Banco Santander reported a net profit of €8.9 billion ($11.4 billion) for 2008, a 22 per cent drop from a year before. The bank's results contrast with Deutsche Bank's reported pre-tax loss of $7.3 billion for 2008.

Though the bank did not invest in sub-prime assets, its three biggest markets - 
Spain,
Britain and
Latin America - have been hit by economic troubles and fears of deteriorating credit quality.

Santander said loans in arrears as a percentage of its total lending climbed to 2.04 per cent at 31 December 2008, from 0.95 per cent the previous year, and up from 1.63 per cent at the end of the third quarter of 2008. In

Spain, the rate of bad loans rose to 2.58 per cent, costing the bank €3.6 billion.

Santander’s private banking results are not separately reported. The only exception is Santander Private Banking, an off shore private banking unit with a primarily Latin American client base, which reported €181 million in attributable profit to the group, up 10.6 per cent on last year.

The bank charged €450 million against its profits (the previous estimate was €500) to offset losses incurred as a result of the bankruptcy of US investment bank Lehman Brothers and the alleged fraud of US money manager Bernard Madoff

The results were announced as Inversiones Mar Octava , an investment company based in
Chile, and Argentine investor Marcelo Guillermo Testa filed a lawsuit against
Santander in

Buenos Aires. The investors say the bank made "misleading and significantly false statements about due diligence and supervision" of their investments.

Last month,

Santander admitted losing more than €2.33 billion it had invested in Madoff funds. At least half the losses incurred by
Santander clients were reportedly suffered by investors in Latin America, mainly in
Argentina,
Brazil,
Chile,
Colombia and

Mexico.

A number of similar legal complaints against

Santander are expected to be filed over the next few weeks on behalf of the bank's Latin American clients.

Santander has offered to compensate individual clients with €1.38 billion in preferential shares that pay a 2 per cent annual coupon and are callable after 10 years.

Last week, Argentinean law firm Tixi, Ricciardi & Romero announced it is suing
Santander in
Geneva and

Miami for improper due diligence on Madoff investments.

According to
Madrid law firm Cremades & Calvo-Sotelo, which represents some 100 Spanish clients suing

Santander, Madoff's victims could be as many as 3 million worldwide, while the legal battle over the Madoff affair will involve 300 law firms, over 45,000 lawyers and some 15,000 formal legal complaints.