Spain’s Santander, one of Europe’s biggest banks, has reached a settlement with the trustee seeking to recover money for Bernard Madoff’s victims, agreeing to pay $235m to resolve claims against two of the bank’s hedge funds managed by its Optimal investment arm.

The deal is the first big settlement for Irving Picard, the trustee, in his quest to get Mr Madoff’s investment partners to return money they withdrew from his business before he admitted running a Ponzi scheme. In recent weeks, he has filed suits against hedge funds and investors who profited from Mr Madoff’s operation, seeking the return of $12bn.