By Douwe Miedema and Sachi Izumi
LONDON/TOKYO (Reuters) - Banks and investment funds across the world lined up on Monday to admit investing billions of dollars in the companies of Bernard Madoff, whom U.S. authorities accused of masterminding a massive fraud.
Britain's HSBC Holdings Plc was the latest bank to join the growing list, saying it had exposure of around $1 billion, making it one of the biggest victims of the alleged $50 billion fraud.
Royal Bank of Scotland and Man Group in the UK, Japan's Nomura and France's Natixis also said they were hit by the worldwide scandal.
Financial companies, reeling after a year of enormous writedowns on bad credit assets, have so far tallied up more than $10 billion in direct and indirect exposure to the possible fraud by Madoff, the 70-year old trader who was arrested on Thursday.
"There is a broader danger here for the industry," an equity analyst at a large European bank said, asking not to be named because of a corporate policy.
"This huge fraud, supposedly in blue chip funds, is going to make people nervous, and you've already seen massive redemptions," the analyst said.
Shares in France's Natixis were down 4.7 percent after it said it had as much as 450 million euros ($605 million) of exposure to the fiasco. The wider DJ Stoxx banking index was 0.9 percent lower.
U.S. prosecutors and regulators have accused Madoff, a former chairman of the Nasdaq Stock Market, of running the fraud through his investment advisory business, which managed at least one hedge fund.
Man Group, the world's largest listed hedge fund manager, said it was exposed to Madoff through its fund of funds business RMF, which has $360 million invested in funds directly or indirectly sub-advised by Madoff.
And Swiss private bank Benedict Hentsch said it had undone its recent merger with alternative investment specialist Fairfield Greenwich, which said it had put half of its assets in one of the funds set up by Madoff.
NUMBERS RISE
A rising number of banks across Europe detailed their potential losses from Madoff, who allegedly set up a so-called Ponzi scheme, in which existing investors are paid out with money from new clients, not from actual investment returns.
BNP Paribas and Santander detailed potential losses on Sunday, and others joined at the start of the trading week, with Italy's UniCredit SpA revealing exposure of around 75 million euros.
RBS said its potential loss could amount to some 400 million pounds ($595 million), if it assumed that the value of its assets in Madoff's firm were nil.
Its exposure to the scandal was through trading and collateralized lending to funds of hedge funds invested in the group, the bank said in a statement.
Hedge funds are already struggling after a year that has badly damaged their boast that they can make money whichever way the market turns.
The AIMA global hedge fund trade association in a statement said it was "very disturbed" by the case, asking for "early and public disclosure of all facts about what went wrong."
"Clearly, lessons must be learned, restitution must be secured for investors, and processes/safeguards must be improved to prevent such a situation recurring," the group said.
Nomura Holdings Inc said earlier in the day it had 27.5 billion yen ($302 million) in 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.
Santander and BNP, the largest banks of Spain and France, respectively, and Swiss private bank Reichmuth & Co also detailed possible losses.
"Santander's direct exposure is very limited, so the impact on their P&L account is virtually null," said Natalia Aguirre, an analyst at financial services firm Renta4.
"But it's not the same story for their clients ... and evidently there could be a long legal process."
Santander put its client exposure at more than 2.3 billion euros ($3.1 billion), while BNP Paribas said it could face a potential loss of 350 million euros.
(Additional reporting by Joel Dimmock and Olesya Dmitracova in London and Tracy Rucinski in Madrid, editing by Andrew Callus and Will Waterman.)
