Banco Santander, Spain’s biggest bank, agreed to pay $235 million to the trustee liquidating Bernard Madoff’s defunct money-management firm to settle claims related to Madoff investments by two of its hedge funds.

The bank, which directed billions of dollars to Madoff, made the out-of-court deal to avoid a lawsuit by trustee Irving Picard, who has been suing Madoff’s biggest investors seeking the return of years’ worth of Ponzi-related profits. Picard said yesterday that the settlement is 85 percent of his claim against Santander.

“We hope that other entities against which we have claims will likewise come forward to settle those claims for the benefit of all of Madoff’s victims,” Picard said in a statement. He filed court papers yesterday asking US Bankruptcy Judge Burton Lifland in Manhattan to approve the deal.