Zurich-based Arab Bank Switzerland is to compensate losses of SFr20 million (about $18 million) incurred through the exposure of the Bermuda-based Auriga International Fund to the Madoff fraud. Managing director, Nasri Victor Malham, told WealthBriefing that reimbursements to clients will be made this week.

The move comes after a March statement in which the bank’s chairman, Abdul Hamed Shoman, denied responsibility for the losses but said he would consider compensating clients on a case-by-case basis. He said clients who are to receive compensation would be contacted when an indemnity plan was ready.

"An estimated $23 million loss of Arab Bank investors was wrought when they invested assets at Auriga International swindled by Bernard Madoff, executive director of US NASDAQ, involved in an estimated $50 billion fraud operation. Clients' investments were invested upon their request and the Arab bank is not held accountable whatsoever for this loss,” Mr Shoman said in the statement.

"Clients are held accountable for their loss and the bank is not under liability or legal obligations of any sort," he added. However, it now appears that the lion’s share of the $23 million losses will be compensated. The bank had $1.8 billion in assets under management at the end of 2008.