“All extraordinary gains during the year were offset by write-offs and reinforcement of the balance sheet,” the bank said in a statement yesterday.

The bank brought forward the announcement of its results as requested by the Spanish stock market regulator, a request made after Santander said it would compensate clients who lost money from the Madoff affair.

Santander said in a statement it would issue €1.38 billion in preferential shares to compensate individual private banking clients' initial investment in the alleged fraud and €500 million will be provisioned against 2008 earnings.

The bank said it would pay a total dividend against 2008 results of €0.651, the same as 2007 and representing a payout of 54.3 per cent of 2008 earnings.

Speaking at a shareholders meeting earlier this week, chief executive Emilio Botín said that the end-of-year results, to be announced in full on 5 February, will be “fantastic, among the best in the banking world". He also expressed optimism about the year ahead.

However, the bank has not achieved the €10 million net profit he predicted last summer.

Santander, which before December seemed impervious to the credit crisis, has been hurt by its dealings with Bernard Madoff. Last month, the bank said it had invested €2.3 billion ($3.06 billion) in Madoff's funds through its hedge fund manager, Optimal. The bank said it had also invested €17 million of its own funds in Madoff products.