Banco Santander SA of Madrid, one of the largest conduits of investor money to Bernard Madoff, agreed Tuesday to pay $235 million to settle potential legal claims by the trustee of his defunct firm.

The settlement, which requires approval by the bankruptcy court overseeing the Madoff firm's liquidation, would raise the amount of assets the trustee has recovered for investors to more than $1.2 billion.

The trustee, Irving Picard of Baker & Hostetler LLP, said the settlement amounts to 85% of what he would have sought from Santander's investment fund.

He has sued several other Madoff feeder funds and investors for more than $10 billion, claiming they "should have known" of the fraud. Some defendants have disputed the allegations; others have not responded to the suits.

Santander did not immediately comment on the settlement agreement.

Also Tuesday, Picard said that he has committed $116 million of advances to 237 claimants who suffered fraud losses.

Madoff has pleaded guilty to perpetrating a Ponzi scheme and is in jail awaiting sentencing.

Santander, one of Europe's largest banking companies, had about $3 billion with Madoff through its Geneva hedge fund group, Optimal Investment Services SA. The parent earned nearly $100 million of fees in 2006 and 2007.

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