More banks reveal Madoff exposure

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By Douwe Miedema and Sachi Izumi

LONDON/TOKYO (Reuters) - Royal Bank of Scotland, Man Group and Nomura on Monday joined a growing list of financial groups acknowledging exposure to the alleged $50 billion fraud surrounding Wall Street trader Bernard Madoff.

A report in the Financial Times said HSBC Holdings Plc had emerged as one of the largest victims, with potential exposure of about $1 billion. HSBC could not immediately be reached for comment.

RBS said its potential loss could amount to some 400 million pounds ($595 million), if it assumed that the value of its assets in market-making firm Bernard L. Madoff Investment Securities LLC were nil. Man Group estimated its exposure at $360 million.

Natixis of France said it had as much as 450 million euros ($605 million) of exposure, and Italy's second-biggest bank, UniCredit SpA, revealed exposure of around 75 million euros.

U.S. prosecutors and regulators have accused 70-year-old 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 Madoff through its institutional fund of funds business RMF, which has some $360 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 percent of RMF's funds under management, and 0.5 percent of funds under management for Man Group as a whole.

RBS's exposure to Madoff, who was arrested in New York on Thursday over the alleged fraud, was through trading and collateralized 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 Inc said earlier in the day it had a 27.5 billion yen ($302 million) exposure related to Madoff, though the impact on its capital would be limited.

On Sunday, three European banks announced a total of $3.8 billion in exposure to Madoff.

Santander and BNP Paribas, the largest banks of Spain and France respectively, and Swiss private bank Reichmuth & Co became the latest parties to detail possible losses over investments made with Madoff.

Shares in BNP and Santander fell sharply in early trade on Monday.

Santander put its client exposure at more than 2.3 billion euros ($3.10 billion), while BNP Paribas said it could face a potential loss of 350 million euros from Madoff-linked investments. Reichmuth said it had about 385 million Swiss francs ($329.1 million) at stake.

(Editing by Andrew Callus)

($1=.6723 Pound)

($1=.7426 Euro)

($1=1.170 Swiss Franc)

($1=91.00 Yen)

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