion fraud by his investment operations.

Spain's largest bank Santander has said its customers have exposure of 2.33 billion euros to Madoff through the bank's alternative investment fund manager Optimal, with the lion's share in Latin America.

Cremades & Calvo-Sotelo said they were now representing more than 50 clients affected by Madoff-related investments in Spain of more than 20 million euros, who could seek redress for losses in the Spanish courts.

"The flow of clients we are getting continues to increase significantly as well as the quantity affected," he said.

BANK CREDIBILITY AT STAKE

"Next week we think we will have enough clients to present ourselves as a real force and to negotiate at the highest level with the banks and put it to them that they have a real problem," Gonzalez Montes said.

"This is affecting clients' trust in the banks and that is going to finish in an immediate loss of private banking clients, but not just in private banking, also of a loss of credibility in the bank."

Last year, Santander moved to shore up investor confidence when it offered to compensate clients of its private banking arm Banif who lost millions of euros from products linked to failed investment bank Lehman Brothers.

Some of Cremades & Calvo-Sotelo's clients had borrowed from their banks in order to invest in Madoff-related products.

"We find ourselves in a situation where the investor has lost the money which he had in the fund, but because he had signed a credit with the bank to pay the fund now doesn't have the fund and has to keep paying the credit," Gonzalez Montes said.

Action in Spain is separate from the U.S. class action which the Spanish law firm announced on Wednesday, along with partner firm Labaton Sucharow, which would be taken against Madoff himself, as well as against intermediary banks and funds. (Reporting by Jesus Aguado and Sarah Morris; Editing by David Cowell)