Royal Bank of Scotland, Man Group and Nomura yesterday joined a growing list of financial groups acknowledging exposure to the alleged €37 billion fraud surrounding Wall Street trader Bernard Madoff.
A report in the Financial Times said HSBC Holdings had emerged as one of the largest victims, with potential exposure of about €741 million. HSBC could not immediately be reached for comment.
RBS said its potential loss could amount to some €447 million, if it assumed that the value of its assets in market-making firm Bernard L. Madoff Investment Securities were nil. Man Group estimated its exposure at €267 million.
Natixis of France said it had as much as €450 million of exposure, and Italy's second-biggest bank, UniCredit SpA, revealed exposure of around €75 million.
US prosecutors and regulators have accused 70-year-old Mr Madoff, a former chairman of the Nasdaq Stock Market, of masterminding a fraud through his investment advisory business, which managed at least one hedge fund.
Man Group said it was exposed to Mr Madoff through its institutional fund of funds business RMF, which has some €267 million invested in two funds that are directly or indirectly sub-advised by Madoff Securities.
"It appears that a systematic and comprehensive fraud may have been committed, evading a range of structural controls," Man Group said in a statement.
The investment represented approximately 1.5 per cent of RMF's funds under management, and 0.5 per cent of funds under management for Man Group as a whole.
RBS's exposure to Mr Madoff, who was arrested in New York on Thursday over the alleged fraud, was through trading and collateralised lending to fund of hedge funds invested in the group, the bank said in a statement.
The scandal comes at a time when hedge funds are suffering from poor performance, impairing their vow of yielding money whichever way the market turns, and has caught out banks and wealthy individuals across the world.
Nomura Holdings said earlier in the day it had a €220 million exposure related to Mr Madoff, though the impact on its capital would be limited.
On Sunday, three European banks announced a total of €2.8 billion in exposure to Mr Madoff.
Santander and BNP Paribas, the largest banks of Spain and France respectively, and Swiss private bank Reichmuth became the latest parties to detail possible losses over investments made with Mr Madoff.
Santander put its client exposure at more than €2.3 billion, while BNP Paribas said it could face a potential loss of €350 million from Mr Madoff-linked investments. Reichmuth said it had about €243 million at stake.