Banks and investment funds worldwide are stepping forward to admit that they have lost billions in the massive fraud allegedly masterminded by Bernard Madoff.
According to prosecutors, the former chairman of the Nasdaq stock exchange has said that instead of investing their money he had been running a pyramid scheme for years in which existing investors are paid out with money from new clients.
The case is set to unleash a raft of law suits against Madoff.
In Europe, those which have lost out include banks in Britain, Scandinavia, France, Switzerland, Spain and Italy. Japan’s Nomura is also a loser.
Analyst Jeremy Batstone-Carr said: “It’s come at a time when confidence in financial institutions generally is at a low ebb, confidence in investing companies – in which many people have put their nest eggs – is already very much under significant pressure, so it is very bad news.”
HSBC saying it has exposure of around 730 million euros, making it one of the biggest victims.
The banks will have lost because of trading or lending for investments made with Madoff.
According to media reports, companies, individuals and foundations have so far disclosed more than 17 billion euros of investments.
The extent of the losses won’t be clear until investigators track where the money has gone and what might be left.
Already the recriminations have started with one major UK investor saying there has been a “systemic failure” of US financial regulators.