Funds: scale of Madoff fraud becomes clearer
Can it get any worse for the banks? Each time the bottom is seemingly reached, someone digs the pit a little bit deeper. The list of Madoff's victims is beginning to look like yet another serious blow to banks - and the governments that are rescuing them.
As Ireland announces a euro 10 milliard rescue package for its banking sector, long after most other EU governments, more news from RBS. It is exposed to the Madoff debacle to the tune of some USD600 million. As Madoff reportedly told staff and police that there is no money, it looks as if RBS has just lost a significant slug of the money it got from selling 58% of itself to the UK government.
And its not the only European bank exposed to losses:
HSBC says that it loaned money to third parties to invest in Madoff funds. HSBC therefore has recourse to those borrowers. The exposure is said to be around GBP1 milliard.
But Santander is in a woefully different and difficult position: it has invested clients' funds in Madoff's activities, say reports. And it could be looking at losses of up to euro2.33 milliard.
BNP Paribas - the largest bank in France - has said that it has "exposure" of around euro350 million but does not say how that is made up.
However, it is Swiss private banks that look the most vulnerable with Swiss media reporting yesterday that Reichmuth has said that it faces losing USD325 million loss and Benbassat & Cie having USD935 million at risk.
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