Madrid- Spain's second-biggest bank BBVA saw its net profit plunge by 18 per cent to 5.02 billion euros (6.5 billion dollars) in 2008, the bank said Wednesday.

Recurrent profit, however, rose by 0.2 per cent, despite the global financial crisis.

The result was influenced by factors including early retirement payments at its Spanish operations valued at 602 million euros and losses caused by alleged Wall Street swindler Bernard Madoff valued at 302 million euros, BBVA said.

Losses caused by Madoff have been much bigger for Banco Santander, Spain's biggest bank, which has admitted to risking 2.3 billion euros of clients' investments and 17 million euros of its own funds in the fraud.

Santander said Tuesday it will compensate private clients' losses to the tune of 1.38 billion euros.

Santander is the world's first bank to offer such damages in the Madoff affair, according to Spanish media.

Private clients will forfeit the interest they would have accumulated through Madoff funds. Santander will not compensate institutional clients, whom it says should have been aware of the risks involved, reports said.

Santander made the announcement after it was sued in a Florida court over the losses suffered by the clients of its hedge fund arm, Optimal, in the Madoff fraud. (dpa)