MADRID, SPAIN - Banco Santander said on Tuesday that it would merge its wealth management and private banking businesses in a reorganisation of the parts of units hardest hit by the financial crisis.

Global private banking chief Javier Marin will take over the new division, the bank said in a brief news release.

Joan David Grima, until now head of wealth management, will take early retirement, it said.

Early in 2009, Santander had to make a 1.38 billion euros ($2.86 billion) preferential share issue to compensate clients who invested via its private banking Optimal Strategic U.S. Equity Fund, which was hit by the Bernie Madoff fraud.

Other clients of its Spanish private banking arm Banif were hit by the collapse of Lehman Brothers.

The bank also had to temporarily suspend payments from a property fund run by its wealth management division after it was hit by an avalanche of redemptions.

Santander's private banking business includes Banif in Spain as well as Cater Allen, James Hay, Abbey Sharedealing and Abbey International.