Spanish giant Santander will pay $235 million to settle claims against two hedge funds managed by its Optimal subsidiary, according to media reports.

This the first large settlement for trustee Irving Picard in his efforts to get Bernard Madoff’s investment partners to pay back money they withdrew before he owned up to the fraud. Mr Picard said the settlement represented 85 per cent of what he wanted from Optimal . “I am very pleased that we reached such a favourable settlement with Optimal. We hope that other entities against which we have claims will likewise come forward to settle.”

When the payment is made, he will have collected $1.225 billion on behalf of Mr Madoff’s victims.

Santander confirmed its funds had withdrawn money in the legally-crucial 90-day period before Mr Madoff’s arrest and said it was pleased to have cleared that set of legal issues with the trustee.