J.P. Morgan & Co. has recovered a substantial portion of its investment in Spain's Banco Espanol de Credito, or Banesto, Morgan chairman Dennis Weatherstone said on Wednesday.

Morgan lost several million dollars on Banesto shares after the bank was seized by regulators in December.

Morgan holds 10% of a $162 million investment in Banesto made by Corsair Partnership, a Morgan fund set up to invest in undervalued banks around the world.

The value of Banesto's shares dropped dramatically from around $14 per share to $5.56 per share after the Bank of Spain ousted the bank's management late last year. But it has since climbed back to around $10.20 per share following Banco Santander's recent acquisition of Banesto.

"Developments have been quite positive," Mr. Weatherstone said, adding Banesto shares are "getting close" to the price Corsair paid for them.

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