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The banker's family was forced to sell Dutch-born artist Jan Griffier the Elder's "View from Hampton Court" after the banker was killed. His wife sent their children to Britain before she herself fled to Belgium.

She was captured and spent two years in a concentration camp before being reunited in 1946 with her family in Britain, where she died in 1968.

The painting dropped out of sight until 1955, when it was sold at auction in Germany.

Six years later, the Friends of the Tate Gallery bought the painting and presented it to the museum.

There is no suggestion that the Tate, a national museum, was aware that the painting was looted art.

The painting remained in the Tate collection, where the banker's son saw it in 1990.

He approached the Tate directly for financial compensation in July 1999, but at the time, there was no formal procedure for making Holocaust-related compensation claims in Britain.

The British government set up the Spoliation Advisory Panel to handle such claims in February 2000.

The banker's son submitted his claim to the panel last June. The claim included slides of the Griffier painting that his father had had made for insurance purposes.

An adviser to Janner, who represented the claimant during proceedings, described the settlement as "a pretty good deal."

"It's roughly the value of the painting, once you take restoration and insurance costs into account," said Mitchell Coen.

The payment is officially designated as ex-gratia, meaning it comes in recognition of a moral responsibility, not as compensation.