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As whoopsies go, it could have been worse: Sure, Banco Santander’s already very-costly British branch just mistakenly sent out $175 million in duplicate payments to some 75,000 people on Christmas Day, which is both very embarrassing and a huge pain-in-the-ass. But it could have sent nearly $1 billion to some very recalcitrant and wealthy-enough-to-hire-the-best-lawyers hedge funds, like Citigroup did. And unlike Citi, it’s likely to get most of the money back (as Schwab did), although it sounds like it will be a costly and headache-inducing task.

To recoup the money, Santander UK has asked the banks where people received the payments to help retrieve the money.

Santander UK said it was also using its own processes for recovering money that was paid in error. It was not clear how the banks would deal with customers who had already spent the money….

It is rare for banks to deposit millions in error, but such mistakes can be the most costly for those who receive the money by mistake.

In April, a 911 dispatcher was arrested on fraud and theft charges after she bought a house and an S.U.V. using some of the $1.2 million that the financial services company Charles Schwab had accidentally deposited in her brokerage account.

In February 2008, two sisters from Blackburn, England, were jailed after they spent nearly £135,000 that a bank accidentally deposited in one of their accounts.

On the other hand, as one recently-early-retired bank executive could tell Santander CEO José Antonio Álvarez, these sorts of things aren’t likely to endear a financial institution to its regulators, especially if they have other reasons to be suspicious. Might be the sort of lazy, slipshod system of controls that a real hard-ass like Andrea Orcel would have sorted out, meaning Santander’s failure to hire him is even more expensive than a mere $75 million legal victory.

British Bank Makes $175 Million in Mistaken Payments [NYT]

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