Madoff, a 70-year-old Wall Street veteran, is alleged to have confessed to having lost 50 billion dollars (S$74.45 billion) of investors' money in a giant pyramid scheme that collapsed in the global financial crisis. -- PHOTO: ASSOCIATED PRESS
LONDON - HSBC bank joined a list of top names in world finance admitting on Monday huge potential losses in a suspected scam by Wall Street figurehead Bernard Madoff, revealing they were fooled by a classic pyramid fraud.
HSBC said that its exposure to the alleged long-running scheme was about US$1 billion (S$1.47 billion).
RBS could lose $890 million
LONDON - BRITAIN'S Royal Bank of Scotland said on Monday that it could potentially lose about 400 million pounds (S$890 million) from an alleged scam run by New York trader Bernard Madoff.
'The Royal Bank of Scotland Group said it had exposure through trading and collateralised lending to funds of hedge funds invested with Bernard L Madoff Investment Securities,' said in an official statement from RBS.
PARIS - FRENCH investment bank Natixis said on Monday it stands to lose up to 450 million euros (S$896 million) in the scandal surrounding New York investment manager Bernard Madoff.
'Natixis could indirectly be a victim of the fraud case for which Bernard Madoff, renowned New York financier, was arrested,' the subsidiary of French banks Caisse d'Epargne and Banque Populaire said in a statement.
Investors around the world have scrambled since Friday to assess potential losses from an alleged US$50 billion (S$74.4 billion) fraud by Bernard Madoff, the prominent Wall Street trader arrested last week.
Following a list of some of the firms exposed to the alleged fraud:
TOKYO - JAPAN'S top broker Nomura on Monday joined the growing list of victims in the scandal surrounding the once high-flying New York broker Bernard Madoff, warning it may have lost about US$300 million (S$444 million).
Nomura said in a statement that it had exposure of 27.5 billion yen, but reassured investors that there would be no significant impact on its finances.
Shares in Santander, the biggest bank in Spain and the second-largest in Europe after HSBC, plunged after the lender said it had an exposure of more than US$3 billion to Madoff Investment Securities in New York.
British, French, Japanese and Spanish banks and funds said investments totalling billions of dollars could be wiped off their balance sheets by a scandal that is set to affect some of the richest people in the world.
Royal Bank of Scotland said it could lose about 400 million pounds (S$888 million), joining a growing list of banks and investors in Europe, Asia and the United States struck by the scandal.
France's Natixis investment bank, already brought low by subprime losses, put its maxiumum exposure at 450 million euros (S$897 million). Retail banking giant BNP-Paribas revealed potential losses of 350 million euros.
Japanese financial giant Nomura said it could lose up to US$303 million and officials in South Korea said financial institutions there a total exposure of some US$95 million to Madoff's scandal-hit investment scheme.
Madoff, a 70-year-old Wall Street veteran, was arrested last Thursday.
He is alleged by US prosecutors to have confessed to defrauding investors of US$50 billion in a long-running scam that collapsed after clients asked for their money back as a result of the global financial crisis.
Banks around the world have rushed to disclose potential losses from the scandal in an apparent bid to avert any deepening of the suspicion which has frozenh credit markets, and in stark contrast to widespread reticence in recent months as the subprime mortgage crisis unfolded.
US authorities allege that Madoff delivered consistently strong returns to clients by secretly using the principal investment from new investors to pay out to other investors in the scheme, a version of what is known as 'pyramid fraud'.
The scheme apparently worked as long as he could attract new investors but seems to have unravelled when some of Madoff's clients asked to withdraw their principal - only to discover that his seemingly brimming coffers were empty.
This fraud is also known as a 'Ponzi scheme' after a US swindler from the 1920s, Charles Ponzi, who cheated thousands of mostly small-time investors of their savings by promising returns of 40 per cent by means of foreign exchange arbitration on international reply-paid postage stamps.
British investment fund Bramdean Alternatives Limited, which said it had put about US$31.2 million in Madoff's company, said that the scandal raised 'fundamental questions' about the American financial regulatory system.
'It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades, while investors have continued to invest more money into the Madoff funds in good faith,' the firm said in a statement.
Britain-based hedge fund manager Man Group said it had invested US$360 million in Madoff Securities. The fund said in a statement that 'it appears that a systematic and comprehensive fraud may have been committed'.
Property magnate Vincent Tchenguiz, one of Britain's richest people, was reported to be potentially affected to the tune of millions of pounds by the scam, which the Wall Street Journal says has also hit wealthy US investors.
Spain's El Pais newspaper reported that the country's second-biggest bank, BBVA, could lose hundreds of millions of euros in the scam. The report said 'some managers put the figure at around 500 million.'
French insurance giant Axa on Monday said that its potential losses were below 100 million euros and top banks Societe Generale and Credit Agricole each said that their exposure was under 10 million euros.
Italy's biggest bank, UniCredit, said its exposure was around 75 million euros but added that an investment unit Pioneer Investments may also have been indirectly affected without giving any further details.
Banco Popolare said its exposure amounted to 68 million euros.
In Switzerland, Geneva private banks could lose up to five billion dollars (3.7 billion euros) in the scam, Swiss newspaper Le Temps reported, while private bank Reichmuth & Co said it may have lost 328 million dollars.
Sweden's Nordea banking group said its exposure was 48 million euros.
Germany's Deutsche Bank and Commerzbank have declined to comment on the effects of the Madoff scam. A spokesman for Commerzbank told AFP that there would be no comment on particular investments because of 'banking secrecy'. -- AFP
