Spanish bank, Banco Madrid has become a casualty of a scandal which has engulfed its Andorran parent. The bank, which caters for wealthy clients has filed for bankruptcy.
Customers rushed to empty their accounts after the US Treasury accused the bank’s Andorran parent, Banca Privada d’Andorra of laundering money for organised crime groups.
The cash withdrawals prompted Banco Madrid to halt business and seek protection from its creditors. The bank had 15,000 clients with assets under management of about 6 billion euros.
The mountainous principality of Andorra between France and Spain is heavily reliant on financial services. Analysts say the problems facing BPA, the third richest in Andorra could strain national finances.
Authorities have taken over the running of the bank. Its chief executive Joan Paul Miquel, who was suspended along with the rest of the board was arrested at the weekend on suspicion of money laundering.
US authorities allege BPA facilitated the movement of 4.2 billion dollars in transfers related to Venezuelan money laundering.
The state appointed managers at the bank have capped cash withdrawals in an attempt to contain the damage from the US accusations.